Sysco 2013 Annual Report Download - page 15

SYSCO CORPORATION-Form10-K4
PARTI
ITEM1Business
Employees
As of June29,2013, we had approximately 48,100 full-time employees, approximately 17% of whom were represented by unions, primarily the International
Brotherhood of Teamsters. Contract negotiations are handled by each individual operating company. Approximately 35% of our union employees are
covered by collective bargaining agreements which have expired or will expire during  scal 2014 and are subject to renegotiation. Since June29,2013,
two contracts covering approximately 300 of such employees have been renegotiated. We consider our labor relations to be satisfactory.
Competition
Industry sources estimate that there are more than 15,000 companies engaged in the distribution of food and non-food products to the foodservice industry
in the UnitedStates. Our customers may also choose to purchase products directly from retail outlets or negotiate prices directly with our suppliers. While
we compete primarily with local and regional distributors, a few organizations compete with us on a national basis. We believe that the principal competitive
factors in the foodservice industry are effective customer contacts, the ability to deliver a wide range of quality products and related services on a timely
and dependable basis and competitive prices. An additional competitive factor for our larger chain restaurant customers is the ability to provide a national
distribution network. We consider our primary market to be the foodservice market in the UnitedStates and Canada and estimate that we serve about
18% of this approximately $235billion annual market. We believe, based upon industry trade data, that our sales to the UnitedStates and Canada food-
away-from-homeindustry were the highest of any foodservice distributor during  scal 2013. While adequate industry statistics are not available, we believe
that in most instances our local operations are among the leading distributors of food and related non-food products to foodservice customers in their
respective trading areas. We believe our competitive advantages include our more than 7,000 marketing associates, our diversi ed product base, which
includes a differentiated group of high quality Sysco brand products, the diversity in the types of customers we serve, our economies of scale and our
wide geographic presence in the UnitedStates and Canada, which mitigates some of the impact of regional economic declines that may occur over time
and provides a national distribution network for larger chain restaurant customers. We believe our liquidity and access to capital provides us the ability to
continuously invest in business improvements. We are the only publicly-traded distributor in the food-away-from-home industry in the UnitedStates. While
our public company status provides us with some advantages, including access to capital, we believe it also provides us with some disadvantages that
our competitors do not have in terms of additional costs related to complying with regulatory requirements.
Government Regulation
Our company is required to comply, and it is our policy to comply, with all applicable laws in the numerous countries throughout the world in which we
do business. In many jurisdictions, compliance with competition laws is of special importance to us, and our operations may come under special scrutiny
by competition law authorities due to our competitive position in those jurisdictions. In general, competition laws are designed to protect businesses and
consumers from anti-competitive behavior.
In the UnitedStates, as a marketer and distributor of food products, we are subject to the Federal Food, Drug and Cosmetic Act and regulations
promulgated thereunder by the U.S. Food and Drug Administration (FDA). The FDA regulates food safety through various statutory and regulatory mandates,
including manufacturing and holding requirements for foods through good manufacturing practice regulations, hazard analysis and critical control point
(HACCP) requirements for certain foods, and the food and color additive approval process. The agency also speci es the standards of identity for certain
foods, prescribes the format and content of information required to appear on food product labels, regulates food contact packaging and materials, and
maintains a Reportable Food Registry for the industry to report when there is a reasonable probability that an article of food will cause serious adverse
health consequences. For certain product lines, we are also subject to the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable
Agricultural Commodities Act, the Packers and Stockyard Act and regulations promulgated by the U.S. Department of Agriculture (USDA) to interpret and
implement these statutory provisions. The USDA imposes standards for product safety, quality and sanitation through the federal meat and poultry inspection
program. The USDA reviews and approves the labeling of these products and also establishes standards for the grading and commercial acceptance of
produce shipments from our suppliers. We are also subject to the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, which
imposes certain registration and record keeping requirements on facilities that manufacture, process, pack or hold food for human or animal consumption.
We and our products are also subject to state and local regulation through such measures as the licensing of our facilities; enforcement by state and
local health agencies of state and local standards for our products; and regulation of our trade practices in connection with the sale of our products. Our
facilities are subject to inspections and regulations issued pursuant to the U.S. Occupational Safety and Health Act by the U.S. Department of Labor. These
regulations require us to comply with certain manufacturing, health and safety standards to protect our employees from accidents and to establish hazard
communication programs to transmit information on the hazards of certain chemicals present in products we distribute.
We are also subject to regulation by numerous federal, state and local regulatory agencies, including, but not limited to, the U.S. Department of Labor, which
sets employment practice standards for workers, and the U.S. Department of Transportation, which regulates transportation of perishable and hazardous
materials and waste, and similar state, provincial and local agencies.