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Kellogg to Replace 1,400 Striking Workers Amid Supply Constraints

The nine-week strike has contributed, along with supply chain issues, to in-store shortages of some of its popular cereals.
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Kellogg (K) - Get Kellogg Company Report wants to make sure consumers can still fill their bowls with Frosted Flakes, Froot Loops, Rice Krispies, and other favorites as it struggles with a worker strike at four of its plants as well as supply chain issues.

Roughly 1,400 workers have been on strike since October which, along with supply chain disruptions, has led to product shortages. The company has started hiring replacement workers to permanently replace the striking workers in order to avoid further in-store shortages.

Workers at four of the company's cereal plants in Battle Creek, Michigan, Omaha, Nebraska, Lancaster, Pennsylvania and Memphis, Tennessee rejected the company's five-year contract offer, reportedly due to caps on the earnings of new hires.

"After 19 negotiation sessions in 2021, and still no deal reached, we will continue to focus on moving forward to operate our business," said Chris Hood, President, Kellogg North America."The prolonged work stoppage has left us no choice but to continue executing the next phase of our contingency plan including hiring replacement employees in positions vacated by striking workers."

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Kellogg Can't Make a Union Deal

Negotiations apparently fell apart over the weekend after the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union (BCTGM) reached a tentative agreement with Kellogg's last Thursday. 

By Tuesday, after a vote on Sunday, the union announced that it was rejecting Kellogg's contract, despite the tentative agreement reached days prior. 

Kellogg has come under fire on social media as SimplyWallStreet reports that Steve Cahillane, Kellogg CEO and chairman, saw his total compensation jump 20% in the 12 months ended January 2021 to about $12 million. 

When workers first began their strike nine weeks ago, they said that year-long negotiations came apart due to issues like health care and retirement benefits as well as the company's alleged threat to offshore jobs to Mexico. 

Kellogg stock is up 2.85% year-to-date.