Sysco, US Foods Teamsters rally for answers about their jobs

Sysco and US Foods Teamsters from IL, MO, WI, CO, AZ, CA, WA, IN, OH, TX

Sysco and US Foods Teamsters protested outside Sysco's shareholder meeting today in Houston and demanded to know if thousands of jobs will be cut if the two companies merge.

Sysco has made vague statements that 'all employees will become Sysco associates Day One' if the merger is approved.

Teamsters General Secretary-Treasurer Ken Hall says the men and women who work for the two companies deserve to know what that means.

“Thousands of workers at Sysco and US Foods are concerned about their livelihoods," Hall said in a statement. "Will Sysco honor its existing collective bargaining agreements at both companies? How does it intend to save $600 million over the next four years, and will its loyal, long-term employees pay that price?”

Sysco’s planned merger with its only national competitor, US Foods, is still far from inevitable. The company has twice announced delays in closing the deal since it was announced in December 2013.

Steve Vairma is the Teamsters Warehouse Division Director, which represents 120,000 warehouse workers and nearly 12,000 at Sysco and US Foods. Vairma said,

It’s time Sysco clears the air. We are here to show the company that we will do whatever it takes to protect Teamsters employed at Sysco and US Foods.

The Federal Trade Commission is putting the deal under intense scrutiny. The transaction was structured by executives who stand to gain from it. No shareholder had a vote. The companies' workers and customers along with anti-monopoly groups warn the merger could significantly harm competition in U.S. markets.

Scott Laughlin, a Sysco employee, said,

Executives are poised to line their pockets from this merger, but we could lose our jobs and the company won’t even tell us if it plans to sell our warehouse or close it altogether.

Forty-six executives stand to pocket cash bonuses on completion of the merger. Chief Financial Officer Robert Kreidler has already cashed in $429,000 and will earn another $715,000 if the transaction closes. Three other executives will split nearly $1.5 million if the deal is approved.

In addition to the rally outside the annual meeting, several Teamsters inside the meeting raised concerns about the merger to Sysco’s senior executives and board members. Shelly Allsup, a Teamsters representative from San Diego, Calif., said:

Investors don't know what the composition of a newly combined company would look like. A possible anti-trust remedy from the FTC could call for divestitures from certain markets.

Food prices to rise with Sysco-US Foods merger, Teamsters say

The proposed Sysco-US Foods merger will probably hurt workers and consumers if it is allowed to go through, a new report by the Teamsters concludes.

The International Brotherhood of Teamsters warned the $8.2 billion merger would result in a virtual monopoly in many markets, costing workers' jobs and raising food prices. According to The Street:

The Teamsters found that the merged company would hold 60% in metro Chicago, 70% in Los Angeles and Southern California, more than 70% in metro Philadelphia, 75% in the midwestern region around Denver and 80% in Minneapolis-St. Paul. 

If corroborated by the FTC, the market shares estimated by the Teamsters would obligate the agency to require sizable divestitures for which there may not be viable buyers, the Teamsters warned.

The Global Competition Report today quoted Teamsters International Vice President Steve Vairma, director of the warehouse division, making that point:

Even with divestitures of physical assets, he said, a smaller competitor could not easily become a check on a combined Sysco and US Foods. 

“Nobody has bought a facility, loaded it with product and taken significant share overnight,” he said.

Teamsters have plenty of experience with what Wall Street likes to call 'rationalizing the supply chain': merging smaller distributors into one behemoth. To pay the exorbitant costs for the merger, companies borrow money. To be able to pay back the debt, they shut down some operations, fire workers and stop investing in new plant and equipment. Oh, and raise prices.

That's exactly what will happen if Sysco and US Foods merge.

The two companies say they will only have a combined market share of 25 percent, but the Teamsters dispute that. Again, from GCRI:

...critics of the tie-up such as the American Antitrust Institute and Food & Water Watch put it at 55 per cent. Alan Meyers, a mergers specialist in the Teamsters’ capital strategies department, said the union had performed an extensive field study to produce its own estimate. 

The union claims 11,500 Sysco and US Foods warehouse workers and truck drivers, who helped the Teamsters survey the number of employees at and the amount of available floor space in those facilities, which determines how much product can be moved through for distribution. Meyers said 70 per cent is an unweighted average of the markets the union has been able to verify, accounting for all types of customers for which Sysco and US Foods currently compete.

You can keep up with what's going on at Sysco and USFoods on the Protecting Sysco & US Foods Workers Facebook page.

Today's Teamster News 05.20.14

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