If approved, the agreement will end a nearly two-month-long strike.
Union workers from four of Kellogg’s US cereal plants – in Michigan, Nebraska, Pennsylvania and Tennessee – went on strike on 5 October after the company and union officials were unable to reach consensus on the terms of a new contract after the previous one expired. The union also claimed Kellogg had threatened to send jobs to Mexico, which the company denied.
The proposed deal
The new deal includes a 3% wage increase for long-time ‘legacy’ workers, along with retirement benefits.
It offers temporary employees – who make up 30% of the breakfast cereal giants US workforce – the chance to become permanent staff.
It addresses Battle Creek, Michigan-based company’s controversial two-tier wage system by allowing legacy workers with four years of contract labour under their belt to immediately move up to the higher pay tier system – which embraces cost of living adjustments and health benefits. Newer ‘transitional’ workers can move up the system in the later years of their contract. Each subsequent year of the contract would see 3% of the plant’s transitional headcount move up to higher-tiered legacy employees.
There are no changes to employees’ current health care plans, but the agreement adds new dental and vision benefits.
Jury is still out
Strikers have reported to be encouraged with the move forward, but the jury is still out.
CGTWGM’s president Anthony Shelton wasn’t in full praise of the deal, but thanked all the members of the bargaining committee and said “as always in our union, the members will have the final say on the contract” when they vote on 5 December.
“We want to go back to work, but we don't want to be taken advantage of,” added Eric Dwornicki, who has worked at the Omaha plant for nearly a decade.
Dwornicki’s colleague Jerry Ellerman said the strike won’t end unless it is a good deal, noting, “I'm willing to stay out here if it's not fair.”
Kellogg’s took a hard line with workers during the strike. Last month, the company went to court to secure an order that set guidelines for how workers behave on the picket line. Strikers in Omaha were blocking entrances to the plant and intimidating replacement workers.
The strike stalled production of all of the company’s well-known brands of cereal, including Frosted Flakes and Rice Krispies. In Kellogg’s Q3 earnings call, Kellogg chairman CEO Steven Cahillane said the strike was compounding shortages and costs for the company’s cereal business.
“There is no question that today’s business environment is as challenging as we’ve ever seen it,” said Cahillane. Cereals accounted for around 40% of Kellogg’s net sales last year.
The Corn Flakes and Froot Loops maker said the labour issues – along with supply challenges – could mean its fiscal 2021 adjusted profit growth forecast would be at the low end of its 1%-2% range, adding the cost inflation was the highest the company has “seen in a decade or more”.
Last week, Kellogg allegedly threatened to begin hiring permanent replacements for some striking workers.
In a statement, Kellogg spokesperson Kris Bahner said the company was ‘pleased’ to have reached the agreement and thanked the Federal Mediation and Conciliation Service.