Kellogg may shut cereal plant after lengthy union battles

The cereal major has been locked in lengthy battles with the Bakery, Confectionery, Tobacco and Grain Millers (BCTGM) union over worker rights and contracts at various cereal plants across the US, including Memphis and Omaha.

Late last year, it proposed a five-year MOA which it said was the only means of securing a steady future for its cereal plants. But in December, 2014, BCTGM members voted against the MOA.

Kellogg, like most cereal firms, has been struggling in the face of declining sales and margin woes.

“We believe that with the MOA, things can be different for Kellogg than it has been for our competitors in the industry,”​ said Marty Carroll, senior vice president for Kellogg North America Supply Chain, in a letter addressed to RTE cereal employees.

“However, without this agreement, or a similar alternative that addresses our business challenges, Kellogg will have no choice but to announce the closure of at least one US cereal plant in the very near future,”​ he continued.

Second vote hope?​

However, Carroll told BakeryandSnacks.com Kellogg was hopeful union members would reconsider. 

“It would be premature to discuss that possibility [of closure] further as it is our hope that the union members will reconsider their position on the MOA and call for a second vote,” ​he said.

Kellogg said it was at a “pivotal fork in the road”; ​evaluating its US RTE cereal production network extensively and the MOA represented the “best path forward” ​to stabilize and sustain business.

“We must ensure that we are operating the right number of plants – in the right locations – to better meet our current and future production needs, and the evolving needs of our retail consumers…We urge the communities in which we operate RTEC plants to implore local union leaders to provide their membership another chance to be heard and to preserve jobs in their hometown.”​

BakeryandSnacks.com is still awaiting a full response from Ron Baker, strategic campaign coordinator at the BCTGM, on whether the union would reconsider the MOA. Baker told us it was a “complex”​ matter due to the extensive details included in the MOA. 

The MOA and historical contract concerns​

Kellogg said the five-year MOA would preserve jobs at the cereal plants for at least the next four years.

“The MOA is not a plan to simply ‘defer’ plant closures, as some have suggested. Instead, the MOA offers an improved cost structure that will allow the business and the plants time to meet the challenges we face on a competitive footing,”​ it detailed.

However, the BCTGM’s concerns likely center around contract terms – the issue that has been the root cause of the lengthy battles between the union and Kellogg. 

Kellogg MOA factbox

The MOA, for example, will introduce terms for ‘transitional employees’ – giving them set hourly rates, medical benefits, paid holidays and vacation and a “path to regular employment if the employee so chooses​”. Kellogg said it would also withdraw ‘casual/seasonal’ contract proposals in Memphis and Omaha and would not introduce them in Lancaster or Battle Creek either.

In 2013, Kellogg locked out 200+ Memphis workers​ for nine months over a dispute that started over concerns on casual employee contracts​. The battle came to a deadlock due to arguments on whether employment terms were negotiable under a local, supplemental contract which expired in October, 2013 or non-negotiable because they were still covered by a master contract.

In July, 2014, a US district judge ruled that Kellogg was guilty of unfair labor practices and forced the cereal major to end its worker lockout​ – a ruling the company said was “disappointing”​​ but would act on​.