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Latest News - December 2014

December 2, 2014
Kellogg cereal workers to vote on contract changes
Jennifer Bowman

Employees at Kellogg Co.'s cereal plants in the U.S. will vote this week on sweeping changes to their labor agreement nearly a year before the current contract expires.

Documents leaked to the Enquirer show the Battle Creek-based company and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union have proposed changes to employees' health care benefits and wage adjustments for those working at the four cereal plants: Battle Creek, Memphis, Tenn., Lancaster, Pa., and Omaha, Neb.

Local bargaining officials from the plants were not included in developing the proposal, according to the documents.

Employees are expected to cast votes Thursday morning. If the proposal is passed, it will supersede the current master contract, which doesn't expire until October 2015, and would be in effect until October 2019.

Kellogg confirmed Tuesday it has been in discussions with labor officials to finalize the agreement. Ron Baker, national strategic campaign coordinator for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, and Kevin Andrews, vice president of BCTGM Local 3G, declined to comment.

"We are collectively committed to ratifying a fair and competitive contract that recognizes the important work of our employees and addresses the long-term health of our North American cereal network," Kellogg spokesperson Kris Charles said in a statement. "We do not, however, negotiate in public. Therefore, we won't further discuss the details at this time."

The proposed changes include eliminating cost-of-living adjustments at the beginning of next year, instead giving a one-time, $2,000 lump-sum payment to active regular employees and those considered "transitional" who have at least one year of service. Regular full-time employees would receive a 2 percent raise after April.

The leave-of-absence benefit for employees would also be eliminated. Benefits for spouses and dependents would stop six months after the employee's death. They then could continue to have coverage if they paid 100 percent of the premiums.

The contract would establish transitional employees, "a special designation of regular employee with different terms and conditions of employment" who is part of regular plant operations. They would be paid $18 an hour and any further wage adjustments, including those for regular employees, would be negotiated through the plants' local supplemental agreements.

Any employee hired after Jan. 1 — considered regular or transitional — would not be eligible for retiree health care.

Guidelines on plant closures are also set in the proposal, in which Kellogg would agree to not permanently cease operations before October 2018 "except in the case of an Act of God or in cases beyond the control of the company." It has the right to announce closures as long as it complies with the 2018 date and other guidelines.

"Between the effective date and Oct. 31, 2018, the company shall assess opportunities and make good faith efforts to repatriate outsourced products into the (ready-to-eat cereal) plants; provided, however, all decisions to implement any such repatriation or related opportunities shall be made by the Company in its sole discretion," the proposal said.

The proposal comes about four months after Battle Creek-based Kellogg ended its 9-month lockout at its Memphis plant, where labor negotiations broke down over use of so-called casual employees. If the requests up for a vote this week are passed, the company has agreed to withdraw its proposals there and in Omaha, where it has been seeking expanded use of seasonal employees.

Kellogg reported a 31 percent drop in profits in during its third quarter amid poor cereal sales. It is also implementing Project K, a four-year restructuring program that has since led to plant closures in places such as North Carolina, Georgia and Ontario, and expansions in Thailand and Malaysia.



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