Kellogg reaches another tentative deal with union to end strike

Dive Brief:

• Kellogg announced in a statement Thursday that it has reached another tentative agreement for a new contract with the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union (BCTGM), which represents the 1,400 workers on strike at four of the company’s ready-to-eat cereal plants. The company said the contract will be voted on by union members by Monday and results are expected early next week.
• The terms of this new agreement appear similar to the previous one, which was overwhelmingly rejected by union members in a vote earlier this month. This latest proposal does not eliminate the two-tier wage system altogether, but it does allow for a cost of living adjustment in wage increases for all employees starting in their first year. The company said the new contract also features an accelerated and definitive path for moving newer, “transitional” employees to legacy wages.
• The potential breakthrough in negotiations comes after a week of mounting political pressure from President Joe Biden as well as lawmakers on both sides of the aisle for Kellogg to avoid hiring replacement workers for the employees on strike as it had originally planned.

Dive Insight:

While Kellogg and BCTGM have been through a failed round of negotiations very recently, it is clear that each of the players involved — the company, the union and political leaders — want to avoid the prospect of hundreds of skilled workers losing their jobs ahead of the holidays. The timing for this latest tentative agreement, which also falls in the midst of supply chain disruption and a labor shortage throughout the food industry and the uncertainty of the omicron variant of COVID-19, shows how much is at stake in ending the strike, which is in its tenth week.

The pressure to reach a new deal began mounting last Friday, when President Biden issued a statement criticizing Kellogg for its plan to replace the striking workers. Erik Loomis, a labor expert and University of Rhode Island professor, said having a sitting president blatantly condemn the actions of a major company in a labor dispute is unprecedented.

“Even the supposedly most prolific [pro-labor] presidents in U.S. history like Franklin Delano Roosevelt never made statements like this,” Loomis told Food Dive.

Progressive Senator Bernie Sanders of Vermont also announced plans to visit Kellogg’s Battle Creek, Michigan, plant this Friday to stand in solidarity with the striking workers.

There has also been a push on the other side of the political aisle for Kellogg to seek a resolution that avoids layoffs. Republican Nebraska Governor Pete Ricketts wrote a letter on Dec. 12 to Kellogg CEO Steve Cahillane that urged the company to restart negotiations with the union, Bloomberg reported. The company’s Omaha, Nebraska, plant, one of the strike locations, employs nearly 500 people.

“Given the extraordinary commitment displayed by Kellogg’s employees over the past two years, the successes they have helped Kellogg’s to achieve, and the inflationary pressures they’re facing, I urge you to return to the bargaining table,” Ricketts said in his letter. The governor is generally considered to be pro-business and even moved to end pandemic unemployment benefits in May of this year, putting Nebraska ahead of most states.

One thing that has tripped up previous negotiations with Kellogg is the union’s insistence on eliminating a two-tiered payment system that did not allow transitional workers to ascend to legacy status. The union and Kellogg had negotiated to lift a 30% cap on these transitional workers in the last tentative agreement, while workers with at least four years of experience at the company could move to the legacy tier, The New York Times reported.

This latest agreement gives transitional workers a higher starting wage of $24.11 an hour, and then the ability for their wages to increase up to $3.00 per year based on the cost of living adjustment. In the previous contract, this cost of living adjustment was only available to legacy workers.