By Bye Hostess

[southparkcpa]

Originally Posted by intelligentjetsfan

Its affects are not as simple as saying that unions can not force other workers that don't want to unionize in to forcibly joining a union and getting their wages garnished.

A February 2011 Economic Policy Institute study found:

Wages in right-to-work states are 3.2% lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic variables as well as state macroeconomic indicators. Using the average wage in non-RTW states as the base ($22.11), the average full-time, full-year worker in an RTW state makes about $1,500 less annually than a similar worker in a non-RTW state.

The rate of employer-sponsored health insurance (ESI) is 2.6 percentage points lower in RTW states compared with non-RTW states, after controlling for individual, job, and state-level characteristics. If workers in non-RTW states were to receive ESI at this lower rate, 2 million fewer workers nationally would be covered.

The rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states, using the full complement of control variables in [the study's] regression model. If workers in non-RTW states were to receive pensions at this lower rate, 3.8 million fewer workers nationally would have pensions.

http://www.epi.org/page/-/old/briefi...ngPaper299.pdf

Unionization, in a private company is fine. the economics will dictate what happens as they have here. Simlarly, airline pilots controlling lives of millions barely make 6 figures. Why???? the industry can't pay it.

Imagine if pilots were employed by the Feds???? 20 years and full pension. An air traffic controller can out earn and need work only 20 years yet a pilot works basically into their late 50s.

[jetman67]

Originally Posted by Bonhomme Richard

18,000 people just lost their jobs a month before the holidays.

Just weeks before weed is legal and the value of Twinkies goes up.

[Frequent Flyer]

You can make a nice living as a parasite. On the down side, it only lasts until you have killed off your hosts.

http://moonbattery.com/?p=21205

[Trades]

All sides of the Hostess debacle are culpable not to mention market conditions and one thing the article didn't bring up is people are choosing healthier fare more often now such as whole grain, whole foods, less sweets, organics, etc. As the article asks, "Does anyone eat Wonder bread anymore?"

Who Killed Hostess?

Scott Shackford|Nov. 19, 2012 6:02 pm


Once upon a time, Hostess’ products – particularly Twinkies and Wonder Bread – had significant amounts of cultural recognition. They were once part of the largest commercial bakery in the world. They were once indelibly associated with the very idea of snack foods for both the Baby Boomer and Gen. X youths.


But the market has changed and Hostess really hasn’t. They are no longer culturally relevant in any market other than nostalgia. And whether they’ll be around to change is going to be up to whoever ends up in control of what’s left of its assets. After two bankruptcies over the past decade and a strike by bakery union workers, Hostess Friday said it’s liquidating its assets and shutting its doors, a move that could lead to firing of nearly 18,000 employees.


A judge this afternoon urged mediation between Hostess Brands and its unions to prevent a shutdown, but the company’s future remains very unstable, to be sure. As the possibility of Hostess’ demise grew, analysts made with the pointing fingers, calculating who, where, and how the bakery had been murdered, not unlike a game of Clue (another mid-to-late 20th Century nostalgia reference of limited modern day cultural presence).



The Bakers Union at the Negotiating Table with a Picket Sign
Hostess Brands cited its enormous pension debts and labor costs for its bankruptcy and stated the Bakery, Confectionary, Tobacco Workers and Grain Millers (BCTGM) Union’s refusal to negotiate reductions as culprit. Courthouse News Service looked over the latest bankruptcy filings and noted that eight of Hostess’ top 10 creditors are pension funds. It owes almost $1 billion to the Bakery & Confectionary Union & Industry International Pension Fund alone.


The Teamsters even turned against the bakers union, putting out a statement encouraging them to hold a secret ballot vote as total company meltdown approached to see if people really wanted to risk everybody's livelihoods:

Teamster Hostess members and all Hostess employees should know this is not an empty threat or a negotiating tactic, but the certain outcome if members of the BCTGM continue to strike. This is based on conversations with our financial experts, who, because the Teamsters were involved in the legal process, had access to financial information about the company.

Management at the Executive Suite with a Checkbook
Of course, the counter-narrative to blaming the unions is always executive greed, hedge funds, Wall Street, et cetera.
The BCTGM responded to the attempt to lay the blame on them with accusations of their own:

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.


BCTGM 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.


Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO's with no true experience in the wholesale baking business have left this company unable to compete or survive.

According to David A. Kaplan at Fortune, who wrote a lengthy and extremely fascinating look at Hostess’ financial situation back in July, many of those raises were proposed but never actually happened. In fact, the new CEO brought in earlier this year dropped the salaries for four top executives to $1 for the remainder of the year.
The union was correct about the failure of company leadership to improve factories and modernize. But some problems could be laid at both their doors:

Management promised to turn around the company's fortunes through innovation and workplace efficiency. It tried a limited-edition return of original banana-cream Twinkies and published The Twinkies Cookbook, which included such half-baked epicurean delights as Twinkie Sushi and Pigs in a Twinkie. But ancient delivery trucks and plant equipment didn't get replaced. The company's pricing often didn't keep pace with that of competitors. And Hostess still had ludicrous work rules: The Teamsters had separate drivers for deliveries of such goodies as Yankee Doodles and Nature's Pride Nutty Oat. (Of course this jobs-preserving work rule was agreed to by Hostess in the last labor negotiation.)

The Free Market at the Grocery Store with Competition
Kaplan points out further that the market was not enjoying their Ding Dongs the way it used to:

By late 2011, Hostess was getting, well, creamed. Its sales last year — $2.5 billion — were down about 11% from 2008 and down 28% from 2004. (Twinkies remain the best individual seller — 323 million of them in the 52-week period ending June 29, give or take a splurt.) Overall, Hostess lost $341 million in fiscal 2011, 2½ times the loss of the prior year — and by early 2012, primarily because of burgeoning interest obligations, its debt had grown to about $860 million.

There is so much competition now in the grocery store for bakery products, much more than in Hostess’ heyday. Does anybody actually still eat Wonder Bread?


Doug Mataconis at Outside the Beltway notes that maybe the days of Hostess are simply over, regardless of any debts, protectionist union agreements or creaky factories:

There’s no doubt that labor costs were a huge problem for the company, but it’s also clear that there were a number of other factors that appear to have contributed to their troubles. Among these are what seems to be a rather antiquated distribution system and the fact that consumer tastes have changed significantly over the years. Most importantly, these aren’t the 1970s when Hostess snacks were a ubiquitous part every kids’ lunch box, at least in my neck of the woods. (I was a fan of the fruit pies personally) The bread side of the business was likely suffering from the fact that that particular market is saturated right now and that a lot of grocery store consumers are preferring to purchase breads made fresh on-site rather than branded products. So, yes, the Union was the proximate cause of today’s decision to shut down the business but my feeling is that it would’ve happened anyway.

The Sugar Lobby in the Halls of Congress with Tariffs
The Christian Science Monitor, pulling from a Cato Institute report, questions whether America’s protectionist racket with sugar growers bears responsibility:

Since 1934, Congress has supported tariffs that benefit primarily a few handful of powerful Florida families while forcing US confectioners to pay nearly twice the global market price for sugar.


One telling event: When Hostess had to cut costs to stay in business, it picked unions, not the sugar lobby, to fight.
“These large sugar growers ... are a notoriously powerful lobbying interest in Washington,” writes Chris Edwards of the Cato Institute in a 2007 report. “Federal supply restrictions have given them monopoly power, and they protect that power by becoming important supporters of presidents, governors, and many members of Congress.”

Some food manufacturers have moved facilities to Mexico and Canada. While the assumption may be the move is to save money on labor costs, it allows companies to buy sugar on the world market for a cheaper price than they would in the United States.


If Hostess is either liquidated or sold, one of the big names being bounced around is Mexico’s Groupo Bimbo, which already manufactures and distributes Wonder Bread south of the border.


Rich People on Giant Yachts with Their Armies of Servants
Checking in from some other planet is alleged economist Paul Krugman, who participates in no actual analysis of Hostess whatsoever despite writing a column that is allegedly about it and instead engages in class warfare via nostalgia about how even the rich people during the ‘50s were so much better than the class of rich people we get today. Also unions had a lot more power:

Nor were high taxes the only burden wealthy businessmen had to bear. They also faced a labor force with a degree of bargaining power hard to imagine today. In 1955 roughly a third of American workers were union members. In the biggest companies, management and labor bargained as equals, so much so that it was common to talk about corporations serving an array of “stakeholders” as opposed to merely serving stockholders.

Eh, what? Hostess’ failure is almost assuredly in part to caving into the unions on unsustainable pensions and work protection regulations, a disaster that all sides played a role in. Is there anybody outside Krugman who thinks Hostess failed because the bakers union wasn’t powerful enough?

[Trades]

and just some more to prove that both sides were clueless...

Twinkies maker Hostess ready for its big bake sale
By CANDICE CHOI
AP Food Industry Writer








NEW YORK (AP) -- The future of Twinkies is virtually assured.
Hostess Brands Inc. got final approval for its wind-down plans in bankruptcy court Thursday, setting the stage for its iconic snack cakes to find a second life with new owners - even as 18,000 jobs will be wiped out.


The company said in court that it's in talks with 110 potential buyers for its brands, which include CupCakes, Ding Dongs and Ho Hos. The suitors include at least five national retailers such as supermarkets, a financial adviser for Hostess said. The process has been "so fast and furious" Hostess wasn't able to make its planned calls to potential buyers, said Joshua Scherer of Perella Weinberg Partners.


"Not only are these buyers serious, but they are expecting to spend substantial sums," he said, noting that six of them had hired investment banks to help in the process.


The update on the sale process came as Hostess also received approval to give its top executives bonuses totaling up to $1.8 million for meeting certain budget goals during the liquidation. The company says the incentive pay is needed to retain the 19 corporate officers and "high-level managers" for the wind down process, which could take about a year.


Two of those executives would be eligible for additional rewards depending on how efficiently they carry out the liquidation. The compensation would be on top of their regular pay.


The bonuses do not include pay for CEO Gregory Rayburn, who was brought on as a restructuring expert earlier this year. Rayburn is being paid $125,000 a month.


Hostess was given interim approval for its wind-down last week, which gave the company the legal protection to immediately fire 15,000 union workers. The company said the terminations were necessary to free up workers to apply for unemployment benefits. About 3,200 employees are being retained to help in winding down operations, including 237 employees at the corporate level.


The bakers union, Hostess' second-largest union, has asked the judge to appoint an independent trustee to oversee the liquidation, saying that the current management "has been woefully unsuccessful in its reorganization attempts."


Hostess had already said last week that it was getting a flood of interest from potential buyers for its brands, which also include Devil Dogs and Wonder bread. The company has stressed it needs to move quickly to capitalize on the outpouring of nostalgia sparked by its liquidation.


"The longer these brands are off the shelves, the less they're going to be valued," Scherer said Thursday in U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y.


Last week, Scherer had noted that it was a "once-in-a-lifetime opportunity" for buyers to snap up such well-known products without the debt and labor contracts that would come with the purchasing the entire company. Although Hostess sales have been declining over the years, they still clock in at between $2.3 billion and $2.4 billion a year.


Scherer also said a surprising number of potential buyers have expressed interest in most of its three dozen factories.


The company's demise came after years of management turmoil and turnover, with workers saying the company failed to invest in updating its products. In January, Hostess filed for its second Chapter 11 bankruptcy in less than a decade, citing steep costs associated with its unionized workforce.


Although Hostess was able to reach a new contract agreement with its largest union, the Teamsters, the bakers union rejected the terms and went on strike Nov. 9. Hostess announced its plans to liquidate a week later, saying the strike crippled its ability to maintain normal production.
In court Thursday, an attorney for Hostess noted that the company is no longer able to pay retiree benefits, which come to about $1.1 million a month. Hostess stopped contributing to its union pension plans more than a year ago.


Toward the end of the hearing, a man who said he'd worked for Hostess for 34 years stood to give his objections to the wind-down plan, saying creditors shouldn't be paid when the company hasn't been making its contributions to workers' pension funds.


"I have traveled pretty far to get here," he said, noting that many of his co-workers didn't know how to get to the hearing and speak for themselves. "I just wanted to be heard."

[Axil]

Originally Posted by Trades

and just some more to prove that both sides were clueless...

And why is this a problem exactly? Retention bonus's often save a lot of money. If your executives jump ship, you're going to spend a lot more time and money than the 1.8 million getting replacements up to speed.

[21st Amendment]

Haven't read anything on this, but do people eat Twinkies, Ring Dings, Yodels.. anymore? I remember them being in kids lunches. Do parents still feed their kids that garbage? Maybe the free market killed Hostess.

[Trades]

Originally Posted by Axil

And why is this a problem exactly? Retention bonus's often save a lot of money. If your executives jump ship, you're going to spend a lot more time and money than the 1.8 million getting replacements up to speed.

I agree that is possible, it just strikes me that they are essentially rewarding people for a job poorly done.

[Trades]

Originally Posted by 21st Amendment

Haven't read anything on this, but do people eat Twinkies, Ring Dings, Yodels.. anymore? I remember them being in kids lunches. Do parents still feed their kids that garbage? Maybe the free market killed Hostess.

In a lot of the articles the market is definitely a factor but Hostess' argument is that they needed to renegotiate to stay competitive in the market and some unions involved chose to not compromise which forced the bankruptcy. I am sure there is culpability on all sides of this and the market is absolutely a factor.

As for the "are people eating this crap still" argument, the world is getting fatter supposedly so I assume that while some people are on a health movement there are still those that scarf down ding dongs at an alarming rate.

[palmetto defender]

Originally Posted by 21st Amendment

Haven't read anything on this, but do people eat Twinkies, Ring Dings, Yodels.. anymore? I remember them being in kids lunches. Do parents still feed their kids that garbage? Maybe the free market killed Hostess.

To increase your knowledge, I suggest you go into a supermarket occasionally to get an idea what's being sold.
You would be surprised the number of items in the snack food area. Hostess was badly managed and had to compete with Kraft, Keebler, divisions of Pepsi and numerous private label products and regional producers.
BTW, they did make sandwich bread products as well.
Death by union. An increasing phenomenon.

[adb280z]

Originally Posted by palmetto defender

To increase your knowledge, I suggest you go into a supermarket occasionally to get an idea what's being sold.
You would be surprised the number of items in the snack food area. Hostess was badly managed and had to compete with Kraft, Keebler, divisions of Pepsi and numerous private label products and regional producers.
BTW, they did make sandwich bread products as well.
Death by union. An increasing phenomenon.

It was death by management, not union.

[Axil]

Originally Posted by Trades

I agree that is possible, it just strikes me that they are essentially rewarding people for a job poorly done.

I understand the concern, and it's certainly possible some of the people receiving retention bonus's didn't deserve them. However if i were a creditor worrying about getting any of my money back from Hostess i would be more concerned if they didn't attempt to retain anyone during their wind-down. Competent executives and management level employees can and will jump to more stable situations unless incentivized to stay.

Originally Posted by adb280z

It was death by management, not union.

While poor management plays a role in just about any bankruptcy, i find it hard to primarily blame the management when even other unions were asking the baker's union to give up more at the table.

[Trades]

Originally Posted by adb280z

It was death by management, not union.

Why does it have to be one or the other rather than seeing that both sides plus external forces are the logical issues?

[palmetto defender]

Originally Posted by adb280z

It was death by management, not union.

Nope. Similar to the auto manufacturers and other business, it WAS the union. Management "contibuted" by being weak in its dealing with labor.
Unlike companies like Boeing which are moving to right to work states, perishable food producers can't do that as easily.
Death by union.
BTW, the union clerical workers in LA/Long Beach have shut sown the ports.
40% of our imports come through there. Their average salary? $160,000/year. Not a typo - read it this AM. Unions. Thugs and punks. And friends of the Caliph.

[PlumberKhan]

Originally Posted by palmetto defender

Nope. Similar to the auto manufacturers and other business, it WAS the union. Management "contibuted" by being weak in its dealing with labor.
Unlike companies like Boeing which are moving to right to work states, perishable food producers can't do that as easily.
Death by union.
BTW, the union clerical workers in LA/Long Beach have shut sown the ports.
40% of our imports come through there. Their average salary? $160,000/year. Not a typo - read it this AM. Unions. Thugs and punks. And friends of the Caliph.

No.

Nobody eats Wonder Bread and Twinkies. Only fat f*cks that can't see their d*cks eat that sh*t.

Management made them a company that sells pure crap.

[Axil]

Originally Posted by PlumberKhan

No.

Nobody eats Wonder Bread and Twinkies. Only fat f*cks that can't see their d*cks eat that sh*t.

Management made them a company that sells pure crap.

Damn right! The U.S. is a generation of health nuts, who would never consume that sort of junk food!

Of course we do have an obesity rate of 37.7%, which is triple the rate in 1990. But we're changing that right?

Oh.. Looks like the projected obesity rate for 2030 is over 44%.

I dunno... maybe a company that sells junk food isn't a non-starter?


Well what about other junk food company? They're going out of business too right?

Let's see..

Hershey stock price up 32% on the year.

Coca-cola 17%

I could go on, but you get the point. America loves junk food. I'm sure management made mistakes, but selling empty calories that make you fat wasn't one of them.

[PlumberKhan]

Originally Posted by Axil

Damn right! The U.S. is a generation of health nuts, who would never consume that sort of junk food!

Of course we do have an obesity rate of 37.7%, which is triple the rate in 1990. But we're changing that right?

Oh.. Looks like the projected obesity rate for 2030 is over 44%.

I dunno... maybe a company that sells junk food isn't a non-starter?


Well what about other junk food company? They're going out of business too right?

Let's see..

Hershey stock price up 32% on the year.

Coca-cola 17%

I could go on, but you get the point. America loves junk food. I'm sure management made mistakes, but selling empty calories that make you fat wasn't one of them.

Sounds like something a fattie would post.

[palmetto defender]

Originally Posted by PlumberKhan

No.

Nobody eats Wonder Bread and Twinkies. Only fat f*cks that can't see their d*cks eat that sh*t.

Management made them a company that sells pure crap.

The company was founded before ANYONE on JI was born.
Probably before many PARENTS of JI people were born.
Their products have been around awhile. Like I pointed out, tough to compete against bigger guys. Especially with criminal unions.

[Bonhomme Richard]

Originally Posted by 21st Amendment

Haven't read anything on this, but do people eat Twinkies, Ring Dings, Yodels.. anymore? I remember them being in kids lunches. Do parents still feed their kids that garbage? Maybe the free market killed Hostess.

Pretty sure they do. Not all parents can afford healthy specialty snack foods for their kids, you limousine liberal.

And Hostess also owns Drakes. I still eat Drakes Coffee Cakes.

[quantum]

Originally Posted by Trades

I agree that is possible, it just strikes me that they are essentially rewarding people for a job poorly done.

I'm going to jump in on Trades' side, and add that greed is the real culprit: from incompetent CEOs and other executives, to union bosses. And the workers get screwed.