Workers at a Sobeys distribution centre in Quebec have gone on strike after negotiations between the company and the union broke down, a situation that could strain an already delicate food supply chain.
About 190 workers at the grocery warehouse north of Montreal walked off the job late Monday and have started picketing outside the Terrebonne facility, said Kim Bergeron, a lawyer representing UFCW Canada's Local 501.
The union and the company reached an impasse after more than a dozen meetings since November, with pay and benefits emerging as key sticking points, she said.
The strike comes as supply chain setbacks continue to leave some grocery store shelves in Canada less stocked than usual, while higher ingredient, shipping and labour costs are ratcheting up food prices.
Sobeys Inc. spokeswoman Jacquelin Weatherbee said the company had contingency plans in place to support its stores in Quebec from its other distribution centres.
"We are working very hard to ensure there is minimal impact to our IGA stores across the province," she said in a statement.
"We are obviously disappointed in the outcome of these negotiations to date. All we want is a fair deal that is good for our teammates and keeps our business competitive."
The grocer warned suppliers of potential delays and picket lines at the warehouse.
"Supplier partners should expect some delays when accessing the Terrebonne site due to the strike," Sobeys vice-president of distribution for central Canada Simon Morin said in a letter to suppliers.
"Please inform your employees that they may be required to cross a picket line when delivering to our Terrebonne site."
The labour disruption is being watched closely by analysts.
The walkout at the Terrebonne distribution centre "adds another layer of complexity to industry-wide supply chain disruptions," Irene Nattel, an analyst with RBC Dominion Securities Inc., said in a client note.
The effects of a short-duration strike should be minimal, she said.
Meanwhile, Nattel added that the breakdown in negotiations and resulting strike mandate is "not inconsistent with the negotiation process."
She pointed to company filings that indicate the grocer is willing to accept the short-term costs of labour disruption "to support a commitment to building and sustaining a competitive cost structure for the long term."
Weatherbee noted that Sobeys negotiates more than 60 collective bargaining agreements across Canada each year and had previously not had to deal with a strike in more than a decade.
In late January, the union representing workers at a Sobeys warehouse in Ontario said it ratified a four-year contract with "massive wage increases."
Unifor said the agreement covering more than 500 workers at a distribution centre east of Toronto included a full-time pay increase of 19.5% over four years.
The grocer, owned by Empire Co. Ltd., also agreed to signing bonuses, doubled its RRSP contribution and added a sixth week of vacation at 26 years of seniority.
"Through collective bargaining, we were able to deliver a strong contract that includes a considerable pay boost for existing workers as well as future hires while also levelling the playing field for our part-time members,'' said Pat Twohey, Unifor Local 1090 bargaining chairman.
The union representing Sobeys workers in Quebec did not disclose details of the pay and benefit increases it is seeking.
Weatherbee said the union's demands were "significantly above market average."
The collective agreement expired earlier this month.