The Earthgrains Company (NYSE: EGR) successfully served customers and consumers over the Labor Day holiday weekend, despite challenges presented by work stoppages by some employees at 15 bakeries.

"We are very pleased with the response of our employees and our ability to serve customers under challenging conditions," Earthgrains Chairman and CEO Barry H. Beracha said. "We have the resolve to continue to serve our customers to the best of our ability as we work toward a solution with our union employees that maintains our local market competitiveness as well as our ability to improve our company for the long-term benefit of customers, employees and shareholders."

All but one of Earthgrains' 66 bakery and refrigerated-dough plants continue to operate and route sales representatives are continuing to serve customers. In the Southeast, where the work stoppages began, Earthgrains has been able to maintain service levels to customers. More than 20 percent of union production employees are working their scheduled shifts at affected bakeries in the region, including as many as 50 percent to 70 percent in some bakeries.

"There has been a phenomenal effort to protect our customer relations, brand equity, market share, and the jobs that depend on these efforts," said John W. Iselin Jr., Earthgrains' president of Worldwide Bakery Products. "This serves the best interests of everyone, including those employees who have chosen for the time being not to report to work."

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) has called strikes at seven bakeries where contracts have expired, and picket lines have been initiated at eight other plants. Among the bakeries with primary strikes, six are in the Southeastern states of Alabama, Tennessee and Georgia, but sales and production operations are continuing in the region.

"Earthgrains is meeting the needs of our stores so that we can satisfy consumer demand," said Clint Williams, Senior Vice President, Operations, for Jitney-Jungle Stores of America, Inc. "Earthgrains is our major supplier of bread in the Mississippi and Alabama market, and we appreciate the daily communication updating us on the status of their operations. We had a successful Labor Day weekend. The only impact we have seen is limited disruption of product assortment."

The BCTGM secondary picket lines are at eight Earthgrains' plants in the Southeast, Texas, and California where production workers are covered under existing contracts.

"We regret that the BCTGM International Union has taken these actions affecting our employees rather than sitting down with us at the bargaining table and reaching agreement," Iselin said. "We believe that any remaining issues can be overcome in good-faith bargaining. We have continued to invite the union to the table, including extending an offer to use the Federal Mediation and Conciliation Service, which the union declined.

"Unfortunately, the union has not been willing to resume talks, and our employees are losing thousands of dollars in wages and benefits in a dispute that could have and should have been resolved weeks ago. We are renewing our call for the BCTGM International Union to come to the bargaining table so that striking employees, including those at bakeries covered by existing contracts, can resume earning paychecks and benefits."

Primary Strikes

The BCTGM represents bakery production workers who are on strike in Fort Payne and Mobile, Ala.; in Memphis, Nashville and Chattanooga, Tenn.; in Louisville, Ky.; and in Atlanta. All but the Chattanooga bakery continue to operate using management and hourly employees, temporary workers and union employees reporting to work.

More than 45 percent of union production workers are reporting for work in Atlanta, about 40 percent in Mobile, about 23 percent in Memphis and less than 10 percent in Fort Payne, Nashville and Louisville. Earthgrains is serving the Chattanooga market through production at the company's other bakeries in the region.

Route sales employees are continuing to serve customers.

Earthgrains offered competitive contracts to the union for employees in Fort Payne and Mobile, but the BCTGM International Union did not allow employees to vote on the proposals. The International Union has also refused to bargain a proposal the company made for a region pattern contract that would pertain to employees in Memphis, Nashville, Chattanooga and Atlanta. Employees at those bakeries elected to strike before a contract proposal could be negotiated. The company's Southeast regional pattern proposal was comparable to one in the Midwest that the union has endorsed and used to settle contracts, including one last week.

"We do not believe economic issues are keeping the sides apart," Iselin said. "Our offers all contained wage increases and pension increases. The offers maintained healthcare benefit levels without passing additional costs to employees and maintained or improved overtime provisions. We have successfully reached new contracts with the BCTGM in Midwest locations as recently as last week and the week before. These settlements reflected wage and pension increases similar to what we were offering in the Southeast. In the past few months, we have reached agreements for employees at six of our bakeries and four other operating locations. We know we can reach timely, fair and equitable agreements with our employees when union locals are allowed to bargain."

Secondary Picket Lines

The BCTGM has also set up pickets at Earthgrains' bakeries in Meridian, Miss., in Owensboro, Ky.; in Dallas; in Sacramento, Fresno, Oakland and Stockton, Calif.; and at the company's refrigerated-dough plant in Forest Park, Ga. Production employees at those locations are covered under existing contracts. Production is continuing at all the plants using management and hourly employees, temporary workers and union employees reporting to work, including about 70 percent of union employees in Meridian and 40 percent in Dallas.

Additional work stoppages are a possibility if the union refuses to resume contract talks and continues to initiate secondary picket lines at bakeries. In all instances, the company will make every effort to continue to serve customers with bakery products.

About Earthgrains

Earthgrains is the second-largest packaged bread and baked goods producer in the United States with 64 bakeries in the South, Southeast, Midwest, Upper Midwest, Southwest and West. The company also operates two plants that make canned refrigerated dough, toaster pastries and other products.

More information on the company may be found on Earthgrains' corporate web site at www.earthgrains.com.