- On Jan. 9, 520 workers at the General Mills in Cedar Rapids, Iowa voted to join the Retail, Wholesale and Department Store Union’s (RWDSU) Local 110 union. This union also represents workers at the Quaker Oats factory in Cedar Rapids.
- These workers — who handle production, sanitation and maintenance at the facility — will now be represented in contract negotiations as they work to retain their jobs and benefits in the uncertain food manufacturing environment.
- "We’re extremely happy for the vote these courageous workers took today and that they believed in making their voices heard for change and we’re equally honored they believed in RWDSU, Local 110 to represent them. We also look forward to begin building a positive working relationship with the company and the continuance of good paying full time jobs in Cedar Rapids for many years to come," Roger Grobstich, vice president of RWDSU, said in a release.
As a growing number of mainstream shoppers leave the center store for trendier, better-for-you products on the perimeter, General Mills has been struggling to adapt. In its most recent earnings report, General Mills reported net earnings of $343 million — a 20% decrease from last year. The company also missed analyst expectations and its operating profit dropped 23% from the year before to $547 million.
These numbers highlight how the CPG company has had to make some tough choices during the last several quarters as it works to lift its North American profits. One of those choices was for General Mills to cut 625 jobs. The company stated that the move was part of its global cost savings initiative to reduce administrative costs and "align resources behind growth initiatives." Those growth initiatives could come in the form of acquisitions of products that customers are craving. The extra cash could also be used to grow the company's marketing spend. But significant job cuts cause concern for employees across the company.
Other companies have had similar recent cost cutting measures. Kellogg improved its topline growth through its Project K workforce reduction initiative, intended to generate $425 million to $475 million in annual cost savings by this year. Similarly, other food and beverage companies and grocers — such as Coca Cola, General Mills, PepsiCo, TreeHouse Foods and Kroger Co. — have had to slash jobs or close plants in efforts to be more profitable.
With job cuts actively occurring and cereal sales looking soggier, it’s no surprise that the workers at the Cedar Rapids plant that produces cereal, frosting and fruit snacks are seeking shelter in a union. Joining a union ensures that even as cuts are being made within a company, members can negotiate to be guaranteed their paid time off and fair wages as long as they are employed. Although it seems like more manufacturing working would join unions for this level of security, BLS data shows the union membership rate was 10.7% in 2017 — down from its highest level of 12.3% in 2008.
Howard Dorman, a partner and practice leader in the Food and Beverage group at Mazars, told Food Dive that the reason for this small membership is that corporate benefits have gotten better.
"(Corporations) all pay above market, they get really good benefits, they get treated really well," Dorman said of his clients. "I’m not saying the unions are a bad thing, but it’s got to be for the right reason because as soon as the union gets involved, things change and it gets very expensive."
And more expensive workers might not be helpful for General Mills’ bottom line. A local news station reported that before the worker vote, General Mills management said it did not think the workers would be best served with a union bargaining collectively.
The question now is if other manufacturing facilities will follow suit in an effort to maintain their jobs in the face of cuts. That might not be likely, but instead, current employees could do well to pay attention to where a company is investing. General Mills said in its latest earnings release that it will continue focusing on its long-term goals of stronger innovation and reshaping its portfolio with acquisitions and divestitures. If employees can align themselves with future acquisitions they stand a better chance of sticking around for the long haul because their efficiency and know-how could give General Mills that competitive edge it needs to boost its bottom line.