Woke Kellogg's Stock Tanks as Labor Talks Go Soggy
Share of the cereal maker Kellogg dropped sharply Wednesday morning after the company’s talks with its labor union fell apart and workers decided to continue striking.
Shares of Kellogg fell 2.4 percent despite the S&P 500 holding near flat for the day.
Investors have reasons for concern. The company has said it would hire permanent replacements for striking workers but that may be easier said than done. The Labor Department said that employers had 11 million open jobs in October, a record high.
Rutgers University professor Todd Vachon, who teaches classes about labor relations, said he’s not sure the company will be able to hire enough workers to replace the ones who are out on strike in the current economy, and Kellogg’s may have a hard time finding people willing to cross a picket line.
“By voting ‘no,’ the workers are making a strong statement that they are not satisfied by the agreement, but they are also signaling they believe they have the leverage that’s needed to win more,” Vachon said.
If Kellogg cannot attract workers to replace the unionized employees, it could have trouble keeping up production in the months ahead. The company also face inflationary pressure that has pushed up the costs of the ingredients of its products.
Kellogg shares have badly lagged the market over the past 12-months. Shares are down 1.3 percent from a year ago while the S&P 500 is up 26.6 percent. Five years ago, Kellogg blacklisted Breitbart News, saying the news organization did not represent its values. Shares have fallen 15.6 percent since then while the broader market has doubled in price.
On Wednesday, Kellogg also lagged behind rivals General Mills, Mondelez, and Conagra.
The company’s sales are at risk of political backlash as it fights with union workers to keep down their wages. Already reviled by the American right for the campaign against Breitbart, it now risks alienating pro-union Democrats and politically independent pro-worker economic nationalists as well.
The company is effectively controlled by a far-left foundation. The W.K. Kellogg Foundation is the seventh-largest philanthropy in the United States, distributing hundreds of millions of dollars in grants. It was founded by cereal magnate W.K. Kellogg after his grandson ran into difficulty getting adequate healthcare in small-town Michigan despite the family’s wealth. “Use the money as you please so long as it promotes the health, happiness and well-being of children,” Kellogg told the foundation’s trustees.
In recent years, however, the foundation has been captured by left-wing activists. It has donated billions to left-wing causes and liberal think tanks, according to a report by the Capital Research Center. Five years ago, the Kellogg Company called for a blacklist of Breitbart, saying that the news organization did not reflect its values. This prompted a #dumpkellogg’s boycott in response that AdWeek described as inflicting huge damage to the company’s reputation.
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