Thursday, August 7, 2008

Food Retailing & Labor Unions: Canada's Supreme Court to Hear Case that Could Change Wal-Mart's, and Others, Non-Union Status in North America

A decision today by the Supreme Court of Canada to hear a case challenging the closure by Wal-Mart, Inc. of one of its stores in Quebec in which employees voted to be unionized could open the door to ending the mega-retailer's union-free status in North America, Fresh & Easy Buzz has learned this morning.

The Wal-Mart store in question, located in Jonquiere, Quebec, was the first Wal-Mart unit in North America to obtain union certification based on a vote to do so by the store's employees in 2005. Wal-Mart shut the store down shortly thereafter.

When the Jonquiere, Quebec Wal-Mart store was shut down by the U.S-based retailer, which is the largest corporation and retailer in North America and in the world, the store's employees cried fowl, saying they had unfairly lost their jobs because they voted to unionize the store, adding that prior to the Wal-Mart going union, there had never been talk of the store possibly closing, according to a representative of the employees involved in the case.

The Supreme Court of Canada didn't say this morning if it has an opinion one way or the other regrading the case, just that it will hear arguments from both sides--the lawyers representing the former store employees and Wal-Mart.

A clerk for the Supreme Court of Canada says it will be a number of months before Canada's highest court hears arguments in the case, which if lost by Wal-Mart could have serious negative results to the retailer's long time position against having its North American stores unionized.

Wal-Mart is the leading seller of food and grocery products in terms of total annual sales in North America. It's number one in the U.S. and number three in Canada. However, the retailer is building numerous new combination food and general merchandise supercenters throughout Canada, and is expected to become that nation's number two seller of food and grocery products soon, behind number one Loblaws.

Wal-Mart is the only one of the Big 5 North American food and grocery retailing chains that's non-union. Kroger Co., SuperValue, Inc. and Safeway Stores, Inc., the three top food retailing chains in the U.S., all are unionized, as is Canada's number one chain, Loblaws, along with all of that county's leading supermarket chains and nearly all of the top 25 in the U.S.

Wal-Mart historically is a bit different than these supermarket chains in that it started out not as a retailer of food at all but as a general merchandise (with a limited selection of grocery products) discount chain with its Wal-Mart discount store format.

It was only when Wal-Mart introduced its Supercenter format some years after the company was founded by Sam Walton that the retailer began to sell a full selection of fresh and shelf-stable food and grocery products.

However, today food and grocery is key to Wal-Mart's existence, as well as being its top selling categories, generally referred to by the retailer as consumables.

In addition to its Supercenters, which average nearly 200,000 square feet and feature a full supermarket full of fresh and shelf-stable food and groceries inside, Wal-Mart also operates 45,000 square foot standalone supermarkets called Wal-Mart Neighborhood Market.

The mega-retailer also has in recent years added lots of food and grocery items to its huge Wal-Mart discount store format stores, including perishable dairy and deli items and frozen foods. The only categories not sold in the discount format stores are fresh meats and produce.

As Fresh & Easy Buzz has written about extensively, Wal-Mart also has created a new small-format combination grocery and fresh foods market called Marketside. Those stores, which will average 15,000 -to- 20,000 square feet, will sell in-store fresh, prepared foods, along with a selection of fresh produce and meats, basic grocery items, and some specialty and natural food products. The first four Marketside food-only stores will open this fall in the Phoenix, Arizona Metropolitan region.

Today's decision by the Supreme Court of Canada should be welcomed with fully-open arms by the U.S.-based United Food and Commercial Workers (UFCW) union, which represents about 1.3 million unionized supermarket and food store clerks who work for union supermarket chains and independents in the United States, Canada and Puerto Rico.

The UFCW has been trying to get Wal-Mart store-level workers to vote to unionize a store for decades, and in 2005 thought they finally had hit pay dirt with the store in Jonquiere, Quebec, when its employees voted to go union. However, as we reported above, Wal-Mart closed that store soon after, eliminating the only unionized Wal-Mart in North America.

The prime North American focus of the UFCW of late has been on Tesco's Fresh & Easy Neighborhood Market, as we've reported on and written about in Fresh & Easy Buzz. [Type in UFCW union in the blog search box and you will get a selection of those stories.]

The UFCW is conducting an aggressive, multi-front campaign designed to pressure and encourage Tesco officials to meet with union leaders in order to discuss the potential of unionizing store-level employees of its Fresh & Easy Neighborhood Market USA division based in Southern California.

Tesco officials say their position is that they see no reason to meet with union officials, and that the UFCW is free to organize Fresh & Easy grocery store employees within U.S. federal labor laws.

Tesco's Fresh & Easy currently has 68 small-format (10,000 -to- 13,000 square feet on average) in Southern California, Nevada and Arizona.

We suspect that although it won't take any attention away from its Tesco Fresh & Easy unionization campaign, that based on today's decision by the Supreme Court of Canada to hear the Quebec Wal-Mart store closure case, the UFCW will likely put some increased emphasis on its Wal-Mart campaign, which at least in terms of being in front of the public has been rather silent of late.

We also would suspect Tesco PLC executives and lawyers will (or should be) watching the Supreme Court of Canada closely, particularly when it begins hearing arguments in the case, since a decision against Wal-Mart by the court could have significant consequences for all non-union food and grocery retailing chains doing business in North America.

North America's unionized supermarket chains also will be watching the case closely. These retailers believe Wal-Mart and Tesco's non-union status in North America gives them an unfair competitive advantage over the unionized chains because under the UFCW contract these retailers pay far higher hourly wages and offer far more extensive (and thus costly) health benefit plans than do either Wal-Mart or Tesco do in North America.

Fresh & Easy Buzz Editor's Note: Related News: On August 1, the Wall Street Journal reported a story based on sources described as Wal-Mart, Inc. employees, that the mega-retailer has been "mobilizing its store managers and department supervisors around the country (United States) to warn that if Democrats win power in November, they'll likely change federal law to make it easier for workers to unionize companies -- including Wal-Mart."

The piece is a good companion to our report above. Click here to read the August 1, 2008 Wall Street Journal story.

Wall-Mart has denied telling workers to vote against Democratic candidate for U.S. President Barack Obama and Democratic party candidates for U.S. Congress in the upcoming November, 2008 election as the Wal-Mart employees interviewed for the Wall Street Journal piece said is the case, according to an August 1 report by the Associated Press (AP).

From the August 1 AP report:

Wal-Mart Stores Inc., the world's largest retailer, denied a report Friday that it had pressured employees to vote against Democrats in November because of worries that a bill the party supports would make it easier for workers to unionize.The measure, called the Employee Free Choice Act, would allow labor organizations to unionize workplaces without secret ballot elections. It was co-sponsored by Barack Obama, the presumed Democratic presidential candidate, and opposed by John McCain, the presumed Republican nominee. Click here to read the compete AP story.

Meanwhile, a story in today's online publication, Huffington, is reporting a coalition of pro-union groups is launching a petition drive campaign asking the U.S. Federal Elections Commission to investigate Wal-Mart for illegal electioneering, a charge it has denied as described above in the AP story. Read the Huffington Post piece here.

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