K Sign

Kellogg Execs Looking For ‘Reasonable’ Solution to Strike

Nov. 4, 2021
Costs from the work stoppage are among the reasons the company is sticking to its profit guidance despite lifting its sales forecast.

Kellogg Co. executives on Nov. 4 said they are raising their fourth-quarter sales guidance but keeping their profitability outlook where it is in part because of costs related to the strike by its U.S. cereal workers.

Members of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union walked out of their Nebraska, Michigan, Pennsylvania and Tennessee plants Oct. 5 after saying they’d been asked to make concessions on health care, retirement benefits and other components of their contracts. Kellogg officials said soon after that the union was misinterpreting the company’s contract offer and that they would continue production as best they could.

Speaking to analysts and investors Nov. 4 after reporting third-quarter earnings, Chairman and CEO Steve Callihane and CFO Amit Banati repeatedly used the word “reasonable” to describe the outcome the company is looking for. Calihane said the Kellogg offer adds to compensation levels that are already among the highest in the industry and doesn’t ask workers to take anything away from their current contracts.

“We think a fair resolution should be in the offing,” Callihane said. “We want to get to a negotiated settlement and get back to work.”

Callihane added that, with the Oct. 5 contract approaching and year-long talks not producing a new agreement, the company had taken steps to be able to continue cereal production. Those included bringing in white-collar and outside workers and trying to build inventories ahead of time. The cereal plants, he said, are “gaining productivity each and every day.”

Kellogg posted a third-quarter profit of $305 million, down 13% from the same period of 2020, on sales that rose nearly 6% to $3.6 billion. Callihane said his team now expects net sales to rise between 2% and 3% this year, up from its previous guidance of a small increase.

See also: ‘Striketober’ Comes Out Swinging

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