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.