Kellogg Cereal Workers Union Says Tentative Deal Reached

(Bloomberg) -- Kellogg Co. and the union representing striking workers at the company’s cereal plants say they have reached a tentative agreement to end the months-long standoff.

Members will meet Friday and vote on the new proposal Sunday, according to a union representative. Votes will be tallied Dec. 21 and if the agreement is ratified, workers would return to the plants Dec. 27. The agreement includes cost-of-living raises and removes the term “legacy employee,” but it doesn’t include a deal on retiree health care or cap on lower-tier employees.

“We are hopeful our employees will vote to ratify this contract and return to work,” Kellogg Chief Executive Officer Steve Cahillane said in a statement. The Battle Creek, Michigan-based company said the agreement “includes increased pay for all of our people” as well as expanding health-care and pension benefits. 

A resolution isn’t assured, since the union overwhelmingly rejected the last tentative deal reached by negotiators earlier this month. Kellogg said at the time that it would hire permanent replacements for positions vacated by striking employees, a stance that drew criticism from President Joe Biden.

“We’re happy negotiations continued in good faith,” said Dan Osborn, president of the union chapter in Omaha, Nebraska. 

The strike has affected plants in Omaha; Battle Creek; Lancaster, Pennsylvania; and Memphis, Tennessee. The locations produce Rice Krispies, Raisin Bran, Froot Loops, Corn Flakes, Frosted Flakes and other brands.

Changes to the two-tier employment system have been a sticking point in negotiations. Currently at Kellogg’s cereal plants, longer-tenured legacy workers get better benefits and pay, while “transitional” workers can graduate into the higher class as legacy workers leave their jobs. 

The company’s shares rose 3.6% on Thursday. The stock is up about 6% this year, trailing a 24% advance in the S&P 500 Index.

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