Safeway takeover about more than just the price of stock shares

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In the flurry of press coverage about the proposed takeover of Safeway by a private equity firm much attention has been paid to the need to increase share price and none has been given to the effect such a change in ownership will have on the workers at the grocery chain.

It is my privilege to be president of the union that represents Safeway workers in the western part of Northern California. Our union is familiar with the odds-on favorite to take over Safeway, the private equity firm,  Cerberus.

Our members at Albertsons got a new boss in 2006, the same one apparently slated to take over Safeway. Due to the completely incompetent management of Idaho-based Albertsons, the chain was vulnerable to a takeover by Cerberus. For the next 10 years the new employer, modestly named after the mythological dogs that guard the gates of Hell, sold every piece of property
that wasn't nailed down and then some.

The results in terms of store closures, reductions in hours and rundown stores were miserable for the workers and shopping public alike. Our members at Albertsons experienced no upside to this corporate takeover and had they not been represented by  the UFCW, the results would have been far more devastating.

Back in the 80's the movie Wall Street came out. The outfits that took over companies and jettisoned properties and workers with equal zeal back then were called corporate raiders, green mailers, arbitragers and leveraged buyout specialists. Their motivation was pretty clear - racking up huge financial gains for themselves and their deep-pocketed investors. Why build something when you can destroy it and reap a quick buck?

Today we have The Wolf of Wall Street. Hollywood's portrayal of the characters performing corporate takeovers has remained fairly consistent. Off the movie screen, however, corporate America has succeeded in recasting corporate raiders as job and wealth creators. No matter how this is recast or repackaged the bottom line is the hard-working men and women employed at takeover targets get the short end of the stick.

The name Cerberus comes from Greek mythology. This situation is reminiscent of a Greek tragedy where everyone knows what's going to happen but can't do anything about it. It would be best for the workers and shopping public if the greed and avarice of the Safeway and Cerberus negotiators led to the demise of this deal. If the takeover goes through the UFCW will do its best
to make sure that the Albertsons story doesn't repeat itself at Safeway.

Ron Lind is the president of Local 5 of the United Food and Commercial Workers.

Photo: Cerberus, the private equity firm named after the Greek mythological dogs that guard the gates of hell, is trying to take over Safeway, the supermarket chain. Edublogs.org

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  • " Chains like Safeway, Kroger, and Albertsons simply cannot stay in business paying $15+ hourly wages to unskilled workers."


    James, I don't know where you get your numbers from but a lot of jobs at Safeway don't pay more than $7 or $8 an hour either. Which begs the question, what the heck is the union there for? An entry level job at Wal-Mart and an entry level job at Safeway pretty much pays the same thing.

    Its a myth that somehow these union-driven companies are paying more money. Trader Joe's is non-union and pays pretty much better than any other story in the grocery industry, same with Whole Foods.



    Posted by Mike H, 03/06/2014 10:26pm (5 months ago)

  • Thanks Ron.ufcw local 5 members are counting on you

    Posted by Patty Flores, 03/06/2014 4:59pm (5 months ago)

  • This is the beginning of the severe downfall of unions who represent workers in this industry.

    Question: Why is Wal-Mart number one in market share?

    Answer: Because they succeed in hiring non-union employees who work for less money, therefore giving them the ability to hold prices down. Chains like Safeway, Kroger, and Albertsons simply cannot stay in business paying $15+ hourly wages to unskilled workers. To keep up their profit margins, they must place higher prices on their goods.

    When these investment firms take over, they will bust the unions with a "take it or leave it" attitude. With the high rate of unemployment, they will have no problem filling these jobs at $5 - $7 less hourly pay than the current unionized workers are making.

    This has already happened in many other industries which can outsource work to other countries, at the expense of good American jobs. Now it's hitting home as well.

    Example: The case of Wonder Bread / Hostess Cake. The union employees refused the company's offers, and now everyone is out of work. No problem for these companies to close the doors and restructure. UNIONS DO NOT HAVE THE POWER AND STRENGTH THEY ONCE DID, not by a long shot!!

    Posted by James, 03/04/2014 4:26pm (5 months ago)

  • Cerberus does not care about anything other than the money. Look at the other companies that they have taken over, not just the Albertons. They seem to take over a lot of companies that are represented by unions.

    They also took over AT&T Advertising and became YP. I am a current employee and I can tell you that it has gone downhill since the sale happened. There have been layoffs and outsourcing of those jobs. The quality has gone downhill. They do not seem to care about quality.

    The contracts that have been proposed slash incomes tremendously. The decisions they make negatively effect the customers and the employees. Good Luck

    Posted by anonymous, 03/04/2014 7:04am (5 months ago)

  • Ron Lind had done a great deal of damage to Lucky, Savemart contract because all the workers are still suffering from the union contract that includes wage cut, paid cut, personal holiday cut, vacation leave cut, etc. Talk is cheap Mr. Lind.

    Posted by Lucky Store -Local 5, 03/02/2014 1:00pm (5 months ago)

  • I work for albertson after we were bought and renamed LLC things are much better than when supervalu owned us they were the ones who ran us in the ground drove.most.of our shoppers away. Almost a year so far so good. Safeway will be better if sold I think

    Posted by rick, 03/02/2014 11:51am (5 months ago)

  • Even the "Friend of Joe Albertsons" doesn't quite have his facts straight.

    In 2006, because of the mismanagement of Boise and the resulting struggles of the company, part of Albertsons was sold to Cerberus, with the larger part sold to Supervalu. The divisions Cerberus bought were the ones that were struggling the most. While Cerberus did close and sell nearly 2/3 of these stores, the stores that remain have become very profitable and to my knowledge they have no intention of closing.

    In 2013, because of the aweful job of Supervalu and the brilliant performance by Cerberus, Albertsons was once again reunited. During this first year, sales have jumped to double digit increases. The management of Albertsons LLC are all "grocery" people and they know what they're doing. I am once again excited to be an Albertsons employee. I'm seeing bonuses I never thought I'd see again. Cerberus has closed roughly 3% of the acquired stores and they were all very underperforming, in the red locations.

    This acquisition is about building a grocery power house. It's about buying power and positioning the company to become more competitive with the likes of Walmart, Target and Kroger.

    While there is surely to be some store closures (in some areas, antitrust issues may demand it), most Safeway employees should not get over-excited. If you work in a store that's in the black, I can almost assure you your job is safe.

    Posted by Albertsons Assistant Store Director, 03/01/2014 1:07pm (5 months ago)

  • I have been studying the human and cultural aspects of mergers and acquisitions for the past 30 years. I have documented the "merger syndrome"--the normal and to be expected human reaction to the stress and uncertainty of going through a merger or being acquired. The symptoms of employee distress are outlined in my book "Joining Forces: Making One Plus One Equal Three in Mergers, Acquisitions and Alliances."

    In one of our most strikings, even the best planned and strategically sound takeovers have undesirable negative impact on employee well-being, work team performance, and overall organizational effectiveness. So, one could just imagine how difficult the threat of a takeover by a firm like Cererbus is to employees. Mr. Lind is right on the money! (pun intended)

    Posted by Mitchell Lee Marks, 02/28/2014 3:56pm (5 months ago)

  • Obviously the president of Local 5 of the United Food and Commercial Workers doesn't know what he's talking about. First, the chain became vulnerable due to the incompetent managment at SuperValu, in MN, not Boise, Idaho. What Cerberus bought in 2006 was a shadow of what once was. Second, now that Cerberus has put Albertsons back together, they have began to get customers back into the stores, and sales is rebounding very nicely.

    Posted by Friend of Joe Albertsons, 02/28/2014 12:28pm (5 months ago)

  • I worked for Safeway for many years in the 80s and 90s. The sadest part of this story is that Safewa workers have already been through this scenario once before when KKR took Safeway private. Before the sell, Safeway was the largest retailer in North America; after the takeover, whole divisions were sold off or simply closed, throwing thousands out of work. Safeway today is making a fair amount of money, but the Wall Street class, showing their typical greed and disregard for the working class, would rather make a quick buck by buring the place down. This is how the American economy works today.

    Posted by Keith, 02/28/2014 11:01am (5 months ago)

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