Kellogg and union reach deal that could end its 2-month strike

By Chris Isidore, CNN Business

Kellogg reached a tentative agreement late Wednesday night with the union that has been striking at its cereal factories for two months, signaling the end of one of the nation’s highest profile labor disputes.

“We are pleased to announce that Kellogg Company and the union have reached a tentative agreement for a new five-year labor contract covering 1,400 employees at our US cereal plants in Battle Creek, Mich., Lancaster, Penn., Memphis, Tenn. and Omaha, Neb.,” said Kris Bahner, a Kellogg Company spokesperson.

About 1,400 member of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union who make such breakfast staples as Corn Flakes, Frosted Flakes and Rice Krispies at four Midwest plants have been on strike since October 5. They will remain on strike until the deal is ratified by the rank-and-file members. Union members are set to vote on the agreement December 5.

The tentative deal gives workers much of what they said they wanted — though maybe not as quickly as they had been demanding. A two-tier wage system that paid more recent hires less in salary and benefits had been a key sticking point in the talks.

According to the company, the agreement would bring the lower-tier workers with at least four years at the company up to the upper tier immediately upon ratification. It also would have a path for other lower tier workers to move to the upper tier during the five years of the agreement.

The proposed deal also gives more senior workers a 3% raise upon ratification, and annual cost-of-living wage increases to keep up with rising prices.

But the news of the tentative agreement doesn’t guarantee that workers will be ready to accept the offer and return to work. Angered by past concession contracts and seeing employers having trouble hiring workers, many union members have been flexing their muscle and voting against deals reached between management and union leadership.

And the statement from the union’s president did not praise the terms of the agreement or claim it was a victory for the union and the members, as is often done with agreements are reached that have the full support of the union leadership.

“I want to thank and commend all of the members of the bargaining committee for their many, many hours of extremely hard work to reach this tentative agreement,” said Anthony Shelton, the union’s international president. “As always in our union, the members will have the final say on the contract.”

Other strikes

Members of the United Auto Workers at farm equipment maker John Deere rejected two tentative agreements reached by their negotiating team, prompting and prolonging a 5-week strike by 10,000 workers. Union members recently accepted a third offer from the company and ended the strike.

In the film and television industry, 63,000 unionized production workers represented by the International Alliance of Theatrical Stage Employees only narrowly avoided a strike last month when 50.3% of membership voted in favor of a tentative deal with the studios.

And both of those deals were more lucrative than the one now being considered by workers at Kellogg.

But Deere was reporting record profit, even with the impact of its strike, and it recently forecast even higher profits and revenue ahead. Kellogg has not been doing as well financially, even before the strike.

For the first half of this year Kellogg reported that excluding currency adjustments and special items, sales were up 2% from a year prior and earnings were down 3%. Overall sales for the company have been flat for an extended period, rising only 6% overall from 2016 through 2020.

Kellogg has kept the plants operating during the strikes with a combination of management staff and temporary workers manning the production lines. The company had recently threatened to start hiring permanent replacement workers. But with a tight labor market and a near record number of job openings, most US employers are having trouble finding workers — let alone for jobs that require crossing picket lines to get to work.

Striking Kellogg workers have also spoken of their ability to stay out by finding temporary jobs to supplement their strike benefits.

Shares of Kellogg gained 2% on news of the agreement. They had lost 5% of their value since the start of the strike through the close of trading on Wednesday, a period during which the S&P 500 gained 5%, even with recent losses.

— CNN Business’ Rob Mclean contributed to this report.

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