Jennifer Bowman

Battle Creek Enquirer

Kellogg Co. said it "must take steps now" to sustain its cereal business after union employees overwhelmingly struck down proposed changes to their labor agreement over the weekend.

Only 21 of 1,289 votes cast last week were in favor of the proposal, said Trevor Bidelman, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Local 3G in Battle Creek. The proposed contract would have affected employee health care benefits and wage adjustments for employees at the company's four U.S. cereal plants — in Battle Creek, Memphis, Tenn., Lancaster, Pa., and Omaha, Neb. — as Kellogg grapples with poor cereal sales.

Employees will continue to work under the current master contract, which expires in October 2015. But rejection of the proposal may leave uncertain the future of the cereal plants.

About 400 employees work at the Battle Creek plant at 425 Porter St., Bidelman said.

In a statement, Kellogg said it continues "to believe that this agreement represents a path forward together to stabilize and sustain our cereal business and allow U.S. (ready-to-eat cereal) to be more competitive across our Global Supply Chain network."

"The reality is that significant challenges remain — the (ready-to-eat cereal) category continues to decline and that leaves us with far more production capacity than we need in our U.S. cereal network," company spokesperson Kris Charles said in the statement. "While we firmly believe that we can build a sustainable future for this business, we must take steps now to begin that process.

"For our employees and for this company, we remain committed to the sustainable future of this business and focusing together on producing the high-quality, nutritious foods that give people a better start to their day."

In a letter to employees last week, BCTGM International President David Durkee said before the settlement proposal was developed, a "top Kellogg executive" told him the company was set to announce the closing of two U.S. cereal plants. Kellogg would not say which plants, he said.

"If the Agreement is not accepted on December 4th, I firmly believe that, with the excess capacity that currently exists, Kellogg will close one (ready-to-eat) cereal plant very soon," Durkee said in the Dec. 3 letter. "With the tonnage declines expected for the industry in 2015, it is highly likely a second plant will close shortly thereafter. Any capacity needs not met by the remaining two RTEC plants would simply be moved to their non-union plants in Mexico and Canada or dispersed into co-manufacturing networks."

The proposed contract — developed after discussions between Kellogg and the union in coordination with the Federal Mediation and Conciliation Service — was handed out to workers a week ago. Union employees at all four plants then met before their votes were collected and sent to Maryland for counting. Among the proposed changes were eliminations of cost-of-living adjustments and a leave-of-absence benefit, and requiring wage adjustments to be set in supplemental contract negotiations.

It also would have established transitional employees, "a special designation of regular employee with different terms and conditions of employment" who is part of regular plant operations, according to the contract proposal. They would be paid $18 per hour.

Any employee hired after Jan. 1 — considered regular or transitional — would not be eligible for retiree health care.

RELATED: Kellogg workers vent before vote on contract changes

RELATED: Kellogg cereal workers to vote on contract changes

The proposal would have allowed Kellogg to close a plant only "in case of an Act of God or in cases beyond the control of the Company." It would have retained the rights to determine output at each facility and announce a closure at any time, but the company would have been required to operate at least one production line at each cereal plant through October 2018.

The union argued the proposal would provide workers with "job security in the form of a restriction on plant closings for a minimum of four years." Kellogg also would have agreed to "good faith efforts to repatriate outsourced products" to the U.S. cereal plants.

Under the current master contract, Kellogg is required to provide the union "with the information pertaining to the contemplated change" at least two months before a plant closure decision has been finalized. Affected regular employees are eligible for severance pay.

On Monday, Bidelman said the vote results were not surprising.

"When companies make decisions like this, they already have this pre-determined," he said. "All they want is concessions on the way out. If they're going to a close a plant, they're going to close a plant. When you look at the cost of what we are, it's so minimal that I don't even think it has an impact on them.

"Instead of them coming to us and wanting to work with us on increasing efficiency, they would rather take from us. Which doesn't make any sense to me. To me, the whole idea of a company and a union is about working together for the betterment of each side. And when one side tries to take advantage of the other side, this is the kind of result you get."

Call Jennifer Bowman at 966-0589. Follow her on Twitter: @jenn_bowman