Union starts strike on company in bankruptcy

[Stark]

Social security is a ponzi scheme because your dad is rich? PS your disclaimer is the funniest thing I've seen on this webboard in literally weeks.

The disconnect between management and financial professionals cashing themselves out before they just go look for another hugely paying sinecure and the workers who may well collapse into debt slavery is pretty hilarious.

Is there a reason why more businesses don't fold and reopen to get out of bad contracts?

[Broomstick]

The whole argument playing out over this debacle is either: "the union is greedy and stupid, fuck them!" or "Evil CEO's screwing over the working stiff, let's get 'em". Everyone seems to be ignoring the fact that this company as a whole was making stuff that nobody wanted to buy in sufficient quantity to keep the company afloat. Management was rigid and didn't innovate and create new products. Labor was obtuse and wouldn't sacrifice the few for the needs of the many. They all made their bed and now they lie in it.

^ This.

I think that while the market for snack cakes has declined over the years, there are enough competitors still in the black that someone will snatch up the most popular/well know product lines and start producing them again. They won't be Hostess Twinkies, but they will be twinkies made by someone.

[Col. Crackpot]

Social security is a ponzi scheme because your dad is rich? PS your disclaimer is the funniest thing I've seen on this webboard in literally weeks.

The disconnect between management and financial professionals cashing themselves out before they just go look for another hugely paying sinecure and the workers who may well collapse into debt slavery is pretty hilarious.

Is there a reason why more businesses don't fold and reopen to get out of bad contracts?

Wow.... in ten years on this board i think that is the first time i have seen someone use the 'my dad says, so it's true' argument!

[SirNitram]

The whole argument playing out over this debacle is either: "the union is greedy and stupid, fuck them!" or "Evil CEO's screwing over the working stiff, let's get 'em". Everyone seems to be ignoring the fact that this company as a whole was making stuff that nobody wanted to buy in sufficient quantity to keep the company afloat. Management was rigid and didn't innovate and create new products. Labor was obtuse and wouldn't sacrifice the few for the needs of the many. They all made their bed and now they lie in it.

^ This.

I think that while the market for snack cakes has declined over the years, there are enough competitors still in the black that someone will snatch up the most popular/well know product lines and start producing them again. They won't be Hostess Twinkies, but they will be twinkies made by someone.

Two bankruptcies, six CEOs, and debt piling up after being acquired by hedge funds may also have had an effect.

[Alkaloid]

OK, so I'm curious about this. Hostess offers workers contracts with pay rates and pensions. They buy other companies that offer pensions as well, and are aware they will have to cover those pensions when they do so. Several years later, Hostess decides that it can't afford to keep paying its staff the same rates or the pensions it is contractually obliged to, and attempts to renegotiate. Staff (in this case represented by unions) decline the new offer presented, and Hostess then fails as a business. Is this not the free market in action? The incompetent and wasteful fail and allow room for the competent and innovative to prosper. I really don't understand why libertarians have an issue with unions in this case, it seems the unions are merely helping the invisible hand do its job.

[Vendetta]

Silly Alkaloid. The free market is supposed to work for the capitalists (old definition, the owners of capital), not punish them.

Of course in cases like these it probably will, the people who actually own the capital behind Hostess (who generally have a lot to start with) will lose very little proportional to what they have because they can recoup by selling the valuable parts of the brand, but the workers, who have much less to begin with, will lose proportionally much more because the people who make the brands now will do so using their existing plant and workers (or just far cheaper ones in China, Twinkies are famous for never going off due to being packed with chemical shite so why not base your plant in the cheapest place possible).

And this is called "capitalism".

[Col. Crackpot]

The whole argument playing out over this debacle is either: "the union is greedy and stupid, fuck them!" or "Evil CEO's screwing over the working stiff, let's get 'em". Everyone seems to be ignoring the fact that this company as a whole was making stuff that nobody wanted to buy in sufficient quantity to keep the company afloat. Management was rigid and didn't innovate and create new products. Labor was obtuse and wouldn't sacrifice the few for the needs of the many. They all made their bed and now they lie in it.

^ This.

I think that while the market for snack cakes has declined over the years, there are enough competitors still in the black that someone will snatch up the most popular/well know product lines and start producing them again. They won't be Hostess Twinkies, but they will be twinkies made by someone.

Two bankruptcies, six CEOs, and debt piling up after being acquired by hedge funds may also have had an effect.

all symptoms of a business who's primary product is reaching the end of it's life cycle. Remember Polaroid?

[The Yosemite Bear]

Retrospect, the company went through a bankrupcy a few years ago, and the union made a ton of concessions to try and save it. Then the venture capitalists came in, put more debt on the company took their fees and tripled the CEOs salary.

[Flagg]

So they got Romneyd?

[ArmorPierce]

My father is retired and since the stock market crashed, he broke even. He owns real estate (one rental property), has stocks in multiple mutual funds, and has been living off of a portion of the interest.

Social Security is a ponzi scheme. One could argue that separate retirement accounts are kept, but all payouts come from one general fund. It's administration costs are low mainly because all they do it buy government debt.
It's one of the worst performing pension plans.

To say it's a ponzi scheme is factually incorrect and a means to manipulate people.

I do agree an individual ideally should not rely only on social security and should take advantage of a diversified investment portfolio if they are able to. Social security should be there as a minimum safety net for people if all else fails so buying government debt is not a bad thing in my opinion.

[Simon_Jester]

Who defines "minimum safety net?" That's something we've been arguing over for decades. There are political factions in this country that would seem willing to accept "bread, water, a hovel to live in, and the first time you get seriously sick you die" as a "minimum safety net."

Obviously there's an upper limit, but when I hear rhetoric about minimums I worry.

[Broomstick]

More like "bread, water, and the first time you get seriously sick you die" - hovel optional. I mean, look at all the homeless people.

[Teebs]

Silly Alkaloid. The free market is supposed to work for the capitalists (old definition, the owners of capital), not punish them.

Of course in cases like these it probably will, the people who actually own the capital behind Hostess (who generally have a lot to start with) will lose very little proportional to what they have because they can recoup by selling the valuable parts of the brand, but the workers, who have much less to begin with, will lose proportionally much more because the people who make the brands now will do so using their existing plant and workers (or just far cheaper ones in China, Twinkies are famous for never going off due to being packed with chemical shite so why not base your plant in the cheapest place possible).

And this is called "capitalism".

That's not really how bankruptcy works. The owners generally lose their investment because shareholders are at the back of the queue for getting the funds from the sell off. Since a company goes bankrupt when it can't pay all of its debts, all of the money from selling assets is going to go to the people who lent the company money, not its shareholders.

[Block]

Silly Alkaloid. The free market is supposed to work for the capitalists (old definition, the owners of capital), not punish them.

Of course in cases like these it probably will, the people who actually own the capital behind Hostess (who generally have a lot to start with) will lose very little proportional to what they have because they can recoup by selling the valuable parts of the brand, but the workers, who have much less to begin with, will lose proportionally much more because the people who make the brands now will do so using their existing plant and workers (or just far cheaper ones in China, Twinkies are famous for never going off due to being packed with chemical shite so why not base your plant in the cheapest place possible).

And this is called "capitalism".

That's not really how bankruptcy works. The owners generally lose their investment because shareholders are at the back of the queue for getting the funds from the sell off. Since a company goes bankrupt when it can't pay all of its debts, all of the money from selling assets is going to go to the people who lent the company money, not its shareholders.

Depends on who gets preferred stock doesn't it?

[ryacko]

My father is retired and since the stock market crashed, he broke even. He owns real estate (one rental property), has stocks in multiple mutual funds, and has been living off of a portion of the interest.

Social Security is a ponzi scheme. One could argue that separate retirement accounts are kept, but all payouts come from one general fund. It's administration costs are low mainly because all they do it buy government debt.
It's one of the worst performing pension plans.

To say it's a ponzi scheme is factually incorrect and a means to manipulate people.

I do agree an individual ideally should not rely only on social security and should take advantage of a diversified investment portfolio if they are able to. Social security should be there as a minimum safety net for people if all else fails so buying government debt is not a bad thing in my opinion.

It is agreed by many that social security will probably be able to payout 85% of all obligations after 2020, a de facto cut in pensions.

To call the Social Security Trust Fund a trust fund and a safety net is factually incorrect.
In reality it is neither.

[Simon_Jester]

Which "many?"

Citation needed.

[aieeegrunt]

This is classic capitalism in action. Loot, plunder, run the company into the ground while creaming as much as possible for the executive while you can.

Then blame the unions, even though the executive had already started bankrupcy proceedings months before the union started the strike action, because the executive had judged that the corpse was sucked dry and it was golden parachute time for them.

Meanwhile the workers who actually generated the wealth are left without anything at all in a climate that hardly favours finding new employment.

[D.Turtle]

It is agreed by many that social security will probably be able to payout 85% of all obligations after 2020, a de facto cut in pensions.

And in order to be able to pay out 100% for all eternity, all you would need to do is lift the cap on the Social Security tax. Social Security is pretty much the surest, best-funded government system the US currently has.

[Teebs]

Depends on who gets preferred stock doesn't it?

I'm not sure what you mean by preferred stock, but not really... The order of distribution (in the UK at least, I assume the US is similar):

1) Secured creditors with fixed charges
2) Secured creditors with floating charges
3) Unsecured creditors
4) Shareholders

(employee pay up to a certain amount ranks somewhere among the creditors, can't remember where, but higher than unsecured)

Having any form of stock in the company is not going to get you a pay out when unsecured creditors aren't getting all of their money back.

[Alyeska]

This is classic capitalism in action. Loot, plunder, run the company into the ground while creaming as much as possible for the executive while you can.

Then blame the unions, even though the executive had already started bankrupcy proceedings months before the union started the strike action, because the executive had judged that the corpse was sucked dry and it was golden parachute time for them.

Meanwhile the workers who actually generated the wealth are left without anything at all in a climate that hardly favours finding new employment.

Did you even read this thread before spewing that bullshit out of your mouth? The situation with Hostess isn't anything like you described it.

[Terralthra]

From the perspective of a single worker at Hostess...

Wonder Bread runs deep in my family. I started at Interstate Bakeries in 1999 in Waterloo, Ia after the birth of my first daughter. I asked my father in law who to talk to for an interview. He had spent his entire adult life there, eventually retiring in 2007. His father drew retirement from the very same bakery. My wife and her sisters experienced a truly middle class Midwestern upbringing, complete with a safe home environment, college educations, and health insurance. He went to work everyday knowing he would be able to retire and draw his pension. He was even able to pass the job down to his son in law.

I love Wonder Bread. It has supported our family financially and medically for the last 14 years. When my wife wanted to attend graduate school we found a university near a bakery and moved to Lawrence, KS, home of the greatest basketball team in the history of ever. I will miss the overwhelming smell of baking bread and the friendships I built at both bakeries. Including with engineers, truck drivers, supervisors and managers who have also lost their jobs.

Many of them likely blame the Bakers Union, me. Most understand that this was inevitable. There has been no confidence in the leadership of this company at any level of any department for years. We have watched 6 CEO's come and go since 2002 and all of them left the company worse than when they took over. All of them got paid, not just the salaries they agreed to, but bonuses and increases all along the way. Including the current joker, who announced he was leaving with less than a year on the job, before he even submitted this last contract offer to us.

When I received my first paycheck from then Interstate Bakeries in 1999 it had a memo stapled to it. The memo announced that Wonder had just had the most productive quarter in baking history. It stated that the health of the company and brand had never been better. The break room was buzzing with excitement because our contract was soon to be up for renegotiation and this would surely mean smooth sailing. A few weeks later we got the 'oops' letter. Turns out it was all an 'accounting' error and the company was failing miserably.

Conveniently though, CEO Charles Sullivan and the board managed to sell their stock before word got out about the bad news. No jail time of course. In fact, Sullivan was brought back as a consultant after his resignation. Enron happened a few years later and at the bakery we were amazed how much attention they got compared to us.

The company of course used it's 'oops' letter to justify asking for concessions from the Union. We gave nothing and gained nothing that year after a 45 minute strike. The status quo continued and I proudly joined the middle class for the first time in my life. I made $14 an hour and had insurance. I even went on vacations for the first time. I had great pride in my job, and the products. We bought a new car for the first and only time in my life. In 2003 I transferred to the Lenexa, KS bakery.

In 2005 it was another contract year and this time there was no way out of concessions. The Union negotiated a deal that would save the company $150 million a year in labor. It was a tough internal battle to get people to vote for it. We turned it down twice. Finally the Union told us it was in our best interest and something had to give. So many of us, including myself, changed our votes and took the offer. Remember that next time you see CEO Rayburn on tv stating that we haven't sacrificed for this company. The company then emerged from bankruptcy. In 2005 before concessions I made $48,000, last year I made $34,000. My pay changed dramatically but at least I was still contributing to my self-funded pension.

In July of 2011 we received a letter from the company. It said that the $3+ per hour that we as a Union contribute to the pension was going to be 'borrowed' by the company until they could be profitable again. Then they would pay it all back. The Union was notified of this the same time and method as the individual members. No contact from the company to the Union on a national level.

This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn't repay. The Union continued to work despite this theft of our self-funded pension contributions for over a year. I consider this money stolen. No other word in the English language describes what they have done to this money.

After securing our hourly cash from the bankruptcy judge they set out on getting approval to force a new contract on us. They had already refused to negotiate outside of court. They received approval from the judge to impose the contract then turned it over to the Union for a vote. You read that right, they got it approved by the judge before ever showing to the Union.

What was this last/best/final offer? You'd never know by watching the main stream media tell the story. So here you go...

• 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.

Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.

It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.

That $3+ per hour they steal totaled $50 million last year that they never paid us. They sold $2.5 BILLION in product last year. If they can't make this profitable without stealing my money then good riddance.

I keep hearing how this strike forced them to liquidate. How we should just take it and be glad to have a job. What an unpatriotic view point. The reason these jobs provided me with a middle class opportunity is because people like my father in law and his father fought for my Union rights. I received that pay and those benefits because previous Union members fought for them. I won't sell them, or my coworkers, out.

We may have forced the companies hand but they were going to smack us with it anyway.

All emphasis mine.

It doesn't mention in detail, but while the union has been making concessions on wages and pensions for 7 years, the CEOs in question have ALL gotten raises and performance bonuses. Presumably for "cutting costs" (paying people less).

[Flagg]

Here's Forbes' Take on it.

Who Killed Hostess Brands and Twinkies?

I’m sure you have, by now, heard the news. Hostess Brands, the company that gave us such remembered childhood treats as Twinkies, Ding Dongs, Devil Dogs and other baked foodstuffs that have fallen into disfavor in our more gourmand age, announced today that it would be closing for business, effective immediately.

More than a few observers say they know who to blame for the demise of the iconic company: the Bakery, Confectionary, Tobacco Workers and Grain Millers International union, which represents thousands of striking Hostess Brand workers who have refused to accept a new contract that would do everything from slash their salaries to their retirement benefits.

Time for a reality check.

Hostess has been sold at least three times since the 1980s, racking up debt and shedding profitable assets along the way with each successive merger. The company filed for bankruptcy in 2004, and again in 2011. Little thought was given to the line of products, which, frankly, began to seem a bit dated in the age of the gourmet cupcake. (100 calorie Twinkie Bites? When was the last time you entered Magnolia Bakery and asked about the calorie count?)

As if all this were not enough, Hostess Brands’ management gave themselves several raises, all the while complaining that the workers who actually produced the products that made the firm what money it did earn were grossly overpaid relative to the company’s increasingly dismal financial position.

So now an estimated 18,500 workers will join the nation’s unemployment rolls. But while Hostess Brands might soon become a forgotten name from the past, it’s unlikely such a fate awaits such signature products as Twinkies. Company executives have already asked for bankruptcy court permission to begin the process of selling off their famed product lines to other companies.

Finally, a personal note: A few years ago, my husband picked our children up from a playdate at a home where, he said, it seemed like more food was banned than allowed, there was no television, and it was all too politically correct in the way all too many middle class childhoods are today. My husband’s response? Before bringing the boys home, he stopped in at a local grocery and introduced our ecstatic children to fine products of Hostess Brands. “Yodels,” he told me, “never tasted so good.”

So it's pretty much as aieeegrunt put it.

[Losonti Tokash]

Ah yes, the notably pro-union liberal rag Forbes magazine.

[Stark]

Creating bad eating habits in your kids = quality journalism, that's for sure.

[Col. Crackpot]

Depends on who gets preferred stock doesn't it?

I'm not sure what you mean by preferred stock, but not really... The order of distribution (in the UK at least, I assume the US is similar):

1) Secured creditors with fixed charges
2) Secured creditors with floating charges
3) Unsecured creditors
4) Shareholders

(employee pay up to a certain amount ranks somewhere among the creditors, can't remember where, but higher than unsecured)

Having any form of stock in the company is not going to get you a pay out when unsecured creditors aren't getting all of their money back.

Floating charges crystallize upon default so the first two classes of lien holders would merge.