Kellogg's Delivers Ultimatum to Battle Creek

Snap, crackle, pop. Kellogg's, the leading cereal maker in the U.S. is stirring up trouble at its birthplace in Battle Creek, Michigan.

Kellogg's wants Battle Creek City - the company's home for the past 76 years - to annex the nearby Battle Creek Township. Battle Creek City holds 35,000 people; the Township has 21,000. Kellogg's claims that a merger is necessary to secure a stable economic environment.

But Kellogg's has been none-too-subtle about imposing its tastes. On May 26, Kellogg chairman William E. LaMothe gathered together the area's leading elected officials and prominent businessmen and issued an ultimatum: merge the communities, or else. LaMothe threatened to pull Kellogg's corporate headquarters out of Battle Creek unless the municipalities bowed to the company's wishes. "A fundamental change in the political structure of the community must be made," LaMothe said, according to a press release the company issued.

The Kellogg's threat has shaken up Battle Creek and polarized the communities. If Kellogg's moved its headquarters, the towns would lose 700 jobs, $23 million in salaries, and the prestige of playing host to the giant corporation. A more ominous threat looms. Kellogg's might shutdown the Battle Creek cereal plant, the company's first and largest factory, employing over 3000 workers. There is a "potential for future move out of the plant" if the headquarters leaves, admits company spokesperson Joe Stewart.

Citizen groups have sprung up on both sides of the issue, waging publicity campaigns to get their respective views heard. City and township residents will vote on November 2 to decide whether they will go along with the Kellogg's proposal. If passed annexation would become official January 1.

"We must join together if we are to compete in the real world for jobs, growth, and cultural progress!" proclaims the Citizens to Save Our Community. The group, whose slogan is "Unify and Grow," has circulated a pro-merger petition, presented a slideshow, and distributed yard signs, buttons, bumper stickers, pins and pamphlets.

"Bigger does not mean better! Bigger does not mean cheaper;" counters the Citizens to Continue Battle Creek Township. This organization claims the merger would boost taxes, increase the cost of the town's public goods, such as water, sewers, police and fire protection, and drive out some residents and small businesses. The "anti" group is using pamphlets, radio advertising, and daily phoning of the township's registered voters in its campaign arsenal.

Kellogg's claims that its merger proposal is a necessity. "We want to stay here, but you can't make a financial investment where you know it's going to depreciate," explains Kellogg spokesperson Joe Stewart. Kellogg's intends to build a $30 million headquarters building to replace its old one, which is too small for the company's needs, Stewart says. The question for Kellogg's was where to build the new headquarters.

"We had two options," notes Stewart: either "pull out of here" to a "sound" place where "building and property values would have a chance to appreciate," "or take a look around here and see what we could do to improve the situation."

Stewart cites "the fragmentation" caused by competing local governments as one cause of the "economic decline" that has hit the area - which faces a 15.6% unemployment rate. "It's a frustration when you want to get a major economic process started," says Stewart. The company decided the area "could no longer afford all the fighting that goes on between the local governments." Stewart says it took the municipalities five years to decide to build a suburban mall and 26 years to consolidate the railroad routes that lead into the city.

Kellogg's claims altruistic motives for its demand. We are not trying to bring "benefit to us but to the whole area," says spokesperson Stewart.

The citizen group opposed to the merger denounces the "corporation's threat." Kellogg's is "using hard times to accomplish something that the governmental units have said NO to since 1926," says one of their leaflets.

"When corporations take over and demand economic growth (according) to their ideas, that's fascism!" protests Stan Canfield, a Battle Creek Township trustee opposed to the merger. Canfield sees the proposal as "a takeover by the power structure that Kellogg's has developed."

Canfield argues that Kellogg's reasoning is full of holes. "Jobs are leaving here by the hundreds because of Michigan's economy rather than the political system," says Canfield.

"Kellogg's is crucial to the area," admits Tom Ewing, treasurer of the citizen's group fighting Kellogg's. "It would be devastating if they leave." Still Ewing thinks the merger is a bad idea because it would raise taxes for township residents. "You've got people who can't afford" the increases, says Ewing. "What's going to happen to them?"

"The issue is short-term tax increases (for township residents) considered against long term economic growth for all residents of the Greater Battle Creek Area," concludes an economic impact study commissioned by Kellogg's. The study claims the economic development fund would create 35 new businesses and 1,835 jobs. But annexation opponents say "the money in this fund is from Battle Creek Township taxpayers. "

For all the bitterness that Kellogg's has created, the company has received praise for the openness with which it has discussed its plans. "Kellogg's is doing us a favor," city manager Gordon Jaeger states. "Most companies when they decide to move, they just move. Here, they've given us an opportunity to change to meet their needs."

Kellogg's triumphed on November 2. The Battle Creek City voters okayed annexation by an 11 to 1 margin. In the Township, annexation also passed easily, getting 65% of the vote.

"It's pretty tough to come against a corporation of this size with 15% unemployment," comments annexation critic Stan Canfield, but "we gave them a heck of a fight."