Notifications
Clear all
Topic starter
While there's nothing like a sex scandal to avert media attention from the fiscal cliff, and a nuke attack on Iran not withstanding, at least they averted the great Twinkies crisis of 2012!
Have we really averted this crisis? They have agreed to mediation. Crisis to resume on Wednesday.
This crisis brings to mind the question, why do unions have so much power? Why isn't every place in the US a "right to work" place?
If Hostess were able to simply fire all of the unhappy union workers and hire people who were willing to work for the pay/benefits that they were offering, then hostess would probably find many employees willing to work.
I have always wondered why the employee/employer relationship so lopsided.
Employers MUST give an employee notice before they can be fired and in many places must justify the firing. An employee can quit any time they want without giving any notice or a reason.
The unions can demand that all workers must be members of a union and require the employer to withhold dues from their paychecks. Why can't the employer demand that the unions provide insurance for all union members?
And everyone complains about how unfair those awful job-creating corporations are.
What about all those high-paying jobs the unions created? People who work for unions are parasites.
Posted : November 20, 2012 5:57 pm
The unions and employees are not to blame in this case. The loyal, longtime employees are being used as scapegoats by the incompetent management and board. There may be some cases where employees need to share the blame, but not here. They are among the lowest paid union bakers in the country. The CEO's and hedge fund high flyers put this company in the crapper. The brand will just be sold and be back on the shelves in weeks.
Posted : November 21, 2012 4:10 pm
Topic starter
Yes, its always the incompetent management to blame. You take a company like Hostess where they make a product that falls out of favor. People become more health conscious and stop eating sugary products. Couple that with the cost of their ingredients rising. Notice the last ten years on the chart. The price of sugar more than doubled. Other ingredients went up as well.
http://www.mongabay.com/images/commodities/charts/sugar.html
But that's not the hard-working faithful employees fault. They still want raises and more benefits. Maybe the terrible management didn't react to the changing market fast enough, you know, using sugar substitutes, developing new products that appeal to health conscious customers.
When the bakers make mistakes they burn some bread. When upper management makes mistakes the company fails. Different level of responsibility, different stress levels. But they are overpaid and ultimately the buck stops there.
So, 2004 and Hostess declares bankruptcy. The awful management is fired! Their focus changes from new products to staying alive. The company downsized to stay alive. They laid off 10,000 workers. A third of their work force. Still struggling with costs of ingredients and workers wanting raises and more benefits they push on.
The company struggles through the longest bankruptcy in history at that time. Bankruptcy ends in 2009. New management again. A bankruptcy judge is overseeing things at this point. Driscoll the CEO asks for and gets a salary raise to $1.5m a year. The judge approves. Experienced CEOs are hard to find and expensive. The unions are incensed, bakers are worth just as much as CEOs, right? Only union bakers are worth that much, non-union bakers work for much less.
They don't recover. They go deeper into debt. Just like our government, except they can't simply raise the cost of products on their "rich" customers to become profitable again, like our government is proposing. They don't have customers who are not allowed to stop buying their product, like our government. Maybe their management is incompetent, like our government.
So 2012 and after three changes of management since 2004 they declare bankruptcy again. It's not the bakers fault, they are still baking bread and demanding raises and more benefits. When asked to renegotiate their contracts, to reduce pay and benefits and reduce pension demands they refuse. It's not their fault the company isn't successful, it's managements fault. Management reduces its salary to $1 per year until they come out of this.
So the reality, the company employees 19,000 employees and is $860 million in debt. Something needs to happen. They have gone through 3 management teams in the last 8 years. Most of the bakers still have their jobs. The union will not give any more and is determined to ride the company into the ground. Management has offered to give the employees and equity stake in the company in return for reduced salary and benefits, in other words the employees would own about 25% of the company. No deal. Not with the bakers. The Teamsters who represent most of the employees agrees, but not the bakers, they would rather the company fail.
Who will buy this company? No one in their right mind. They will wait for bankruptcy. Layoff all of the current complaining employees. Then someone will come along and buy up the successful product brands and start producing them in newer more automated plants which require fewer union employees and the brands will become successful again.
Many industries are in the same boat. They have old plants which employee many semi-skilled employees. New competition comes along which is highly automated. Machines do a better more consistent job and don't require raises and benefits. But existing companies are being strangled by the unions, they are not allowed to downsize and automate without expensive and often deadly fights. Unions prevent a company from reacting to changing markets. New startups are not under those constraints.
I am sure there are other points of view, this is but one.
Posted : November 21, 2012 5:22 pm
i have heard stories where the guy delivering and shelving one item can't be in the store the same time as someone delivering and shelving a different product. both products being baked and sold by hostess
if true, just crazy
Posted : November 21, 2012 5:48 pm
http://www.forbes.com/sites/helaineolen/2012/11/16/who-killed-hostess-brands-and-twinkies/
this is Forbes take on Hostess
Posted : November 21, 2012 8:25 pm
Didn't eat much of their products, but still sad to see them go. I actually like Wonder Bread.
Posted : November 21, 2012 9:03 pm
Topic starter
This is Fortune/CNNs take.
http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/
This is Business Insiders take.
http://www.businessinsider.com/how-workers-and-management-both-caused-the-fall-of-hostess-2012-11
Hostess made the same mistake the US Government made. They made pension promises that they couldn't keep. Just like social security. Except they can't force their customers to buy their product and pay more while offering less like the government can.
Executives usually make more than their workers because they have more impact on the success of the business. The executives did not give themselves raises. The board of directors who represent the owners of the corporation gave the executives raises. And in some cases the Judge in charge of the bankruptcy proceedings approved. Management are employees also, hired by the Board of Directors. They are often fired by the Board when the results are not as expected.
As an example. The President of the United States.
The president earns a $400,000 annual salary, along with a $50,000 annual expense account, a $100,000 nontaxable travel account and $19,000 for entertainment. The most recent raise in salary was approved by Congress and President Bill Clinton in 1999 and went into effect in 2001.
Plus lots of perks. Lots of perks!!!!
http://en.wikipedia.org/wiki/President_of_the_United_States#Compensation
Plus almost $200,000 per year for the rest of his life. Plus lifetime perks. His annual pension is tied to the annual rate of basic pay for the head of an executive federal department -- $199,700 in 2011. This will amount to over $6m assuming Obama live into his 80's. All for just 8 years of work. He would have gotten the same for just 4 years of work. The hostess executives don't get a lifetime salary.
http://en.wikipedia.org/wiki/President_of_the_United_States#Post-presidency
All of this during a time when we have so many poor. How disingenuous can Obama be. Tax the rich! How about cut presidential and congressional perks and lifetime salaries?
Posted : November 21, 2012 9:17 pm
So it looks like when we leap off the fiscal cliff there will be no soft spongy cream filled landing.
Posted : December 11, 2012 7:59 pm
Topic starter
This is not new news and nothing illegal took place. This was one of the things that led to the strike which forced the closure in the first place.
Hostess workers were represented by many unions. Many of the unions, such as the Baker, Confectionary, Tobacco Workers and Grain Millers International Union, had pushed for years to have their pensions managed not by Hostess but instead by Multi-Employer pension organizations. This was supposedly good for the union workers and made it possible for them to easily change jobs within the industry and take their pensions with them. The pensions were portable within the industry. Unfortunately the Pension Benefit Guarantee Corporation, the government organization which protects workers pension plans does not insure multi-employer pensions, only single company pension plans.
Hostess had made it known as far back as August 2011 that they were no longer making the employer part of the contribution to these pension plans. The employee part was still being made. No employee funds were taken. This is apparently not illegal.
According to the Wall Street Journal, the company - which abruptly announced that it was ceasing operations after unionized workers balked at post-bankruptcy wage and benefits cuts and began a strike - acknowledged that it had diverted money once intended for employee pensions into its general operating funds, as far back as August 2011.
The company was, at the time, teetering on the brink of bankruptcy, and made an announcement that it would no longer fund its pension plan. But company contributions were still coming and ended being used to help prop up the economically embattled bakery, even after Hostess declared bankruptcy in Jan. 2012.
Because those contributions came from Hostess and not its employees, pension experts say the scheme probably did not violate federal pension laws, though lawyer James P. Baker says the move was known as "betrayal without remedy."
Gregory Rayburn, the company's CEO told the Journal that the pension diversion was "like a lot of things in this case" and says that the diversion plan began long before he assumed his post.
Hostess's move to cease its pension contributions apparently led directly to the strikes which eventually led the company to shutter its operations.
http://www.benefitspro.com/2012/12/11/hostess-diverted-workers-pension-funds-company-adm
Posted : December 11, 2012 8:42 pm
