Hostess to close, lay off 18,500 after 'crippling' union fight

LOOK WHAT OBAMA HAS DONE.

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Hostess is rotten!

From the Sacramento Bee:

The contract calls for extreme wage and benefit cuts which amount to 27- 32% overall, with an 8% wage reduction imposed immediately. The company unilaterally ceased making contributions, required by their union contracts, to the workers' pensions in July 2011. Hostess has also imposed draconian cuts in health benefits and eliminated the eight-hour workday.

Hostess Brands is in bankruptcy for the second time in eight years. Since the first bankruptcy in 2004, BCTGM members across the country have taken dramatic wage and benefit concessions and watched as 21 Hostess plants were shut down and thousands of jobs lost. At the time of the first bankruptcy, Hostess workers were assured by management that money saved via concessions or plant closings would help make the company stronger, more vibrant, and more competitive.

Instead, helpless Hostess employees watched as money that was supposed to go towards capital investment, product development, plant improvement and new equipment went to executive bonuses and payouts to the hedge funds that own Hostess Brands. They watched as the company illegally withdrew from all Taft-Hartley pension plans, saving more than $50 million in the first five months. The BCTGM learned that the then Hostess CEO was to be awarded a 300% raise, and at least nine other top executives were to receive raises ranging between 35% and 80%.

Dimes to Hostess donuts that the execs and investors are all Republicans.

I'm sorry for the employees -- but really, who eats that CRAP? I'm guessing it's the same people who eat Oscar Mayer cold cuts, Kraft Cracker Barrel cheese and Libby's Vienna Sausages. Really?

^^Not kidding. I am deadly serious. One of the reasons health care in this country is so expensive is because of rampant morbid obesity.

And Mayor Bloomberg won't bail them out.

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"It's always nice to know unions are still considered relevant in their toxicity for management types to be blamed for their mismanagement that is far bigger than them."

Can you rephrase this, Strummer? Not clear.

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Hostess has been on a downward spiral for years- sales are indeed down (as Bob's remarks demonstrate) and Unions are being scapegoated. I've seen many Facebook statuses blaming the Unions or Obama for "Killing twinkies"

It's illustrative to know that the bakers union had already taken multiple cuts in wages and benefits while upper management (and owners) were doing quite well. They had taken no cuts and the bakers had started at $680 a week three years ago- many of them were working for about $400 a week now and told they needed to sacrifice even more.

And it DOES NOT mean the "death of the Twinkie." Other bakeries are chomping at the bit to purchase the Hostess, Dolly Madison and Wonder Brands (among others) and re-launch them. What we know as "Hostess:" was at least the fourth corporate entity to make the Twinkie products.

Do yourself a favor and peruse the Google News page and see the right-wing media with headlines like the OP blaming the union without mentioning the "Venture Capital" firm that loaded Hostess up with debt, looted the pensions and will profit from the sale of those brand lines.

Chalk this one up to "Bain-style capitalism."

That's okay, artscallion. I just got off of work too.

Here's something that goes along with Joe's posts
http://sphotos-a.xx.fbcdn.net/hphotos-prn1/59065_10151315904196153_630530638_n.png

I am very pro union and come from a family that has two generations of union orginizers in it. I am also someone who feels that in any situation blame should be placed on the proper parties. In otherwords, if this situation was the fault of the union (which it clearly isn't) then I'm all in favor of pointing the finger at them. But, considering that isn't the case, I think it's very wrong or the people on top to scapegoat them.

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Ok, now back to the real world... of course unions played a huge role in this. Was Hostess potentially the subject of mismanagement? I'll take your word for it. Would the company have eventually gone under regardless of this strike? Sure it's certainly possible.

However unions expedited the process! Hostess was in dire straits and instead of the unions coming to a compromise solely based on the reality of the situation, they let the entire company collapse. Now all of their members who are a part of Hostess are out of work. No matter what your response may be, this is the reality. No matter what management did in the past, the union's short term decision caused all of these employees to be laid off immediately. There is no spin as reality will always speak louder than any words. Everyone is now out of jobs.

And no this isn't "Bain-style capitalism". You do realize any venture capital or investment firm behind hostess will be hit hard? Paying their top executives lots of money and having those executives underperform is contradictory to what you think, bad for the VCs. At the end of the day, they're going to have to liquidate all of Hostess's assets to try and pay their debtors. And once that is all said and done, they'll likely take a massive loss on their investment. So this is all very negative for VCs. It was in their best interest to keep the company open as long as possible, but since union workers couldn't agree to a new lower salary and they stopped production during busiest time in the industry, VCs decided to cut their losses and not further widen the gap of debt. Responsible business decision.

Updated On: 11/16/12 at 11:33 PM