UFCW Local 324 President Andrea Zinder on Albertsons-Kroger merger
Andrea Zinder is president of Southern California’s UFCW Local 324, which represents 15,000 grocery workers in Orange and southern Los Angeles counties. Her local strongly opposes the merger of America’s two largest supermarket-only chains: Idaho-based Albertsons and Ohio-based Kroger. Together the two operate 5,000 stores. This includes in California under the names Food 4 Less, Pavilions, Ralph’s, Safeway and Vons.
Zinder said more pressing is blocking Albertsons’ related plan to pay a controversial $4 billion dividend on Monday that would go mostly to private equity firms. Six attorneys general — four Democrats and two Republicans — have also come out against the dividend. This includes AGs from Oregon, Washington state and Idaho. Thursday, a judge temporarily blocked the dividend for a week, pending further court hearings.
SACTO POLITICO: Of Local 324’s 15,000 grocery-sector members, about 11,000 work for either Kroger or Albertsons. What concerns you about Albertsons’ $4 billion planned dividend payment?
ANDREA ZINDER: For Local 324, there is the potential for several thousand jobs to be adversely affected if this were to go through the way it is currently proposed. The $4 billion which Albertson wants to pay its shareholders would go primarily to private equity firms, and we believe it would really devastate the company. This would create a distressed company whether or not they merge, and would force them to sell off stores.
[Private equity firm] Cerebus has about one-third ownership of Albertson, but they are not alone. About 70% of the Albertson stock is private equity.
Blocking this dividend payout is important because it is related to the merger. The regulatory process for a merger like this is normally quite lengthy. Even Albertsons and Kroger have said [the merger] is not taking place probably until 2024. But what they are trying to do is grab and steal the money from Albertsons and put Albertsons in a position so that it almost can’t operate unless some kind of sale goes through.
S/P: Where does Albertsons’ $4 billion come from?
ZINDER: The $4 billion is partially cash on hand and partially borrowing against assets.
S/P: As a union, what has it been like negotiating with Cerebus since it took over as the Albertsons’ largest shareholder in 2006?
ZINDER: That is a very hard question to answer. Before Cerebus, we experienced a devastating strike and lockout in Southern California in 2003 and 2004. We had to make a lot of changes to our contract, which destroyed a lot of full-time, living wage middle-class jobs. Ever since that time, we have gradually been improving upon our contracts to regain some footing. This included most significantly in our recent 2022 negotiations.
Our members have been on the verge of going on strike again several times with Cerebus at the helm. It is hard to pin that all on private equity or not, but the negotiations have been extremely, extremely difficult.
S/P: Relative to a living wage, where is the typical wage for your grocery-story union members?
ZINDER: With our most recent contract settlement this year, I would say we are getting close to living wages. But part of the biggest factor is most of these jobs aren’t full-time. Even with a $23 or $24 hourly wage, when employees don’t receive adequate hours on a weekly basis, they can’t live on it. All of our members get benefits, though. Benefits kick in at a very low threshold of hours. That is the one thing we have been very proud to maintain, and our benefits are extremely comprehensive and affordable.
S/P: Private equity firms are basically the modern versions of the Gordon Gekko-like corporate raiders of the 1980s. They seem to just operate in a slower fashion. For some time, they’ve been buying up, consolidating and siphoning off profits from scores of industries, including newspaper companies. Beyond the issues for your union members, how concerning is our current era of private-equity-driven consolidation?
ZINDER: Private equity has one goal: to enrich its investors as quickly as possible. Especially for a basic-needs industry like groceries, that is not good for the community, the consumers, the public, or the workers because all [private equity] wants to do is get rich fast, and they will just do whatever they can to drain a company of assets.
S/P: As part of its merger plan, Kroger and Albertsons said it plans on “divesting” 100 to 375 stores with overlapping geographic areas. That means selling and closing stores, which would mean fewer options for Californians, right?
ZINDER: Yes. Southern California has the most overlap between Albertsons and Kroger stores of anywhere in the country. So Southern California is most at risk of forced divestiture. There are several parts of the country where only one or the other operates. But also in Washington state, Colorado and Arizona, these are the two big chains that are competing against each other. So other than Albertson now trying to create a distressed company [through its $4 billion dividend plan], they wouldn’t necessarily be forced to close stores.
There has already been a lot of consolidation of the supermarket industry over the last 25 years in Southern California. That has created food deserts because the major grocers have pulled out of areas which they call “higher-cost-to-operate areas.” They say it costs them more to operate there. Those are the first stores they close. They don’t close them in the affluent areas. In the Los Angeles area, there are several pockets of food deserts with few to no local grocery stores.
SP: The economist and former U.S. Labor Secretary Robert Reich has expressed concern about price escalations by U.S. oligopolies and monopolies for years. This has included noting how consolidation of the U.S. grocery sector has caused huge increases in grocery costs that is a major component of inflation. What is your view of that?
Zinder: I believe that. I really do. And because of the consolidation, they can get away with it. It is a key factor in pricing people out of the market to buy even basic groceries.
S/P: What about Albertsons and Kroger’s claim that they must get bigger to more effectively compete against Amazon and Walmart?
ZINDER: Albertson and Kroger are strong companies. We aren’t talking about weak companies. We aren’t talking about companies that have inability to maintain profits and sales, especially during the pandemic. Walmart and Amazon sell food, but for the most part most people don’t go to them for their weekly shopping. There is a difference between traditional grocery stores and a store that sells some food products. People might go there to buy in bulk or large ticket items, but they aren’t going there to run in and get food for dinner.
Both Alerbertson and Kroger are making money, especially in California. No one disputes that. They are doing well. If they say they want to compete better against Amazon and Walmart, it’s to take over the market, and consumers are they ones who are going to lose. That’s because [a merged Albertsons-Kroger is] going to have even more control over pricing. If they wanted to bring down prices, they have enough assets and profits right now to do that and keep making money.
S/P: Recently Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.) and Rep. Jan Schakowsky (D-Ill.) wrote the Federal Trade Commission calling on federal regulators to block the merger. What have you heard about the Biden Administration’s position?
Zinder: What I have heard is the current head of the FTC is very, very heavily scrutinizing mergers. So that is a glimmer of hope on this, but the Biden Administration is going to defer to its Justice Department, obviously, and that is all I have heard of at that level. I have heard a lot more at the state level with the state AGs.
S/P: What are the implications of a merger on the strength of your Local 324?
Well, any loss of membership isn’t good for anybody. It’s not good for the workers. It’s not good for the communities where they live. And clearly it is a disadvantage to the Union. The loss of jobs doesn’t benefit anybody except those investors who will benefit from the profiteering, they aren’t looking out for the general well-being of the public.