Money & The Economy

Cereal Giant Reaches Deal With Union Group After Months Of Labor Strike

Kellogg announced Thursday that it reached a tentative agreement with employees, potentially ending a 10-week labor strike at the company.

The agreement between the cereal giant and The Bakery, Confectionery, Tobacco Workers and Grain Millers’ (BCTGM) International Union and four other unions representing 1,4000 workers would cover five years, and two parties will vote on the terms by Monday, according to a Kellogg press release.

“We value our employees. They have enabled Kellogg to provide food to Americans for more than 115 years,” Kellogg chairman and chief executive, Steve Cahillane, said in the press release. “We are hopeful our employees will vote to ratify this contract and return to work.”

Highlights from the agreement include increasing leading pay, improving no-cost healthcare, improved retirement benefits, a more defined path to legacy wages and benefits, and no takeaways, according to the press release.

The workers have been on strike for over two months, demanding increased pay and improved benefits, according to The Wall Street Journal. Workers were also upset about Kellogg’s two-tier pay system, where new employees were paid less than veteran employees while also paying more for healthcare.

Kellogg employees rejected a tentative offer on Dec. 7 which included more benefits for all employees and increased wages for newer employees after four years, the WSJ reported.

Nebraska Republican Gov. Pete Ricketts sent a letter to Cahillane on Sunday urging the company to restart negotiations with the BCTGM Union, the Omaha World-Herald reported.

“Despite the challenges of the global pandemic, they showed up day after day to do their jobs so that across the country there was food on the shelves,” Ricketts reportedly wrote in the letter. “These workers helped Kellogg’s increase sales and revenue (and grow net income by over 30%) from 2019 to 2020 — a time when business endured losses due to the financial headwinds of the pandemic.”

Ricketts also pointed to soaring inflation and the state’s record-low 1.9% unemployment rate, saying “retaining your people should be a priority,” according to the World-Herald. “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.”

Meanwhile, President Joe Biden issued a statement on Dec. 10 saying he was “deeply troubled” by Kellogg’s reported plan to permanently replace the striking workers.

“Permanently replacing striking workers is an existential attack on the union and its members’ jobs and livelihoods.  I have long opposed permanent striker replacements and I strongly support legislation that would ban that practice,” Biden said in the statement.

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