Kellogg initiates lockout at Memphis cereal plant

by Eric Schroeder
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BATTLE CREEK, MICH. — A little more than a week after idling a cereal plant in Memphis, Tenn., the Kellogg Co. on Oct. 22 locked out employees at the facility. Kellogg and the facility’s employees represented by BCTGM Local 252G have been bargaining for a new labor contract at the Memphis plant since Sept. 17, but negotiations stalled and the contract expired on Oct. 20.

Kellogg gave the union an ultimatum on Oct. 16 to accept the company’s “last/best” offer or be locked out of the Memphis plant.

In the last/best offer, Kellogg said its ready-to-eat cereal network has “significant excess capacity,” and the market for R.-T.-E. cereal “is challenging, margins are declining, costs are up, and there are significant competitive pressures from other cereal manufacturers.”

Additionally, Kellogg said labor costs at its U.S. R.-T.-E. facilities are “substantially above its competitors.” The company laid off about 70 employees in August.

“These are significant challenges that Kellogg needs to address promptly,” the company said. “The Memphis plant is currently not the low-cost producer of many products, and Memphis has already felt the impact of that fact. Recently, Kellogg made the business decision to move two lines out of the plant. Kellogg would like to reverse this trend and believes that Memphis can become more competitive — not only when compared to external competition — but also within Kellogg’s R.-T.-E. cereal network. A more competitive plant is the best job security.”

The union has refused to accept a company proposal that workers said amounts to introducing a two-tiered wage scale that would cap new workers’ wages compared to what veterans earn.

When Kellogg idled the facility earlier this month, Kris Charles, a spokesperson for Kellogg, said the plant would be down for about three weeks. Kellogg makes a variety of cereals at the Memphis plant, including Apple Jacks and Froot Loops.
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READER COMMENTS (6)

By Ruthie House 12/13/2013 11:10:35 AM
If Kelloggs would us the plant at its maxium production capability and not let lines set idle they would be a competitive production plant. Corporate kelloggs not telling the whole story.

By terry Strain 11/1/2013 9:29:24 PM
The treatment of these union employes is not so GRRRREAT! Memphis employees are fighting for all of the employees that the union represents! All employees at the other plants should walk out! Or, do as little of work as possible until this is resolved. Boycott now! Negotiate on the items the local can, not master contract items that was done earlier in the year.

By Jerry House 10/28/2013 5:30:26 PM
For those which do not understand how the process works. Labor forfeited past wage increases for their benefits. Mexacali, Mexico now produces cereals once produced here. Memphis prior to NAFTA was a low cost producer Imported to the USA.

By Melissa 10/24/2013 11:53:00 PM
Health insurance cost for the employees? Battle creek employees pay $ 0 for their insurance with a $0 copay and a $0 deductible and the retirees get the same free benefits. Oh ya they pay $ 10 for prescriptions.in addition They get paid on avg $ 20 per hour. Company match 401k union pension and buy stock at discounted rate. But yes kellogg company is taking advantage and screwing the employees.

By Nanette Carnes 10/23/2013 3:13:21 PM
This is a 13 billion dollar a year company with only 1400 union cereal employes. These brave workers in Memphis are fighting for future people that they do not even know yet. They are fighting for the middle class and fairness in business practices.

By Sharon Craven 10/23/2013 3:10:51 PM
No more Kellogg's in my home till Kellogg's honors there employees and end the lockout.