Conservatives are leaping at the Hostess liquidation as affirmation of their anti-union worldview. Organized labor is killing Twinkies and 18,500 jobs, thus shafting the little guy.
Hostess certainly didn't shaft the big guys who drove the company into the ground:
[Bakery, Confectionery, Tobacco Workers and Grain Millers International Union] members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256 [press release, BCTGM union press release, 2012.11.13].
The union also notes that those well-fed CEOs have already unilaterally withheld $160 million in promised pension contributions over the past year while failing to right the company's fiscal ship. That mulct comes on top of the $100 million worth of concessions workers accepted during Hostess's first bankruptcy in 2004. Hmm... any Romney-Ryan/Rand readers want to construct a givers-and-takers narrative here?
Only $2,550,000! Damn unions.
So far I've seen both sides of the aisle have valid points. Just like any other issue of this type its likely multiple factors lead to the demise of Hostess. Specific to the pay-raise for top leaders at the company that appears to be more of a money-grab before the company dies. This un-ethical approach shows that leadership may have failed to direct the company in the proper direction. However the unions have made it very difficult for Hostess to make any changes. I would say there is an equal amount of blame to go around between the unions and leadership. But we will never know the answer, because both sides of the issue will continue to only look at their side.
Yep, the cause of Hostess's troubles was with it's workforce.
Had nothing to do with mismanagement, poorly structured debt from vulture capitalists, lost market share, shifting consumer demand, deferred operational maintenance...nope. Nothing to see here...it was the unions fault.
For the record, the Teamsters Union did vote to accept the concessions while the Bakers union chose to call the company's bluff. A move that was successful the last time poor management forced Hostess into bankruptcy.
The president of the Teamsters had this to say: "Our members have already given at the well, and this time it will take sacrifices among all parties - management, lenders, equity holders and employees - to restructure Hostess into a viable enterprise that is well-positioned for future growth."
I'm not sure if Ripplewood Holdings (the private investment firm that owns Hostess) even tried to get their investors - General Electric's (GE) GE Capital division, Monarch Alternative Capital and Silver Point Capital- - to make concessions. It doesn't look like it.
Not surprisingly, there is no information on what sacrifices management, lenders, equity holders were willing to make. But then, as we see on the national scale, some people believe that sacrifice is good, just not for themselves.
http://www.thestreet.com/story/11372755/1/twinkie-maker-hostess-files-for-bankruptcy.html
http://www.washingtonpost.com/national/on-leadership/why-didnt-hostess-workers-believe-the-threats/2012/11/16/0638138e-302f-11e2-a30e-5ca76eeec857_story.html?tid=pm_pop
should do a little research on who heads the holding company and the full statement from the Teamsters. I did.
Here's probably the best read on the demise of the Twinkie...which was once thought to have the half life equal to radioactive material.
http://management.fortune.cnn.com/tag/ripplewood-holdings/
Good read, Jana. There is blame to go around, but my friend the route driver (a teamster) had already received his $110/week pay cut and stayed on the job. Now he's out of a job. You can't really fault the Teamsters too much for trying to protect people's pensions even while agreeing to painful pay cuts for members. And with executives grabbing all they could until they got caught you can't fault the unions for a lack of trust in management. In the end the bakers union may have miscalculated by not agreeing to some cuts.
But you have to question whether Hostess had a long-term future even if the unions had completely sold out their members (they didn't and shouldn't have). Besides twinkies, Little Debbie makes all the same things as Hostess and sells them for a fraction of the price Hostess charges. Looking at the 2 racks at the convience store, the products looked the same so I always bought the Little Debbies and saved 30-50%. Between deliveries, the Little Debbie rack always ran out of product, and the Hostess rack remained mostly full. Maybe the demise of Hostess was a foregone conclusion based simply on competition.
Oh, no. How long will it take for all of the references in the Williams and Ree song to be lost to history. They lyrics to this classic:
He was eating Twinkies, as he drove along the highway
Listening to Merle Haggard and his band
He didn't see the semi, as he came around the corner
And he died with his Ding Dong in his hand!
Oh yes he died with his Ding Dong in his hand
He scattered cream filled cupcakes 'cross the land
One of life's great big no-no's,
He was reaching for his Ho-Ho's
And he died with his Ding Dong in his hand
He was a country singer, who was eatin' Zingers
As he sang with a red-hot country band
The band was really smokin', 'til the singer started chokin'
And he died with his Ding Dong in his hand!
Yes he died with his Ding Dong in his hand
That last song he sang was really grand
He thought he was the mostest, 'til he bit that big fat Hostess
And he died with his Ding Dong in his hand!
Yes, he died with his Ding-Dong in his hand
He scattered cream-filled cupcakes 'cross the land
Well, I hope and I pray that when I reach that fateful day,
I will die with a great big humongous Ding-Dong… or a severely large Suzy-Q… maybe some of them powdered doughnuts that they leave out on the shelf at the local stop & rob for about three years… in my hand.
I intend to die with charred pink slime on my plate and cold green fizz in my cup.
If the unions try to kill those two foundations of my happiness, it'll mean war.
In my many years owning and managing businesses, the workers and unions have never been the fault. The managers of the business have caused ALL failures. Weak managers cause the need for unions.
A baker with Hostess lays out what the best and final offer was:
1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don't have it now then you never will.
Here's his pay history and forecast
$48,000 in 2005
$34,000 in 2011
$25,000 in 5 years if he took their offer.
Yep, those unions are the thugs that are wrecking everything...
From: http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery
Smells like Suzy Q's Twinkies:
http://www.businessinsider.com/twinkies-are-saved-hostess-and-bakers-union-agree-to-mediation-2012-11
More Hostess malarkey. (Thank you Joe Biden)
"Hostess Brands, the maker of sweet snacks like Twinkies that filed for Chapter 11 bankruptcy protection last week, will ask a bankruptcy judge today to approve a plan that will allow it to pay $1.75 million in bonuses to 19 of its executives."
http://thinkprogress.org/economy/2012/11/19/1215811/hostess-executive-bonuses/
Yep Jana, It looks like what John Morrell did a long time ago. Drive out the existing employees and replace them with sub-living wage workers. Executives rewarding themselves at a time of bankruptcy and layoffs is just icing on the twinkie. Stockholders get the shaft. Employees get the shaft. Creditors get the shaft. Executives get raises despite running the company into the ground. What's wrong with this system!? I hope President Obama uses his second term to take on these predators who are destroying America.