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    Published on: December 9, 2003

    In Monday Night Football action, the St. Louis Rams clinched an NFC playoff spot with a 26-20 victory over the Cleveland Browns.
    KC's View:

    Published on: December 9, 2003

    In our piece yesterday about the Southern California labor strife, we chided both sides…but that didn't sit well with one MNB user, who wrote:

    Your editorial is a classic fence-sitter approach to a situation where there really are right and wrong answers. While you touch on the consequences of the dispute, there can be no dispute that the cause of the problem is the UFCW's unwillingness to adopt the necessary changes to the contracts that will allow for the unionized chains to have a chance to survive in a competitive environment.

    The grocery business is thus facing the same fork in the road that the steel industry, auto industry, airlines and any other place in the US where there is competition must make a decision. The problem is not Steve Burd, who is probably a SOB, but so what. The unionized companies are facing competition in the form of Wal-Mart and Costco and other big chains where labor costs are totally out of whack, and getting worse. The UFCW leadership is the only thing standing in the way of changing that, since management cannot make the change unilaterally. If the UFCW will not change, they can join the hall of failed union leaders who took the same kind of suicidal positions as the "leaders" at the unions who represented Eastern Airlines employees, the UAW, which now represents less than half of the number of employees it did in the US auto industry, the steel industry in the US which is a shadow of its former self, etc.

    Sitting on the fence as you are doing, saying tsk tsk to both sides is really destructive and counterproductive. A lecture is not what is needed.

    Employees need the cold hard facts and not more "come let us reason together" nonsense from industry observers. Stop being so political and just state the obvious;, that if the union doesn't come to its senses, there will be no jobs for its members. Management really doesn't have a role in this battle since it is a matter of the marketplace determining where it will shop, consumers will go to buy their groceries where they are the best value, and the consumers are saying that they will not pay for health and welfare programs that exist in few other industries in the country. Just because management was stupid enough to agree to these contracts in the past doesn't mean that they have any control of the future. That decision is entirely up to the union and its members. You ought to let them know that instead of trying to be a politician.


    Gee, if you think we were trying to be a politician in what we wrote, you haven't been reading MNB for very long…

    We weren't being political. We happen to think that both sides are wrong in not being willing to adjust to changing circumstances. And, quite frankly, to say that one side is right and the other is wrong is exactly the kind of arcane reasoning that has created this mess and prevents it from being resolved.

    We don't usually attack MNB users, but this letter really got on our nerves.

    Since when did "reasoning together" become an unreasonable expectation?

    And another MNB user wrote:

    I find it both sad and unfortunate that both sides have realized that past negotiations and failures on their part to look at the long-term have created the situation we are in now. It seems to me that all contracts are for short-term gains. No one looks past the immediate pay or benefits.

    Now both sides will and should suffer because the corporations can't give anymore and the Union can't play any more trump cards. The well is dry and the Union is going to lose. Decertification is the program I would be trying to plant now.

    Kiss another greedy and uneducated union good-bye and begin to put up the Welcome to Southern California Wal-Mart signs. What hand do you believe Wal-Mart has played in this scenario?


    Again, we're not sure than you can say fairly that organized labor has a monopoly on greed. Or bad judgment.

    Another MNB user brought a different perspective:

    This is another example of the squeezing out of the middle class. You have 70,000 workers, most of whom make less than $20,000, forced to strike or be locked out to protect their wages and health care benefits. I don't think people understand that when you drive down these jobs that all other businesses in the area are affected too. These people go to movies, buy clothes, buy cars, etc. When they can't do these things, it has an impact on the community. As far as health care, that is the main reason a lot of these people are working in this industry. If the company's plan is implemented, most of these workers couldn't afford to have health insurance. When those who can't afford to pay for it stop getting the coverage, it will make the cost for those who still can, go even higher. The people who can't afford the coverage anymore will then turn to the public or state health plans, usually much later than they would if they had their own coverage. A lot of the time these visits are for much more costly treatment. The bottom line is we pay for these people's coverage out of our taxes. Back in the 40's, there was national heath care proposed for all Americans. The employers of the day said "Oh no, we will take care of the people. The government need not get involved." That is why most employers have some form of a health care plan today. But the employers are now saying "No way!" It is time for national health care. Our system as currently run won't last much longer if the projection that the cost of health care will double every 4 to 5 years is accurate.

    We're not sure that most of the 70,000 workers actually make less than $20,000 a year…but even if they do, the fact is that both sides have to figure out a better way to deal with spiraling health care costs. The union can't expect the chains to just continue absorbing the costs as the competition gets tougher and tougher. It isn’t reasonable.

    And we're not sure that universal, government-run health care will fix anything.




    Regarding the seeming marginalization of new Dominick's CEO Randall Onstead from labor negotiations being conducted by parent company Safeway, one MNB user wrote:

    I believe he was hired as a figurehead not someone who would actually make the decisions.

    His easy going style, good looks and his Texas charm are being used as a smoke screen to cover the fact that it's the same as it was, Safeway expecting employees to make all the concessions.

    Get in a guy that is able to talk with employees, make them feel worth-wild and needed but still offer the same contract that started the problem in the first place.....

    The employees saw his video with him in an open collared shirt, used as a prop to make employees think, he was one of them. He's not a Safeway man, he's a worker! The fact that Safeway ruined his father's chain is always mentioned but he wasn't brought back there to fix its problems and there "are" problems in the Texas division!

    Instead, they bring him into Chicago, tell employees that he wants to teach Burd a lesson and make this chain work. Wouldn't he know more about fixing a non-union chain that he used to run?

    No one is buying it!


    At least, not everyone…
    KC's View:

    Published on: December 9, 2003


    • Spartan Stores announced that it has hired Theodore Adornato as Executive Vice President, Retail Operations. Adornato joins Spartan Stores from Ahold-owned Tops Markets, where most recently he was Regional Vice President of Tops Eastern Region.

    KC's View:

    Published on: December 9, 2003


    • Costco Wholesale Corp. posted first quarter earnings of $160.2 million, compared with $145.7 million in the same period a year earlier. Quarterly sales rose 14 percent to $10.31 billion, while same-store sales also were up 14 percent.



    • Ingles Markets reported a 15 percent increase in net income for fiscal year 2003 over fiscal year 2002. Net income was $17.0 million for the year ended September 27, 2003, compared to $14.7 million for the year ended September 28, 2002. Net income for the fourth quarter of 2003 was $8.4 million compared to $3.8 million for the 2002 fourth quarter.

      Net sales for the fourth quarter of 2003 increased 3.7 percent over the fourth quarter of 2002 while comparable store sales increased 2.1 percent for the same period. For the year, net sales increased 1.6 percent with comparable store sales growth of 0.8 percent.

    KC's View:

    Published on: December 9, 2003

    In a speech yesterday, Coca-Cola Chairman and CEO Douglas Daft said that it is up to beverage companies to provide product options that allow consumers to make healthier choices, but that "a simplistic government solution will not address the issue," and that parents, teachers and schools must help children make sensible choices.
    KC's View:

    Published on: December 9, 2003

    The Associated Press reports that the European Union has refused to lift its five-year-old moratorium on new foods made from genetically modified ingredients, a move that is likely to further alienate the US, which accuses the EU of being in violation of trade agreements.

    The specific proposal that was rejected by the EU would have allowed the sale of canned sweet corn from a strain developed by the Swiss-based Syngenta company.

    The EU has approved new rules - scheduled to take effect next April - that are supposed to end the moratorium while imposing new labeling and traceability standards. These standards also are objected to by the US.
    KC's View:

    Published on: December 9, 2003

    The Boston Globe reports this morning that Mayor Thomas Menino plans to announce that the city will import prescription drugs from Canada for thousands of city workers and retirees, a move that the city believes could cut about $1 million a year from its $61 million prescription drug bill.

    The city is taking the initiative despite warnings by the federal Food and Drug Administration (FDA) that medicines imported from Canada are not as safe as those bought in the US. Reimportation is illegal, though a number of states and municipalities are engaging in the practice as a way of closing budget deficits.

    The US Congress has instructed the Department of Health and Human Services (HHS) to review whether drugs can be safely imported from Canada.
    KC's View:

    Published on: December 9, 2003

    Crain's Chicago Business reports that McDonald's management is "just weeks away" from deciding what it will do with its "partner brands," which include Chipotle Mexican Grill, Boston Market and Donato's Pizzeria.

    The company has been in the process of making this decision for months, saying that while the non-burger assets brought diversity to the business, they were a distraction as the company sought to bolster its traditional burger restaurants.

    Two possibilities seem most likely: that the company will completely sell off the brands to an equity firm, or keep a small stake in them with the option to buy them back at a later time.
    KC's View:
    We've always felt that McDonald's was making a mistake to even consider divesting these brands, and feel the same way even as the burger business seems to be coming back.

    But what do we know?

    (Mostly, we just like Chipotle…and can't imagine why anyone would want to get rid of it. Maybe we'll get lucky, though, and Mickey D's will find a buyer that will really know how to expand this brand.)

    Published on: December 9, 2003


      FMI Hails Signing of Medicare Prescription Drug Bill. "One of the most overlooked and essential benefits of the Medicare drug bill signed today ensures that 40 million seniors can fill their prescription needs at neighborhood pharmacies at affordable prices," said Tim Hammonds, president and CEO of the Food Marketing Institute (FMI), who joined with other members of an industry task force at the White House to witness the formal signing of the bill into law by President Bush.

      "For six months, FMI spearheaded an industry task force that worked closely with the White House and leadership in Congress to preserve a competitive and convenient marketplace for seniors," Hammonds said. "We look forward to working with the Administration to ensure that these reforms are reflected as Congress intended in the regulations implementing this law."


    • FMI Accepts Nominations for 2004 Neighborhood Partnership Awards. The Food Marketing Institute (FMI) is now accepting nominations for the 2003-2004 Neighborhood Partnership Awards (NPA). The awards, presented annually to companies that have demonstrated a strong commitment to their communities, will be presented at the FMI Show in Chicago, May 4-6, 2004. All entries for the NPAs must be received by February 29, 2004.

      Now in their eighth year, the Neighborhood Partnership Awards focus on youth development, community partnerships, health initiatives, hunger programs and other efforts that revitalize and invigorate communities.

    KC's View:

    Published on: December 9, 2003

    USA Today reports that KFC has managed to get a small sales bump from its controversial ad campaign that maintains that fried chicken is health food- or, at least that fried chicken is lower in carbohydrates than many other fast foods.

    This claim has been derided by many nutritionists and is under investigation by the Federal Trade Commission (FTC).

    Still, parent company Yum Brands reported a one percent same-store sales increase in November, the first such increase it has seen since April.
    KC's View:
    So who do you want to give the last word to here?

    Phineas Barnum? ("There's a sucker born every minute.")

    Or Abraham Lincoln? ("You may fool all the people some of the time; you can even fool some of the people all the time; but you can’t fool all of the people all the time.")

    You choose.

    Published on: December 9, 2003

    Fortune magazine has named Wal-Mart as number one on its list of Most Admired companies. The editors noted that it is the first time in the magazine's history that the world's largest company also has been its most admired.

    Also in the top ten are 2) Southwest Airlines, 3) Berkshire Hathaway, 4) Dell Computer, 5) General Electric (which has been number one on the list the last few years), 6) Johnson & Johnson, 7) Microsoft, 8) FedEx, 9) Starbucks, and 10) Procter & Gamble.
    KC's View:
    This will please some. It will outrage others. We expect to hear from both sides.

    Published on: December 9, 2003

    Published reports say that while Wal-Mart remains the prime candidate to purchase Ahold's Brazilian operations, it by no means is a done deal.

    While Wal-Mart wants to acquire both Ahold’s Bompreco and G Barbosa supermarket chains in Brazil, the government there has threatened the Dutch company with fines if it tries to sell both chains together. In addition, there have been reports that Ahold and Wal-Mart have had trouble agreeing on a price.

    The result of these delays could be the re-emergence of local company Companhia Brasileira de Distribuicao as a possible contender to buy one or both Ahold chains.
    KC's View:

    Published on: December 9, 2003

    The Chicago Sun Times reports that beef prices are beginning to show some weakness as the nation moves into the Christmas holidays, a time when ham and turkey often are the meal of choice.

    Cattle futures reportedly have dropped eight percent in price since reaching record highs about a month ago, an achievement largely attributed to the popularity of low-carb, high-meat-consumption diets such as the Atkins Diet, as well as the ban on Canadian beef because of the mad cow scare north of the border.
    KC's View:

    Published on: December 9, 2003

    The Toronto Globe and Mail reports that according to tests commissioned by the newspaper and a Canadian cable news channel, trans fats were present in virtually ever restaurant and fast food product tested.

    "It is," said Bruce Holub, a professor of nutritional sciences at the University of Guelph, "hard to avoid trans fat" when eating outside the home.

    According to research, the Globe and Mail reports, "ingesting just one gram of trans daily — the equivalent of one chicken nugget or two slices of pizza — increases a person's risk of heart disease by about 20 percent."

    Trans fats are created by bubbling hydrogen gas through vegetable oil at high temperatures.
    KC's View:
    Sort of takes all the fun out of wolfing down a Big Mac, doesn’t it?

    Seriously, sometimes it seems like the most difficult task in this arena is balancing the need for credible, user-friendly consumer information with the necessity not to scare the hell out of everybody with alarming stories such as this one.

    That's not to suggest that stories like these shouldn’t be taken seriously. Far from it. But it also doesn’t serve the industry - much less the consumer - for people to be almost frozen in their tracks because of the nature of the info they are getting.

    Published on: December 9, 2003

    The Los Angeles Times reports that as negotiations collapsed between the united Food and Commercial Workers (UFCW) and Southern California's three major supermarket chains, both sides were hunkering down and planning strategy.

    And, the federal mediator involved in the talks said they had been "difficult," and that he would not call the two sides back together until he saw some evidence that discussions would be worthwhile.

    While the three chains - Kroger's Ralphs, Safeway's Vons, and Albertsons - said they had made a new "outstanding wage and benefit" offer that had been spurned by the UFCW, the union said the packaged was inadequate.

    The LAT writes that the new offer promised "to beef up a reserve to keep an employee health-care plan afloat," and withdrew "a requirement that workers take an unpaid two-hour lunch during slow periods." But it also did not include "a 30-cent raise in the contract's third year, a raise that was included in a proposed pact overwhelmingly rejected by union members two months ago. And, the UFCW complained, the new offer would not maintain 'affordable health care for working families.'"

    The UFCW has called a meeting of leaders of union locals from around the country to help plot strategy.

    The strike enters its third month this Friday.
    KC's View:
    Hard to image the two sides even talking again, much less coming to an agreement, before 2004.

    Published on: December 9, 2003

    Salon.com, the online magazine, reports on the attempts being made by animal rights activists to dampen the national enthusiasm for the low-carb, meat-heavy diets that are sweeping the nation.

    At a recent press conference at Washington's National Press Club, a number of people shared their stories of misery caused, in their minds, by the Atkins Diet and its brethren. There was the 53-year-old man who had no heart problems before he went on Atkins and then, after two and a half years on the diet and a loss of a significant amount of weight, suffered from heart disease and eventually had to have an angioplasty.

    There was a 51-year-old man whose cholesterol went from 160 to 158 on the Atkins Diet. And there was the obese teenager who dropped dead after using the diet to try and lose weight.

    Dr. Neal Barnard, president of the Physicians Committee for Responsible Medicine (PCRM), was described by Salon as being the "master of ceremonies at this media circus of misery," and is a self-proclaimed advocate of a plant-based diet. He represents the cadre of people who not only believe that eating meat is physically bad for you, but a philosophically bad idea as well.

    Barnard and his associates are looking for a federal investigation into the long-term effects of low-carb, high-meat diets. "We are calling on the CDC to try to lure Americans away from its honeymoon with the diet that has made its reputation from the fact that it's so counterintuitive -- eat the worst possible food, and lose weight," he said.

    For its part, Atkins Nutritionals released a prepared statement that said, in part, "All of us at Atkins are deeply disturbed by PCRM's shameless exploitation of people who have struggled through personal tragedies." The Atkins position seems simple - a percentage of people get sick, and the percentage of people who get sick while on the Atkins Diet is no larger than the percentage of people who get sick while not on it.
    KC's View:
    It is an interesting debate, and while we have no sympathy for the lunatic fringe on either side, we do think this is an important discussion. After all, the Atkins Diet and its brethren does seem incredibly counter-intuitive; even as we've lost weight on it, it has been hard to believe that we're actually helping our long-term health.

    One of the people speaking at the National Press Club, referring to the damage that the Atkins Diet had done to his health, said that he'd "made a deal with the devil for a 32-inch waist." We know how he feels, even if we're satisfied with just keeping a 34-inch waist.

    It's hard to know if or when the devil is going to come to collect. Guess we'll find out next time we have a physical…

    Published on: December 9, 2003

    Kroger Co. and the United Food and Commercial Workers (UFCW) have agreed on a new contract that should bring back to work some 3,300 workers in West Virginia, Ohio and Kentucky.

    The workers still have to approve the deal in order to end the two-month strike, which has closed 44 stores in the three states. Once the deal is approved, it is expected to take about a week to restock and open the units.

    Details of the negotiated agreement were not disclosed, but both sides said the issue of health care costs had been addressed.
    KC's View:
    Whatever the deal, maybe it can be the framework for some sort of discussion in Southern California.