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Food Giant Kellogg's faces strike issues


Any lovers of cereal may shudder with fear as Kellogg’s workers continue a now nearly three-month-long strike. The company, one of the largest in the cereal market, has struggled to cope with increasing numbers of employees striking and expects to have to rely on loans to continue through what could be several more months of crisis.


Most of the packaged food industry has struggled with supply chain disruption and inflation. Kellogg’s in particular was already struggling to keep up steep costs driven up by global supply issues. This has put a dent in the companies profit margins, however, prior to the two incidents, Kellogg accounted for nearly twenty per cent of their entire market. As per usual, this meant Kellogg’s workers expected their wages to rise and were somewhat irritated when they didn’t.



Barclay’s analyst Andrew Lazar has stated “We [Barclay’s] believe the impact of the strike could well persist for several months or longer and require sizeable investment to repair.” This appears true, Kellogg has now hired temporary workers to fill the places of those on strike. These will cost more than the striking workers, as they will not be as experienced as their predecessors. However, Kellog is facing some of the highest input cost pressures in their area, and are reluctant to allow a wage for such a large percentage of their workforce.



On Thursday, Kellogg announced their fourth-quarter results, with net income estimated to be around $272.48 million, higher than the $208 million reported last year. This suggests Kellogg is making some ground towards recovering from the effect the pandemic had on the profits of all businesses. However, since the strike, Kellogg has seen its profits decrease, and it appears Kellogg is unlikely to give in to the workers on strike.

 

Written by Adam Caudle

Research compiled by Kristina Njeru

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