Kellogg Workers Reject Contract, Prolonging Two-Month Strike

(Bloomberg) -- The union representing about 1,400 Kellogg Co. cereal-plant workers rejected the tentative labor agreement reached by negotiators last week, prolonging a strike that began more than two months ago.

“The tentative agreement was overwhelmingly rejected by the union body,” said Dan Osborn, president of the Omaha, Nebraska, chapter of the union.

Kellogg said in a statement that it was “disappointed” by the outcome and would hire permanent replacements for the positions vacated by striking employees.

“We have made every effort to reach a fair agreement, including making six offers to the union throughout negotiations,” said Kellogg spokesperson Kris Bahner in an emailed statement. “It appears the union created unrealistic expectations for our employees.”

The collapse of the deal extends one of the more high-profile union clashes at a time of renewed clout for organized labor in the U.S. Workers at four of Kellogg’s U.S. plants walked out in early October, leading the company to resume operations with temporary employees and salaried staff. 

Kellogg shares rose 0.9% to $64.14 at 11:01 a.m. in New York. The stock is up 3% this year, trailing a 25% advance in the S&P 500 index.

The tentative agreement between Kellogg and the members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union included wage increases and would have continued to allow new workers to achieve “legacy” status as their tenures at plants endure.

Sticking Point

Changes to the cereal maker’s 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. 

Kellogg had proposed eliminating the transitional concept, instead offering immediate pay increases for transitional workers based on years of service. The union had said these changes, while they would offer higher pay in the short term, would keep workers from reaching full legacy compensation.

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