Could Kellogg’s tentative deal with union become a measuring stick for future labor negotiations?
Despite claims by Kellogg that a deal proposed and rejected out-of-hand by Union leaders in November was its “last best final offer,” the CPG giant announced Dec. 1 another overture to end the nearly two-month strike at its cereal plants in Battle Creek, Mich., Lancaster, Penn., Memphis, Tenn., and Omaha, Neb.
Unlike the prior offer, local officers of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union will present on Dec. 5 Kellogg’s most recent proposed 5-year labor contract to its 1,400 members who have been on strike since Oct. 5.
The tentative deal offers a 3% wage increase across the board, increases for transitional employees depending on years of service, better post-retirement benefits for permanent employees, additional health coverage and other benefits.
Kellogg also offers an accelerated, defined path to legacy wages and benefits for transitional employees – a sticking point for union members who decried the current ‘two-tier’ employment and benefit system for unfairly holding back the 30% of Kellogg employees categorized as transitional.
Kellogg paired its offer with a threat – noting when it brought this proposal to the table in late November that it would move “to the next phase of our contingency plans” if necessary, including hiring permanent replacements for striking employees in addition to tapping “hourly and salaried employees, third-party resources and temporary replacements.”
The company stressed, however, that its “first choice is to have our employees return to work,” and that it would “continue to welcome those who choose to return to work, as we have since the strike began.”
The strike came at a time when demand for ready-to-eat cereal is heightened as many people continue to work and eat at home during the pandemic. As such, supply was already strained and Kellogg reported earlier this year shortages of some favorites, including Frosted Flakes, due to supply chain and production challenges. To help alleviate additional shortages due to the strike in the US, the CPG giant imported product from other countries.
While Kellogg’s strike is one of the longest to afflict the food industry this year, it is far from the only one.
Earlier this year, Mondelez International faced a walkout also led by BCTGM that included more than a thousand employees in five states and lasted nearly six weeks. Prior to that, Frito-Lay employees in Topeka, Kan., went on strike, and truck drivers gathered to strike against Coca-Cola in West Virginia.
Unsatisfied workers have also acted on their own – leaving their jobs across industries in droves. In August, a record 4.3 million workers quit their jobs. In that same month, the CPG industry reported 143,000 unfilled jobs and the broader manufacturing industry had 889,000 open positions.
Given the broad impact of the labor challenges on CPG companies' ability to produce and deliver goods, many stakeholders likely are closely watching Kellogg’s negotiations and – should it prove fruitful – the proposal could become a measuring stick for employee benefits and unions’ power.
The results of the union vote on Sunday should be revealed early next week.