Union President Anthony Shelton said Kellogg’s workers have been “working long, hard hours, day in and day out” to produce cereal for American families, but that the company has responded by cutting benefits and threatening to send jobs to Mexico.
“Kellogg is making these demands as they rake in record profits, without regard for the well-being of the hardworking men and women who make the products that have created the company’s massive profits,” Shelton said in a statement.
Kris Bahner, Kellogg’s senior vice president for global corporate affairs, expressed disappointment in the union’s decision to strike. The company had offered a contract that increases pay and benefits for employees “while helping us meet the challenges of the changing cereal business,” she said.
“Our proposals not only maintain these industry-leading levels of pay and benefits, but offer significant increases in wages, benefits and retirement,” Bahner said.
It’s the latest strike involving a national food brand and BCTGM. In July, Frito-Lay workers in Topeka, Kan., staged a 19-day walkout amid complaints about forced overtime and 84-hour workweeks. In early August, a standoff over work hours and benefits prompted Nabisco employees in five states to leave their posts.
The strikes come at a time of strong demand for at-home foods. Kellogg’s chief executive Steven Cahillane told investors in early August that demand for at-home foods, which include its flagship brands, remained elevated in the most recent quarter, although consumers are gradually doing dining out more often.
The company’s sales nearly matched last year’s figures, but both years showed a substantial increase over 2019.
“Comparing to pre-covid 2019, we realized another quarter of strong organic top-line growth and operating profit growth, as well as improved cash-flow generation,” Cahillane said.
But the company has been racked by supply chain problems in the United States and elsewhere. The industry also is up against a labor shortage, chief financial officer Amit Banati said during a recent call with investors. Not only is it having a tough time filling factory jobs, there are not enough drivers to meet the company’s national and international freight needs. All of it adds up to higher prices and disrupted operations.
“It’s impacting the entire supply chain,” Banati said.
Cahillane told investors that one way around those problems is to pull more from existing assets. “We’ve been working hard at productivity and looking for every area where we can be more efficient,” Cahillane said.
When asked by investors how inflation and higher supply chain costs are eroding profits, he acknowledged that the problems could persist well into next year.
“There’s certain things that are clearly going to unwind ― containers will eventually find their rightful places in the world, labor shortages should mitigate,” Cahillane said. “But it’s hard to predict, and we’re planning for an ongoing challenging cost environment well into next year.”
At the Kellogg’s cereal plant in Lancaster, Pa., that means longer hours and too few days off, according to people who work there.
Kerry Williams, an instrumentation repair technician at the Lancaster plant who doubles as president of the local union, said employees are being forced to work 12- to 16-hour days, seven days a week. Aside from a few weeks when he was on vacation, Williams said he has worked every weekend in 2021. Workers want more time with their spouses and families, he said.
The company “keeps the staffing short, so in order to fulfill the productivity they need, that means longer hours,” he said. “The biggest thing we’re seeking is for them to hire up to the numbers that we need to run the plants.”