Kellogg and union officials have signed an agreement on employment conditions at four cereal plants in the US that will see the sites remain open, months after the Special K owner said there could be closures.
The cereal giant and the Bakery, Confectionery, Tobacco and Grain Millers union yesterday (3 August) announced the ratification of a five-year master contract that covers plants in Battle Creek, Lancaster, Memphis and Omaha.
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Around 1,300 employees are covered by the new contract, which Kellogg said will allow it to further invest in innovation and the growth of its brands.
In February, Kellogg warned "at least" one breakfast cereal plant in the US would close if staff not agree to changes to working terms and conditions.
The threat came after members of the BCTGM union voted against the Kellogg's proposals, which included changes to holiday eligibility and healthcare plans.
"We are pleased we were able to work with the BCTGM to agree on a contract that helps ensure our US plants will continue to be more competitive in our global manufacturing network," Alistair Hirst, enior vice president for Kelloggs global supply chain, said.
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By GlobalDataKellogg said the new contract "narrows the gap" in labour costs between the company's locations across its manufacturing network and in the industry. It insisted the deal included "significant concessions on future healthcare costs" but added there will be no retiree health care for new staff.
Addressing the announcement today in a conference call discussing Kellogg's first-half results, chairman and CEO John Bryant said the contract was a "very good" one.
"It allows us to be more cost competitive, gives us operational flexibility going forward, it has us holding the number of cereal plants we had open today, open but we have flexibility within that to change the scheduling and production of cereal based on what we need to produce for the category," he said.
The firm today reported underlying second-quarter sales that beat analyst forecasts and, despite posting lower half-year revenue and profits, it insisted trends in its US cereal business were improving.
