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Absurd Union Benefits And Rules Killed Hostess

From the editors of the Wall Street Journal:

The Twinkie, a Suicide

November 16, 2012

Perhaps it says something about America—though we’re not sure what—that iconic junk foods like Twinkies, Devil Dogs, Ho Hos snack cakes and Wonder bread have endured since the 1930s despite changing consumer health and eating habits…

Hostess survived the Great Depression. But it couldn’t survive Barack Obama’s ‘recovery.’

Hostess’s owners have decided to liquidate rather than ride out a nationwide strike by one of the largest of its dozen unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. The Texas-based company owned by the private-equity shop Ripplewood Holdings and other hedge funds essentially gave up. On Friday it shut down its 33 bakeries and 565 distribution centers and prepared to fire nearly 18,500 employees en masse and auction off its brand and recipe portfolio.

Hostess posted sales of $2.5 billion in 2011 but lost $341 million and lacked the cash flow to hold out through the bakers union work stoppage that had only lost a few days of production so far. One reason is a labor-rule burden that by comparison makes Detroit look like Hong Kong.

The snack giant endured $52 million in workers’ comp claims in 2011, according to its bankruptcy filing this January. Hostess’s 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012.

Union work rules usually required cake and bread products to be delivered to a single retail location using two separate trucks. Drivers weren’t allowed to load their own vehicles, and the workers who loaded bread weren’t allowed to load cake. On most delivery routes, another "pull up" employee moved products from back rooms to shelves.

If we had a free and independent press these details would have been reported on the front page. But instead we only hear about them in an editorial.

This year management negotiated concessions from some of the unions, including the Teamsters, but the bakers rejected a last and best offer in September. Then the courts gave Hostess unilateral authority to modify collective-bargaining contracts, prompting the strike. So now it will liquidate, instead of attempting to emerge from Chapter 11 intact.

The 18,500 layoffs are equal to about 11% of the net new jobs the entire U.S. economy created in October. The unions are blaming private equity, or Bain Capital, or capitalism, but the election is over. And so is Hostess.

Not to mention that if it hadn’t been for private equity, in this case Ripplewood Holdings, Hostess would never have gone back into business after their 2004 bankruptcy. And these jobs would have been lost eight years sooner.

But this just proves how the parasites will eventually kill the host — or Hostess — and bring about their own demise, if they have their way.

This article was posted by Steve on Monday, November 19th, 2012. Comments are currently closed.

7 Responses to “Absurd Union Benefits And Rules Killed Hostess”

  1. captstubby says:

    which will be seasonally adjusted…

  2. Petronius says:

    So the parasites have finally killed the Hostess. Is it any Wonder?

    What a bunch of Ding-Dongs.

    Hey, how about a Twinkie bailout?!

    Otherwise they say the Twinkies will be made in Mexico, and thousands of undocumented Americans will lose their jobs.

  3. Mithrandir says:

    Prosperity Now, Austerity Later…..

  4. Anonymoose says:

    Hostess survived the Great Depression. But it couldn’t survive Barack Obama’s ‘recovery.’

    That should become a mantra for the modern era. So let me get this straight–rich people and corporations hoard all the money and we should force them to give it up. Make them pay any way possible–and it never gets in their little dim bulb minds they take too much and the company can’t keep afloat. Or maybe the company just fails and that’s it?

  5. BillK says:

    Not so fast; a Federal Judge has forced mediation:

    Hostess and Bakers Union Asked Accept Strike Mediation

    By Dawn McCarty

    The judge overseeing Hostess Brands Inc., while declining to approve the company’s liquidation, asked management and the bakers’ union to enter mediation today to resolve the strike that the maker of Twinkies and Wonder bread said forced it to shut.

    U.S. Bankruptcy Judge Robert Drain said yesterday at a hearing in White Plains, New York, that there are “serious questions as to the logic behind the decision to strike.” Hostess and the bakers’ union agreed to Drain’s request to enter confidential mediation under his supervision.

    “To me, not to have gone through that step leaves a huge question mark over this case which I think will only be answered in litigation,” Drain said. “My desire to do this is prompted primarily by the potential loss of over 18,000 jobs, as well as my belief that there is a possibility to resolve this matter, notwithstanding the losses the debtors have incurred over the last week or so.” …


  6. captstubby says:

    “a possibility to resolve this ”


    we can’t have the union look bad.
    Hostess will be given a “offer they can’t refuse.”

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