Union starts strike on company in bankruptcy

[TimothyC]

Hostess Brands strike puts Twinkies maker in jeopardy

Hostess Brands factory workers nationwide are on strike, protesting a contract that would cut wages and drastically reduce benefits. Hostess Brands warned in a statement last week that a widespread strike would prompt the company to liquidate and lay off the bulk of its workforce.

By The Associated Press / November 12, 2012

Philadelphia

Several hundred workers at a Hostess plant in northeast Philadelphia were off the job honoring a bakers' union strike by the at the bankrupt company's plants across the country.

The walkout that began Friday came after Hostess Brands Inc. imposed a contract that would cut wages and benefits 27 to 32 percent, with an immediate 8 percent wage reduction, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union said. Officials say the company stopped making contributions to the workers' pensions last year, and 92 percent of union members voted to reject the contract in September.

Hostess, which makes Twinkies, Wonder Bread and Ding Dongs, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.

About 330 workers at the Philadelphia plant have joined several dozen workers from Maine who arrived to picket, The Philadelphia Inquirer reported. Only some Hostess workers are free to strike, according to a union fact sheet, but the existing contract allows striking workers to set up picket lines at other plants, and workers at those plants can honor the picket lines.

Thousands of workers are protesting the company's action across the country, James Condran, an international union representative who was at the Philadelphia plant, told the paper.

Hostess Brands Inc. acknowledged "concessions (that) are tough" but urged workers to remain on the job "to rebuild the company."

Hostess warned in a statement last week that a widespread strike would prompt the company "to liquidate if we are unable to produce or deliver products" and it would then lay off most of its 18,300-member workforce "and focus on selling its assets to the highest bidders."

That's a hard cut to take, but it looks like the Union would rather have no job at all, or rather that they think the company is bluffing.

[Guardsman Bass]

It seems kind of pointless. If the company ends up in bankruptcy court, they could probably get the union contracts tossed out completely in the face of potential liquidation.

[weemadando]

Or y'know, the potential for lost wages and cuts would mean that they'd be going backwards. Having to pay more for childcare than they'd be earning, shit like that.

Plus there's the whole point of a union, which is solidarity and the ability to use force of numbers to achieve something when the individual employee's are powerless. So the employees may not have had an issue with a pay cut to keep jobs, but the company stopping pension payments is a huge issue.

[K. A. Pital]

When will American unions grow a dick and a pair of balls and start simply capturing insolvent companies and running them like in Argentina? Often there's nothing to salvage from the company and the creditors don't even care about the insolvent's property, or sometimes there might be some money to pay off the incurred debts.

[NecronLord]

When will American unions grow a dick and a pair of balls and start simply capturing insolvent companies and running them like in Argentina? Often there's nothing to salvage from the company and the creditors don't even care about the insolvent's property, or sometimes there might be some money to pay off the incurred debts.

When American law enforcement stops being powerful and effective and opposed to such. Which is to say never.

[Mr Bean]

When will American unions grow a dick and a pair of balls and start simply capturing insolvent companies and running them like in Argentina? Often there's nothing to salvage from the company and the creditors don't even care about the insolvent's property, or sometimes there might be some money to pay off the incurred debts.

When American law enforcement stops being powerful and effective and opposed to such. Which is to say never.

Yeah, trying those sorts of tactics in America would backfire hard core as any such tactics would probably lead to repression with massive public support. Americans have a dim view of unions in general thanks to year of the media framing all unions as one step removed from the mob. Not helped by the fact that certain unions ARE one step removed from the mob to this day most notably dock workers unions still having a heavy organized crime influence. And even if the union in question is 100% crime free most unions are viewed as parasites by many non-union employees because... well Americans unions are pretty shitty at their PR.

The many rights workers gained because of union efforts have been disconnected in the minds of Americans from the unions themselves. Why do we have a forty hour work week, extra pay for overtime and all sorts of wage protections? Because that's the way it is.... not because that's the way the unions helped make it.

[Guardsman Bass]

When will American unions grow a dick and a pair of balls and start simply capturing insolvent companies and running them like in Argentina?

The company is unprofitable and bankrupt anyways, so a union-owned company would just be in the same situation as a non-union owned company. That's assuming they have enough cash (or can get enough leverage) to buy up the company in question.

Otherwise, I'm not sure why they don't let a union buy up the stock of the insolvent public company they're contracting with. The only issue I can see is if one union held controlling stock in several companies in the same industry, which would raise anti-trust issues.

[Starglider]

Unions murdered this perfectly good company with odious deferred benefits. The plant and brands are all pledged as collateral on the massive loans the company was forced to take to continue to meet union demands. The next step is to dissolve the company and sell off the assets to competitors and private capital outfits. Non-unionised staff can be brought in on market terms without the impossibly expensive defined benefit pension and healthcare demands crushing competitiveness.

It never makes sense to require a company to pay vast amounts of money at some future time for work done today. No company can be that assured of future revenues. All such benefits must be defined contribution administered by third parties with no ongoing liability to or dependency on the original company. Of course unions do it anyway due to a combination of short-sightedness and the fact that the slow murder of companies is very lucrative for union leadership, particularly when government bailouts are involved.

[Guardsman Bass]

It never makes sense to require a company to pay vast amounts of money at some future time for work done today. No company can be that assured of future revenues. All such benefits must be defined contribution administered by third parties with no ongoing liability to or dependency on the original company.

It can make a lot of sense for the company in terms of short-term incentives. Money in the future isn't as valuable to them as money today unless there's a big enough return to make it worthwhile to wait, so if they can get people for lower wages by promising them pensions far off in the future, that's extra revenue for the company in the present.

Admittedly, that's more common with state and local governments than with private companies, but it's still true.

[Sea Skimmer]

It seems kind of pointless. If the company ends up in bankruptcy court, they could probably get the union contracts tossed out completely in the face of potential liquidation.

I know someone who works for them. In fact the bankruptcy court already said a strike would lead to a forced liquidation months ago. This is the companies second bankruptcy in four years. The union went on strike because its dominated by idiots, and because the company said they'd liquidate if the final contract offer was rejected, it was, but the management decided to try to reach a new deal about a month ago. The reality is they don't make many products people want anymore, like wonderbread which is known for its white bread and not its wheat, and white bread sales have gone down massively as people realized how stupid it was.

However the pension issue isn't all the unions fault either, its such a problem because Hostess had a union-pension deal with a number of other bakeries decades ago, now IIRC of the nine bakeries involve only two are left making the pension burden absurdly unsustainable. But no fixing past mistakes now ect..

[ryacko]

When will American unions grow a dick and a pair of balls and start simply capturing insolvent companies and running them like in Argentina? Often there's nothing to salvage from the company and the creditors don't even care about the insolvent's property, or sometimes there might be some money to pay off the incurred debts.

Perhaps the union could purchase the company? Or when the company is liquidated, buy the bakery? No law against collective ownership (to my knowledge).

The reality is they don't make many products people want anymore, like wonderbread which is known for its white bread and not its wheat, and white bread sales have gone down massively as people realized how stupid it was.

I've actually tried some Hostess products, they are ludicrously sugary and yet taste terrible. Corn syrup doesn't compare to cane sugar.
I should have one last twinkie though.

[Guardsman Bass]

I'm sure some of the more popular trademarked baked goods will survive. The company's intellectual property will end up being sold in bankruptcy court to another company if Hostess goes under (probably a company like Bimbo Bakeries, which acquired Sara Lee).

However the pension issue isn't all the unions fault either, its such a problem because Hostess had a union-pension deal with a number of other bakeries decades ago, now IIRC of the nine bakeries involve only two are left making the pension burden absurdly unsustainable. But no fixing past mistakes now ect..

They're not the only ones to get slammed by that. My dad was a member of the Teamsters who worked for a trucking company, and he ended up taking a cut in his pension and health care benefits because of the same type of thing.

[Sea Skimmer]

In this case the Teamsters agreed to the deal after the Union was allowed to send its own auditors to look at the company books. Confirming that the company has to cut costs, has to shed the pensions, and has no reserves of cash to handle a strike. In fact the union striking is only about one third of the work force fucking over everyone else, which once more shows why multiple unions at the same plant are a horrible idea. It looks like we'll have word Friday morning if the company is going under or not, apparently pretty large numbers of people have been crossing the picket lines and keeping almost all the plants at least partially operational.

[Dark Hellion]

Frankly, if you can't make it selling Twinkies to the fat fucks that are Americans your business deserves to die.

[Mr Bean]

Frankly, if you can't make it selling Twinkies to the fat fucks that are Americans your business deserves to die.

Your forgetting Hellion, they don't go bad. How many times have you throw food out or seen stores throw food out and buy more because it went bad? A not significant proportion of food business comes from the fact that people let food spoil. Stores let food spoil and it has to be replaced. Worse twinkies are not a binge food like say Oreo's or Ice Cream (Another product that massively benefits from the fact it only lasts a short amount of time) so people typically only buy a package or two.

Also it does not help that Twinkies are disgusting.

[ChaserGrey]

Looks like they weren't kidding:

http://money.cnn.com/2012/11/16/news/co ... ?hpt=hp_t1

Hostess Brands -- the maker of such iconic baked goods as Twinkies, Drake's Devil Dogs and Wonder Bread -- announced Friday that it is asking a federal bankruptcy court for permission to close its operations, blaming a strike by bakers protesting a new contract imposed on them.

What I find really interesting is this:

The Teamsters union, which represents 6,700 Hostess workers, issued a statement blaming mismanagement by Hostess executives for the company's problems. But it also was critical of the decision of Bakers' union, although it did not identify the union by name.

"Unfortunately, the company's operating and financial problems were so severe that it required steep concessions from a variety of stakeholders but not all stakeholders were willing to be constructive," said Ken Hall, the Teamsters' Secretary-Treasurer.

A union criticizing another, even indirectly, is almost unheard of, at least over here.

[Losonti Tokash]

The unions already gave up over $100 million in concessions to Hostess. The executives gave themselves $8 million in raises and are currently being taken to court for their violation of federal contract law. Blaming the unions for blatant corporate mismanagement is, again, pretty silly.

[Sea Skimmer]

The unions already gave up over $100 million in concessions to Hostess. The executives gave themselves $8 million in raises and are currently being taken to court for their violation of federal contract law. Blaming the unions for blatant corporate mismanagement is, again, pretty silly.

100 million isn't much compared to 300 million in debt to the union pensions, many covering workers who never worked for Hostess, and the large structural problems in the company. In fact you completely can blame the bakers union 100% for this, because the other two unions, which have more workers in total, had sense and accepted the new deal. Maybe because they knew the truth? In fact the bakers union, that has now officially killed Hostess as of this morning, was offered partial ownership of the company and seats on the board of directors which would give them direct power over said executives, and turned that down. The bakers also complained about spending money on advertising to try to increase its sales The fact is the company was unsustainable without large wage and benefits cuts because it just has too much plant and too many workers, and the unions were against mass layoffs too. 8 million bucks was and is absolutely nothing compared to the scale of the problems. The best part is since the company has now folded, and the bakers union is on strike, those guys won't be eligible for unemployment under PA state law. So they've blow their own foot off with a shotgun under a wave of delusion.

[TimothyC]

The unions already gave up over $100 million in concessions to Hostess. The executives gave themselves $8 million in raises and are currently being taken to court for their violation of federal contract law. Blaming the unions for blatant corporate mismanagement is, again, pretty silly.

The company said they were going to close if this happened, and the 8% pay cut, while severe, would have been offset by 3% pay raises in years 2-4 and a 1% pay raise in year 5 (Yes, that functionally leaves them flat before inflation, but over the period of the contract there would have been no pre-inflation cut). I guess they decided that a 100% pay cut forever was the better deal.

The only sympathy I have is for the other employees that also have lost their jobs.

[Losonti Tokash]

Sure, cause they can totally trust the word of a bunch of people who've already proven themselves to be short sighted liars, right? Hostess killed itself, not the unions, and they've already admitted as much.

[TimothyC]

Sure, cause they can totally trust the word of a bunch of people who've already proven themselves to be short sighted liars, right? Hostess killed itself, not the unions, and they've already admitted as much.

Source? Mine is the CNN Money article. And it would have been in the contract.

The Teamsters, after reviewing the books said yes to the pay cuts. The Baker's union said no, and now they won't have jobs anymore. They knew this was a strong possibility, and they went on strike anyway.

[aieeegrunt]

They should just continue to take it up the ass and be thankfull for any crumbs that fall from the executive table right?

[weemadando]

Unions exist to make sure companies turn bigger profits, not to protect employees from exploitation dontcha know.

[Guardsman Bass]

They should just continue to take it up the ass and be thankfull for any crumbs that fall from the executive table right?

Do you think it was better that the company is going down and they're all going to lose their jobs, including the unions that didn't strike and were warning them about the possible bankruptcy of the company if they did? Sure, they're all going to lose their jobs (and possibly be ineligible for unemployment insurance, as Sea Skimmer mentioned), but damn it, they had to show those executives the what-for!

If anything, this is a reminder of how balance is supposed to work. If the company pushes too far, the union pushes back. If the unions pushes too far, the company goes out of business and they all lose their jobs.

Of course, in Hostess's case, the company would probably just go bankrupt again in two years. So why not?

[ryacko]

I just realized something.

This is the best publicity ploy ever.

Everyone is scrambling to get the last twinkie.