Battle Creek's concentration in the cereal industry is known throughout the world. In addition to putting Battle Creek on the map in the minds of million of children and grown-ups worldwide, the cereal industry has generated thousands of good-paying jobs and economic stability. The industry employed approximately 11,000 workers in 1995 accounting for 3.6 percent of the region's total employment and nearly 16 percent of its total manufacturing employment force. In addition, the industry earnings are 55.6 percent above the region's average.

The industry's economic linkages have weakened in the past year as the cereal producers have contracted the production of cereal boxes to facilities outside of the region. Post closed its carton manufacturing operations and last year Kellogg ended its multi-million dollar contract with Fort James' Kalamazoo's plant. Still, for every 100 workers hired at the area's food products producers, another 167 individuals are employed by other industries in the region.

Cereal will remain an integral part of the region's economy. Kellogg has spent millions of dollars upgrading its Battle Creek plant and completed construction on its $75 million W.K. Kellogg Institute for Food and Nutrition Research. On the labor front, Battle Creek's Post Cereal plant is cutting a new course for union-management cooperation by agreeing to a 15-month trial contract that establishes "interest-based," problem-solving teams who will reexamine work rules and work toward enhancing productivity growth in the plant.

Still, the industry faces a mature market in North America where more and more individuals simply do not have the time for breakfast. Discount store brands are cutting into sales of the major producers. New cereal products for new meal times may be the ticket to greater sales but so may be reduced prices which will demand substantial productivity improvements and aggressive cost-cutting measures. International markets hold promise. However, they are often best served by moving production to the market.

Benchmarking: How Do We Compare?

The region's food industry lost ground to its national competitors between 1986 and 1996 period. While earnings grew by $92.4 million during the 10-year period, they would have grown an additional $52.3 million if the region's firms had kept up with their national counterparts. The major source of the region's problems is that the cereal market has experienced both little growth and intensive competition due to the introduction of improved quality store brands. Compared other metropolitan areas with large food industries, the Kalamazoo-Battle Creek region did not perform as well in terms of earning growth. Ours increased 29 percent while Green Bay enjoyed 69.4 percent and Madison 53.3 percent. This relative ranking does not take into account the much larger size of the region's food products industry compared to those in the other MSAs.

A cluster working group process was not convened for the Food Cluster. Members of this cluster are participating in some of the Flagship teams and discussions are under way to have them join the Chemical/Pharmaceutical cluster.