Entering the third week of a work stoppage by some production employees, The Earthgrains Company (NYSE: EGR) has 22 bakeries either on strike or targeted with sympathy picket lines.

The latest bakeries to be affected late last week or over the weekend are in Chicago, Milwaukee, Oklahoma City, Denver, Des Moines, Iowa, Wichita, Kan., and Paris, Texas. Earthgrains is continuing to serve each of those markets to the best of its abilities.

Contingency operating plans are under review for the Des Moines bakery, but continued production is under way at each of the other new strike locations using management and hourly employees, temporary workers and union production workers who continue to report for scheduled shifts.

Under the circumstances, significant production is continuing at 20 of the 22 impacted facilities, and the company's sales systems are operating. In a few cases, management employees are running sales routes.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM International Union) forced a strike against Earthgrains Aug. 26 at Earthgrains' Fort Payne, Ala, bakery, one of the company's largest facilities.

More than 600 of the nearly 3,500 union production workers at the 22 bakeries are reporting for work. In the southeastern United States where the work stoppages began, more than 20 percent of striking union members are crossing picket lines, including more than 75 percent in Meridian, Miss., 50 percent in Atlanta, 45 percent in Mobile, Ala., and 33 percent in Memphis, Tenn. Earthgrains has a total domestic workforce of more than 22,000.

"BCTGM International Union officials have conducted a misinformation campaign with union members around the country about what this work stoppage is about," said Earthgrains Chairman and CEO Barry H. Beracha. "This is not a strike about wages or benefits because Earthgrains has put competitive offers with wage-and-benefit increases on the table. The International Union has refused to negotiate these offers and has refused to allow members of local bargaining units to consider them. This is not about working conditions, such as overtime hours, because Earthgrains wants to address any concern our local employees have. This is not about alleged anti-union motives by the company because Earthgrains has solid working relationships with local bargaining units and has continually reached agreeable contracts with good-faith bargaining. This labor action is a pure and simple power play by the BCTGM International Union, acting in its own interests at the expense of union locals, local employees and the company. It is a shame that thousands of families are being hurt in an attempt by the International Union to manipulate Earthgrains' employees and pressure this company.

"When the International Union wants to sincerely negotiate contracts, we are ready to reach agreements. Until then, we must continue to operate our business the best we can in order to protect jobs by preserving our relationships with consumers and grocery and food-service customers."

Last week, Earthgrains met with International Union representatives in informal talks with the help of a federal mediator. In keeping with the off-the-record nature established for these discussions, Earthgrains will not comment further on these talks.

Earthgrains has focused its production on core bread and bun products at the struck bakeries to best serve customers.

"We are pleased with the level of production we have been able to sustain under the circumstances," Earthgrains' Worldwide Bakery Products President John W. Iselin Jr. said. "There has been a tremendous effort by all of our working employees to preserve our future. In some areas, such as the Southeast, we have been able to maintain very high levels of service to the marketplace. We have very strong union employee turnout for scheduled shifts in Mobile, Alabama, Atlanta, Georgia, and Meridian, Mississippi. Our greatest challenge in meeting customer and consumer needs has been in California."

Iselin said it is time for Earthgrains' union employees to begin demanding answers about the true reason for the strikes in Fort Payne and Mobile and the reason for the International Union's orchestrated effort to spread pickets across the Earthgrains system.

"It's important for our employees to understand that any and all concerns they may have are open for discussion during negotiations. Issues get resolved at the bargaining table, not on the picket line," Iselin said. "Why is it that we have been able to reach fair agreements in the Midwest, such as with Oklahoma City, Denver, and Dallas bakery employees, but the union is uninterested in negotiating similar deals in the Southeast? And why is it that the employees of these Midwest bakeries and elsewhere now must endure picket lines from the Southeast where the union will not even negotiate our offers that are comparable to the Midwest.

"Some pickets have told the media that they have concerns about mandatory overtime. We have attempted to address these issues in the past and welcome the opportunity to do so again. In Fort Payne, turnover of low-seniority employees and a tight labor market are challenges, and we are seeking ways to address them. We attempted to address other solutions more than a year ago that were identified in a report from a joint company-employee task force, but the union refused to even discuss these ideas. In our other bakeries, we will need to agree on creative solutions to overcome fluctuations in the weekly cycle of our business -- where we need additional production to support weekend orders and sales -- and the seasonal nature of our business, particularly the high demand for buns in the summer. Achieving the operational flexibility to address overtime would generate benefits for employees and the company."

Strike Background

In addition to Fort Payne, eight primary strikes are under way -- in Memphis, Chattanooga, and Nashville, Tenn.; Mobile, Ala.; Atlanta; Louisville, Ky.; Chicago; and Des Moines, Iowa.

Sympathy picket lines have been established at 12 other bakeries -- Meridian, Miss.; Owensboro, Ky.; Dallas and Paris, Texas; Oakland, Stockton, Sacramento and Fresno, Calif.; Milwaukee; Oklahoma City; Denver; and Wichita.

A secondary strike is under way at Earthgrains' refrigerated-dough plant in Forest Park, Ga., which operates as part of a separate division and has a current contract.

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. The BCTGM International Union urged employees at those bakeries 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 has been used to settle contracts.

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.