Hostess Closes Doors: More Than 80,000 Lose Jobs and Twinkies in Jeopardy

I fail to see how a unionized worker can have the gall to go on strike during an national economic period when people are thankful just to be working … This month, Hostess Bakeries, a long established American icon like baseball, is going down for the count in the month of November 2012. Last year, Hostess lost $341 million, so what did labor union workers demand – compensation from money not available. Hostess CEOs stated that in order for the corporation to continue, a request was made to accept a lower compensation for an undetermined period of time.

Unions have failed to remember what Samuel Gompers, the founder of the American Federation of Labor stated more than 100 years ago: what workers need is a company that operates at a profit. In other words, what is good for the company is good for the workers – theoretically, if the management keeps that line of thought.

The strike that ensued over this forced Hostess to file for bankruptcy and a judge cleared the way for Hostess Brands, Inc. to fire its 18,500 workers and wind down its operations. The pieces and merchandise that includes Twinkies and other goods are liquidated to the highest bidder. Nature’s Pride, Dolly Madison, and Drake’s were interested in the liquidation. It was reported that Hostess in Irving, Texas wanted to close because it was spending $1 million a day in payroll without any income received. Hostess stated that about 3,200 employees will remain for the liquidation process, but need to look for employment.
Blame for the financial debacle was a presented as a myriad of reasons: Management missteps, rising labor costs, and changing tastes. The union strike dealt the deathblow. The liquidation involves the closure of 33 bakeries, 565 distribution centers, 5,500 delivery routes, and 570 bakery outlet stores.
As CEO Gregory Rayburn stated:

We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.

The bad thing is that when the brands are bought and restarted in production, Hostess workers will not get their jobs back. Hostess filed in the early part of this year, the finalization culminating just a few days ago in the legal court process. It was the workers last chance given last week to return to work or face a shutdown of the company, despite earlier in the year conceding that bankruptcy was in the horizon. Of course, Hostess had faced bankruptcy before, in 2004, but was not forced to close its doors.
According to MSN Money, Twinkie lovers around the world will have no fear – the product said to outlast any other food product on the shelf in lieu of some major disaster will survive the bankruptcy – Hostess just will not produce it.
The Los Angeles Times, mouthpiece for powerful labor unions and big government in Los Angeles, city of trade unions wrote:

Let’s get a few things clear. Hostess didn’t fail for any of the reasons you’ve been fed. It didn’t fail because Americans demanded more healthful food than its Twinkies and Ho-Hos snack cakes. It didn’t fail because its unions wanted it to die. It failed because the people that ran it had no idea what they were doing. Every other excuse is just an attempt by the guilty to blame someone else. …

Keister Award

It’s true that the company had done almost nothing in the last 10 years to modernize or expand its offerings. But as any of the millions of Americans who have succumbed to Twinkie cravings can attest, there has always been something about their greasy denseness and peculiar aftertaste that place them high among the ranks of foodstuffs that can be perfectly satisfying without actually being any good. … Example: Just before declaring bankruptcy for the second time in eight years Jan. 11, Hostess trebled the compensation of then-Chief Executive Brian Driscoll and raised other executives’ pay up to twofold. At the same time, the company was demanding lower wages from workers and stiffing employee pension funds of $8 million a month in payment obligations. [no source provided] Hostess management hasn’t been able entirely to erase the paper trail pointing to its own derelictions. Consider a 163-page affidavit filed as part of the second bankruptcy petition. … The company had known for a decade or more that its market was changing, but had done nothing to modernize its product line or distribution system. Its trucks were breaking down. It was keeping unprofitable stores open and having trouble figuring out how to move inventory to customers and when. It had cut back advertising and marketing to the point where it was barely communicating with customers. It had gotten hundreds of millions of dollars in concessions from its unions, and spent none of it on these essential improvements.

Political pundits on both sides of the fence have slung blame upon each other, as The Inquisitr reported:

With 15,000 Hostess workers fired immediately after Judge Drain gave approval for Hostess to begin emergency liquidation, political pundits from both the right and the left have begun slinging mud at each other. As previously reported on The Inquisitr, some of the Hostess workers, who agree with the Bakery Union’s decision to walk away from negotiations, have been blaming Bain Capital-style greedy Hostess executives for giving themselves raises while asking union employees to take stiff cuts to salaries, pensions, and health insurance. This narrative is derailed by the fact that leading members of the Democratic Party, and one of its top donors, were behind the demise of Hostess. … although some of the accusations ares true. As the Bakers Union says, the Wall Street Journal reports that in July 2011, top executives received a 75 to 80 percent pay increase. What makes this executive pay raise so ridiculous is that two months prior to this Hostess posted a $341 million net loss from a recorded net revenue of about $2.5 billion. The Teamsters Union could not stand for this outrage and the multi-million dollar CEO Brian Driscoll disappeared from the scene in March of 2012. When Greg Rayburn became Hostess’ sixth CEO in a decade he was considered a company turnaround expert. Rayburn quickly reduced those same executives’ salaries to one dollar a year, which included his own pay of $125,000. He did this to combat Hostess’ $860 million debt load and the $2 billion in unfunded pension liabilities to various unions’ workers. … According to American Thinker, the Teamsters, notably, are not affiliated with the AFL-CIO , while the Bakers are part of the labor federation headed by Richard Trumka. It is claimed that “Trumka has a long and sordid history of selling out union workers for his personal political power and career advancement.” Clarice Feldman chronicles for readers of American Thinker Trumka’s “sell-out of the mine workers when he headed the United Mine Workers of America, allying with President Obama, who has made clear his intent to close down coal mines and destroy mining jobs, sacrificing his members’ livelihood, while his political sway earned him a promotion from his own union to head up the entire AFL-CIO and emerge as one of Obama’s key allies.” …
At the end of the the Twinkies saga, the final nail in the coffin was that the Bakers Union called for a strike despite Judge Drain having “serious questions as to the logic behind the decision” and walked out on negotiations. A union is supposed to represent the workers to their benefit, not get them fired

While I had been researching and following this event and in the middle of writing the last article, J. Bartelson sent me the following satirical chain email:

Hostess Bakeries have closed their doors due to union demands.They have no more Twinkies on the shelves.

No more Ho Ho’s to be found. [Swiss Cakes]

The cupcakes are gone.

However, there is still a Ding Dong left …

Thanks to progressive government and those who vote for them.
This entry was posted in Unions.