Kellogg and Cereal-Plant Union Reach a Tentative Deal to End Two-Month Strike

(Bloomberg) -- Kellogg Co. and the union representing about 1,400 of its cereal-plant workers said they reached a tentative labor agreement, potentially ending a strike that began nearly two months ago.

The agreement between Kellogg and the members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union “includes an accelerated, defined path to legacy wages and benefits for transitional employees, and wage increases and enhanced benefits for all,” Kellogg said on a website. The union plans to hold a vote on Dec. 5.

“The workers have won a lot,” said Rebecca Givan, an associate professor of labor studies and employment relations in the School of Management and Labor Relations at Rutgers University. “It certainly shows the success of going on strike.”

A finalized deal would end an acrimonious stretch between the sides, after workers at four plants walked out and the company resumed operations with temporary employees and salaried staff. The strike is one of a number of high-profile actions by unions at a time of renewed clout for organized labor in the U.S.

Kellogg shares rose 1.6% at 10:24 a.m. in New York. The stock was down 1.9% this year through Wednesday's close, trailing a small gain in an S&P index of consumer-staple stocks.

Changes to the cereal maker's two-tier employment system had been a sticking point in negotiations. Currently at Kellogg's cereal plants, longer-tenured “legacy” workers get better benefits and pay. “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.

The new agreement calls for immediate graduation to “legacy” status for all employees of four or more years, and a 3% graduation rate at each plant each year of the five-year contract. It also includes a 3% wage increase for legacy workers upon ratification, with cost-of-living adjustments thereafter, Kellogg said. Raises for transitional employees will depend on their years of service.

Vote Scheduled

The union will have an informational meeting on Friday to discuss the potential contract and will vote on it on Dec. 5, according to Dan Osborn, president of the union chapter in Omaha, Nebraska. The votes will then flown to Maryland to be counted Dec. 6.

The company's cereal workers went on strike Oct. 5. The latest talks were the second round of negotiations after earlier discussions failed to reach an agreement. 

There were signs of frayed relations between the two sides. In November, Kellogg Co. sought a restraining order against the union that was leading the strike at its cereal plant in Omaha, alleging its members obstructed vehicles entering and exiting, trespassed and intimidated nonunion workers at the plant. 

The strike has affected plants in Omaha; Battle Creek, Michigan; Lancaster, Pennsylvania; and Memphis, Tennessee. 

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