Hostess Closing Down after Strike (Twinkies No More?)

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Hostess Closing Down after Strike (Twinkies No More?)

Postby darkwombat » Fri Nov 16, 2012 10:31 pm UTC

http://abcnews.go.com/Business/twinkies-maker-hostess-liquidate-company-strike/story?id=17736898

My shocked mind trembles in horror.
My angry stomach rumbles in sorrow.
My clogged arteries frolic in anticipation of deliverance.

I must believe that somehow, some way, someone will pick up the brands that Hostess liquidates, and bring back the Twinkies.

If not, then half of the premise of "Zombieland" has already come to pass, and surely the hordes of the undead are not far from falling upon us. :shock:

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Mon Nov 19, 2012 3:36 pm UTC

You should sign the petition.

https://petitions.whitehouse.gov/petiti ... y/cJz0ngJR

I mean, we've already bailed out Wall Street, and the car industry...

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Tirian » Mon Nov 19, 2012 4:15 pm UTC

Not on Michelle Obama's watch. You'll have to wait for President Christie for that.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby lutzj » Mon Nov 19, 2012 4:21 pm UTC

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Garm » Mon Nov 19, 2012 4:30 pm UTC

Here's another take regarding the Free Market's role in Hostess' decline. http://www.outsidethebeltway.com/the-free-market-killed-hostess-and-thats-a-good-thing/

From what I've been reading, it seems like through poorly handled restructuring, executive pay raises and golden parachutes, the private equity firms managed to suck the creamy filling out of the company, leaving it nothing but a soft golden shell of its former self.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Mon Nov 19, 2012 4:47 pm UTC

Nah. It was the union. They decided that no job was better than an 8% pay cut.

The article makes it seem possible that Hostess may have closed its doors a year from now regardless of the pay cut, but that's still a year of 92% paycheck. Unions do have advantages, but in this case the Baker's Union caused a lot of problems for their membership.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby freezeblade » Mon Nov 19, 2012 6:16 pm UTC

I'm actually more upset about some of the brands owned by hostess, namingly nearly all the major sourdough bread manufacturers in the SF bay area (Boudin not included).

Colombo, Parisian, and Toscana will all be closing.This makes me sad, as Boudin is expensive, and the previous three could be found in nearly every crappy supermarket.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Garm » Mon Nov 19, 2012 6:44 pm UTC

Heisenberg wrote:Nah. It was the union. They decided that no job was better than an 8% pay cut.

The article makes it seem possible that Hostess may have closed its doors a year from now regardless of the pay cut, but that's still a year of 92% paycheck. Unions do have advantages, but in this case the Baker's Union caused a lot of problems for their membership.


I hope you're being sarcastic, I really do. The executives were giving themselves giant pay raises and asking the unions to take pay cuts while failing to react to a more health conscious public. So sure... Hostess could have limped along for a couple more years if the unions had decided to take the short end of the stick but the company was doomed. Blaming the unions because of the most recent strike ignores the long chain of causality that brought them to this point.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Izawwlgood » Mon Nov 19, 2012 6:47 pm UTC

Garm wrote:From what I've been reading, it seems like through poorly handled restructuring, executive pay raises and golden parachutes, the private equity firms managed to suck the creamy filling out of the company, leaving it nothing but a soft golden shell of its former self.

Hehe, +1, would read again.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Mon Nov 19, 2012 6:56 pm UTC

Garm wrote:The executives were giving themselves giant pay raises and asking the unions to take pay cuts while failing to react to a more health conscious public.

While it's entirely believable, I haven't seen any indication that that is true. Your article's thesis is
So, yes, the Union was the proximate cause of today’s decision to shut down the business but my feeling is that it would’ve happened anyway.
I'm sure that mismanagement is why a nationally recognized brand has been falling apart over the last 10 years, that's not the kind of thing that falls on a factory worker. However, the reason that those factory workers are unemployed today is that the Union decided that a show of force was more important than those worker's jobs. Your article also mentioned that the Teamster's Union had come to the Baker's Union and asked them to please not strike because it would make the company go under and put THEM out of work.

If it wasn't for the Baker's Union, those workers would be paying their rent and making me Twinkies right now.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby CorruptUser » Mon Nov 19, 2012 7:02 pm UTC

While I'm somewhat anti-union, I'm also somewhat anti-corporate. If I had a company, I would never hire the executives of a company that couldn't negotiate a union contract. I hope the workers can find a job elsewhere while the execs are never put in charge of anything more important than a newsstand.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Garm » Mon Nov 19, 2012 7:17 pm UTC

It's not just about executive pay. I think it's mentioned in one of these articles I've link spammed but apparently Hostess was worth about a billion a year and was carrying debt of about 850 million. That's not a well run company, unions or no.

Article about Hostess Executives inability to adapt to a changing market: http://www.forbes.com/sites/adamhartung/2012/11/18/hostess-twinkie-defense-is-a-management-failure/

Article wherein the executives pay is mentioned: http://dealbook.nytimes.com/2012/11/16/hostess-brands-says-it-will-liquidate/

Pertinent quote if you don't want to read the article:

The Teamsters, which has 6,700 members at Hostess, said it played an instrumental role in ousting Hostess’s previous chief executive, Brian J. Driscoll, this year after the board tripled his compensation to $2.55 million. The union also hired a financial consultant, Harry J. Wilson, who had worked on the General Motors restructuring.


Another article discussing creditors attempts to investigate potential abuse of regulations to pay Hostess execs more than they otherwise would have been owed: http://online.wsj.com/article/SB10001424052702304072004577323993512506050.html

And finally, an article from Gawker:

http://gawker.com/5961444/dont-worry-hostess-top-executives-still-got-richer-as-company-collapsed
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby AndyG314 » Mon Nov 19, 2012 7:33 pm UTC

I would suspect that Twinkies aren't going anywhere. The name is worth a lot of money, and it will probably be sold to pay off the companies sizable debt. Many companies who already make Twinkie clones would be happy to put the name on their product. Hostess may be badly run but their brand IP is valuable.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Mon Nov 19, 2012 7:37 pm UTC

Yeah, I won't dispute that the CEO's pay raises increased their debt from $848 million to $850 million because it's largely irrelevant.

The company was in the shitter because of the rather serious problem of not making money, of which a small fraction of that problem can be correlated with CEO pay.

The company closed down because the Baker's Union decided to sacrifice its workers jobs for more power. Striking for better working conditions: Smart. Striking to intentionally close down your own workplace, leaving you unemployed: Dumb.

Best of luck to the factory workers. Hopefully they can find a job with a Union that won't screw them before their unemployment checks stop coming.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Zamfir » Mon Nov 19, 2012 7:42 pm UTC

' 92% is better than nothing' only works if you have some reason to trust the top management, when they say that wage cuts are the only possible rescue.

Because they might lie. For all you know, their plan is to cash out the gains from the wage cut, then let the company fail anyway. Or they could keep the company going anyway, but they like the stick of bankrpty to get them some extra wage cuts.

There are people who specialize in playing chicken with companies. Aim at the wall, and only swerve if people give up enough in their wages, pensions, etc. Apparently the teamsters decided that management was not bluffing, the other Union decided to call the bluff. You can't really judge from some articles who made the right choice, based on the information they actually had (including a management that apparently saw profits enough for bonuses). If you are not willing to call a bluff, you'll get suckered for sure, and again next year.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Garm » Mon Nov 19, 2012 7:44 pm UTC

Heisenberg wrote:Yeah, I won't dispute that the CEO's pay raises increased their debt from $848 million to $850 million because it's largely irrelevant.

The company was in the shitter because of the rather serious problem of not making money, of which a small fraction of that problem can be correlated with CEO pay.

The company closed down because the Baker's Union decided to sacrifice its workers jobs for more power. Striking for better working conditions: Smart. Striking to intentionally close down your own workplace, leaving you unemployed: Dumb.

Best of luck to the factory workers. Hopefully they can find a job with a Union that won't screw them before their unemployment checks stop coming.


Sigh.... You're either trolling or intentionally misreading everything. I understand you're really anti-union but now you're just being absurd. Blame it on the evil, corrupt, socialist, scary-adjective, unions all you want but you're objectively wrong in your determination to lay the blame for Hostess' closure at the feet of the Baker's Union.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Mon Nov 19, 2012 7:59 pm UTC

Zamfir wrote:' 92% is better than nothing' only works if you have some reason to trust the top management, when they say that wage cuts are the only possible rescue.
I don't really care if they're lying or not, if my option is 92% or lose your job in a weak economy where no one is hiring, I'm going to take the 92% sure thing.
Zamfir wrote:You can't really judge from some articles who made the right choice, based on the information they actually had (including a management that apparently saw profits enough for bonuses).
Sure I can. The Teamsters made an accurate prediction, so their choice was better.
Zamfir wrote:If you are not willing to call a bluff, you'll get suckered for sure, and again next year.
Yeah, but I'll have a job. And if I feel that my compensation is too low, I can look for a job that will compensate me better. The difference here being that I'll be looking for a job while collecting a paycheck, rather than quitting and hoping one is available.
Garm wrote:you're objectively wrong in your determination to lay the blame for Hostess' closure at the feet of the Baker's Union.
Your Article wrote:So, yes, the Union was the proximate cause of today’s decision to shut down the business.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Darryl » Tue Nov 20, 2012 4:49 am UTC

Heisenberg wrote:
Zamfir wrote:' 92% is better than nothing' only works if you have some reason to trust the top management, when they say that wage cuts are the only possible rescue.
I don't really care if they're lying or not, if my option is 92% or lose your job in a weak economy where no one is hiring, I'm going to take the 92% sure thing.
Zamfir wrote:You can't really judge from some articles who made the right choice, based on the information they actually had (including a management that apparently saw profits enough for bonuses).
Sure I can. The Teamsters made an accurate prediction, so their choice was better.
Zamfir wrote:If you are not willing to call a bluff, you'll get suckered for sure, and again next year.
Yeah, but I'll have a job. And if I feel that my compensation is too low, I can look for a job that will compensate me better. The difference here being that I'll be looking for a job while collecting a paycheck, rather than quitting and hoping one is available.
Garm wrote:you're objectively wrong in your determination to lay the blame for Hostess' closure at the feet of the Baker's Union.
Your Article wrote:So, yes, the Union was the proximate cause of today’s decision to shut down the business.

One, it wasn't just a 8% paycut, there's the matter of the company not having paid into the pension fund in years. The company owed quite a substantial amount to the pension, and part of the "cuts we need you to take to survive" was gutting the pension so they no longer owed that.
Two, this is a company that increased CEO pay while losing money. The CEO pay is the clear cause here.
Three, the anti-union sentiment that's taken hold in the US in general (not necessarily yours) is kinda disturbing. You'd think people in non-union jobs would look at union pay rates and say "hey, why aren't I making that much?", but instead they're saying "I'm not making that, so why should you?"
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby KnightExemplar » Tue Nov 20, 2012 5:03 am UTC

Realistically, CEO pay is so little money when we're talking about pension funds. If Hostess wasn't paying into the pension funds like they should have... then the CEO's pay is so small its practically irrelevant. Pension funds are huge huge HUGE amounts of money that dwarf the size of the CEO's salary.

There is significant amounts of irony in your post btw.

The CEO pay is the clear cause here... they're saying "I'm not making that, so why should you?"


I'm interested in hearing the Union debate here. But lets not pretend that the CEO's salary actually matters. Unless you can provide me the numbers that prove otherwise... I seriously doubt that a CEO's pay alone would put pension funds in jeopardy.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Garm » Tue Nov 20, 2012 5:09 am UTC

Darryl wrote:Two, this is a company that increased CEO pay while losing money. The CEO pay is the clear cause here.


Gonna disagree with you here. The CEO and his pay are a symptom, not the root cause. Hostess came out of their first bankruptcy with more debt than they went in with. That tells you that the bankruptcy was mismanaged. You're right that one of the primary debtors was the unions themselves. Hostess owes/owed something like 160 million to the pension fund which probably means they did a really shitty job of negotiating with the unions. The key here is massive mismanagement, the foremost sign of which is an inability to adapt to modern times. Reliance on an outdated distribution network (a point many articles make), shitty labor deals, and a more health conscious public all spelled doom for the company. Sure, the unions were the straw that broke the camel's back but the failure of the company is not their fault. The CEO's pay is being talked about so much, imo, because it's a good sign that the execs knew their time was limited and they wanted to profit off the company before their terrible decisions (and the decisions of their predecessors) sno-balled out of control and destroyed the business.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby KnightExemplar » Tue Nov 20, 2012 5:19 am UTC

Gonna disagree with you here. The CEO and his pay are a symptom, not the root cause. Hostess came out of their first bankruptcy with more debt than they went in with. That tells you that the bankruptcy was mismanaged. You're right that one of the primary debtors was the unions themselves. Hostess owes/owed something like 160 million to the pension fund which probably means they did a really shitty job of negotiating with the unions. The key here is massive mismanagement, the foremost sign of which is an inability to adapt to modern times. Reliance on an outdated distribution network (a point many articles make), shitty labor deals, and a more health conscious public all spelled doom for the company. Sure, the unions were the straw that broke the camel's back but the failure of the company is not their fault. The CEO's pay is being talked about so much, imo, because it's a good sign that the execs knew their time was limited and they wanted to profit off the company before their terrible decisions (and the decisions of their predecessors) sno-balled out of control and destroyed the business.


On the other hand, I can get behind that theory. I haven't really followed Hostess however, so I dunno the distribution issues that they would of had.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby AvatarIII » Tue Nov 20, 2012 9:18 am UTC

AndyG314 wrote:I would suspect that Twinkies aren't going anywhere. The name is worth a lot of money, and it will probably be sold to pay off the companies sizable debt. Many companies who already make Twinkie clones would be happy to put the name on their product. Hostess may be badly run but their brand IP is valuable.


...and any secret recipes they may or may not possess.

it always surprised me that Hostess are not international. I have never seen a hostess cake in the UK, maybe I'm just not looking hard enough, or in the right places, since we do occasionally get imported "well known" and unique stuff like Lucky Charms, and Fluff, and even more so Hershey's chocolate, I'm surprised I've never seen a Twinkie, considering how well known they are. perhaps they were trialled at one point and deemed not to UK tastes, or too expensive to import for what they were. A box of Lucky Charms costs £5, in comparison to under £3 for a larger box of premium brand (Kellog's) cereal, so I dread to think what a pack of twinkies would cost in comparison to UK produced cakes.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Xenomortis » Tue Nov 20, 2012 9:52 am UTC

AvatarIII wrote:it always surprised me that Hostess are not international. I have never seen a hostess cake in the UK, maybe I'm just not looking hard enough, or in the right places, since we do occasionally get imported "well known" and unique stuff like Lucky Charms, and Fluff, and even more so Hershey's chocolate, I'm surprised I've never seen a Twinkie, considering how well known they are. perhaps they were trialled at one point and deemed not to UK tastes, or too expensive to import for what they were. A box of Lucky Charms costs £5, in comparison to under £3 for a larger box of premium brand (Kellog's) cereal, so I dread to think what a pack of twinkies would cost in comparison to UK produced cakes.


I think the fact that they taste terrible had something to do with it.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby yurell » Tue Nov 20, 2012 10:02 am UTC

Yeah, the American palate is rather ... different.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby elasto » Tue Nov 20, 2012 10:13 am UTC

UK chocolate >> Euro chocolate >> US chocolate

Unfortunately Chinese supermarkets only sell the crappiest imports. No clue why :/

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Joeldi » Tue Nov 20, 2012 10:40 am UTC

My first thought looking at this thread was 'oh those things, yuck' We don't have them, (though I've tried them on several occasions), and we do have quite a few similar things. They taste like poison.

In my experience, if a piece of chocolate isn't Cadbury or Nestle, the odds are stacked against it tasting anything approaching 'nice'.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Zamfir » Tue Nov 20, 2012 10:43 am UTC

I am still surprised that cadbury can be called chocolate, instead of 'brown colored milk powder'

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby CorruptUser » Tue Nov 20, 2012 1:45 pm UTC

Garm wrote:sno-balled out of control


I see what you did there.


Anyway, American chocolate is a lot like American beer; while the big brands that get all the advertising are mediocre at best, there are a lot of good tiny brands if you know where to look. Only the garbage like Coors or Miller gets exported, so you probably never heard of Dogfishhead, Stone, or Troegs.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Izawwlgood » Tue Nov 20, 2012 1:56 pm UTC

Zamfir wrote:I am still surprised that cadbury can be called chocolate, instead of 'brown colored milk powder'

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Xenomortis » Tue Nov 20, 2012 2:02 pm UTC

CorruptUser wrote:Anyway, American chocolate is a lot like American beer; while the big brands that get all the advertising are mediocre at best, there are a lot of good tiny brands if you know where to look. Only the garbage like Coors or Miller gets exported, so you probably never heard of Dogfishhead, Stone, or Troegs.


As far as I can tell, this is true of beer everywhere.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby HungryHobo » Tue Nov 20, 2012 2:19 pm UTC

Heisenberg wrote:I don't really care if they're lying or not, if my option is 92% or lose your job in a weak economy where no one is hiring, I'm going to take the 92% sure thing.

Hi Heisenberg this is your boss. we've decided we're going to either fire you or cut your pay 8%. also all those back wages/pension we owe you? ya you're going to just have to agree to write off that debt.

also you have our word that we won't do the same next week and the week after that.

The company is just so strapped for cash we were barely able to afford my 20% pay raise last week. we just have no money at all.


Claims of poverty ring hollow when you're giving yourself and your friends pay raises and bonuses.
Promises are worth little if you don't have a record of keeping them.

finally the union members are likely to have known that things were likely to go tits up for a while now and at least this way the employees can claim something in court. if the union had caved they'd likely be in exactly the same place only instead of having no jobs and being owed pension money from a bankrupt company they'd have no jobs and simply not be owed anything from a bankrupt company.
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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby kiklion » Tue Nov 20, 2012 2:42 pm UTC

HungryHobo wrote:
Heisenberg wrote:I don't really care if they're lying or not, if my option is 92% or lose your job in a weak economy where no one is hiring, I'm going to take the 92% sure thing.

Hi Heisenberg this is your boss. we've decided we're going to either fire you or cut your pay 8%. also all those back wages/pension we owe you? ya you're going to just have to agree to write off that debt.

also you have our word that we won't do the same next week and the week after that.

The company is just so strapped for cash we were barely able to afford my 20% pay raise last week. we just have no money at all.


Claims of poverty ring hollow when you're giving yourself and your friends pay raises and bonuses.
Promises are worth little if you don't have a record of keeping them.

finally the union members are likely to have known that things were likely to go tits up for a while now and at least this way the employees can claim something in court. if the union had caved they'd likely be in exactly the same place only instead of having no jobs and being owed pension money from a bankrupt company they'd have no jobs and simply not be owed anything from a bankrupt company.


What can the employee's claim by Hostess going bankrupt in November, instead of Hostess going bankrupt in January? All of those unfunded pension amounts would still be owed and would still be unfunded, come January, Hostess still would have paid no money into the pension fund and the union would have lost the same amount as they lost now, and they would have had the same claim into the pension insurance fund as they have now. The only difference, is the union members losing their jobs 2 months early.

No one is saying that Hostess wouldn't have gone bankrupt if the unions caved, what people are saying is that if the unions caved, the members would have been making 92% of their wages (instead of the 0% they are getting now) and would have 2 months (or however long it takes for Hostess to go bankrupt with the new wages) of getting pay to find new jobs. The decision that no job is better than an 8% pay cut, is only correct for those people who feel they are better off with no pay but 40 hours a week (or whatever they worked) extra to find a new job vs 92% pay but need to find the new job in their spare time.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Beltayn » Tue Nov 20, 2012 3:44 pm UTC

Mike Hummell, a receiving clerk and a member of the Bakers' union working in Lenexa, Kan., said he was making about $48,000 in 2005 before the company's first trip through bankruptcy. Concessions during that reorganization cut his pay to $34,000 last year, earning $16.12 an hour. He said the latest contract demands would have cut his pay to about $25,000, with significantly higher out-of-pocket expenses for insurance.


http://money.cnn.com/2012/11/16/news/co ... s-workers/

While this is anecdotal, it's nowhere near a mere 8% pay cut.
If I went from making $48,000 to $25,000, lost much of my health care package, and my entire retirement savings was pretty much dissapeared due to mismanagement, I'd be pissed.

Anyone saying it is the union's fault is severely lacking in perspective.
Yes, Unionites get lazy and shiftless. Yes, they develop a culture of entitlement, and often don't subscribe to the notion that it's better to cut off your foot to prevent the cancer from spreading. But anyone who wants to talk shit about the unions simply needs to look at the figures. Getting your pay slashed by $14,000, then the possibility to get it slashed another $9,000, that's something that few people would put up with. Union or not.

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The only reason that the knee-jerk reaction to this story makes people think, "oh, those dirty fucking unions" is because:
A) so few Americans understand the concept of mismanagement within corporations, or they simply don't acknowledge it as being the serious problem that it is
B) conservative media has vilified unions to the point where we view them as ruining businesses.
This misconception exists among people that union = $35/hour. That's just not the case.


Hostess has been suffering financially for a long time. This is made clear by the fact that they've filed for bankruptcy twice now and underwent over 4 years of restructuring.

They were no longer paying their union pensions. They didn't go broke because they had to pay union pensions, but they nonetheless violated the terms of their contract with the unions.

If their business profile was so shoddy that they couldn't find lenders or investors willing to extend them additional credit, then the level of mismanagement or lack of revenues was clearly far too serious. We have no idea how indebted the company has been, nor do we know what their financials are. It's completely impossible to know what impact the union made on the organization, but it's safe to say one thing: unions have not ruined any businesses that were well-run.

For example, Car and Driver at one point interviewed the current UAW president. When the topic of "the recession/GM and Chrysler are going under/oh god oh god the sky is falling/Gotdamm those dirty commie unions" came up the guy more-or-less said "Look we had the same contract at Ford as we did at GM and Chrysler. Ford didn't go under, they didn't have to take bail-out money. It was bad management at the other two that forced them into those situations."

~~~~~~~~~~~~~~~~~~~~~~~

I'd wager that reduced demand (via market oversaturation and international competition) has forced Hostess into a commoditized pricing position over the past decade, meaning that they aren't able to raise prices to stay in businesses because they need to effectively compete.

Their core competency is basically junk food, and junk food is not selling the way it used to. Their demographics over the past 20 years have shifted from middle-income consumers to lower-income consumers, and although Americans are fatter than ever, I just foresee a huge amount of competition in junk food that didn't exist 20 years ago.

When an industry is facing commoditization, as so many are in the new global economy, it truly becomes the quick adapters that survive. When your business posts low margins on items, as I assume they do on most of their food products, then price cuts are damaging. If you're used to making only 10 points per item on the contribution margin, and you're down to a few points on the net, you're really at risk. If you can't cut prices, and you can't cut internal costs, and you can't increase consumer demand through a marketing mix, then you're fucked. Hostess just wasn't strong.

Should the baker's union have held out, given the financial weakness of the company? Probably not. But let's not sit here and act as though a small union of bakers going on strike for a short time to protest yet another pay cut is really the straw that broke the camel's back. Hostess sounds like it had cancer, and the strike was just the common cold that finished it off.

I know that it's very tempting to arrive at the very easy conclusion that unions ruined Hostess, but take a look deeper and you'd find a very flawed company on it's deathbed.
Last edited by Beltayn on Tue Nov 20, 2012 3:56 pm UTC, edited 3 times in total.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Tirian » Tue Nov 20, 2012 3:45 pm UTC

kiklion wrote:What can the employee's claim by Hostess going bankrupt in November, instead of Hostess going bankrupt in January? All of those unfunded pension amounts would still be owed and would still be unfunded, come January, Hostess still would have paid no money into the pension fund and the union would have lost the same amount as they lost now, and they would have had the same claim into the pension insurance fund as they have now. The only difference, is the union members losing their jobs 2 months early.


When the company liquidates, a judge decides how much of the liquidated assets go to the pensioners, and if you do it earlier rather than later then there will be more assets and fewer creditors to compete with. Evidently the union members did the math and concluded that the bankruptcy courts would honor their obligations better than the Hostess board of directors, and I'm not comfortable second-guessing them.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby AvatarIII » Tue Nov 20, 2012 3:50 pm UTC

elasto wrote:UK chocolate >> Euro chocolate >> US chocolate

Unfortunately Chinese supermarkets only sell the crappiest imports. No clue why :/


They all have their own advantages, UK chocolate is creamy, Euro chocolate is rich, and US chocolate goes well with peanut butter.
CorruptUser wrote:Anyway, American chocolate is a lot like American beer; while the big brands that get all the advertising are mediocre at best, there are a lot of good tiny brands if you know where to look. Only the garbage like Coors or Miller gets exported, so you probably never heard of Dogfishhead, Stone, or Troegs.


This is especially funny because US Budweiser isn't even the nicest Budweiser you can get in the UK, Czech Budweiser is much nicer.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Tue Nov 20, 2012 4:16 pm UTC

Beltayn wrote:While this is anecdotal, it's nowhere near a mere 8% pay cut.

Not only is this merely an unsubstantiated anecdote, you left out the other anecdotes in your own article.
For a member of the bakery workers' union whose strike a week ago led Hostess to shut operations, it's a sad day. "It was a great job. A lot of people put kids through college, paid for mortgages," he said.
The worker, who spoke on the condition his name not be used, said he spoke out at the union meeting against going on strike. "I said, 'If you're unhappy with the situation, then you need to quit. There are people with responsibilities and mortgages. We all can't afford to strike,'" said the veteran who worked loading trucks.
"While they [Teamsters at Hostess] were not at all happy about the additional concessions, they did not want to lose their jobs," she said. "My husband and I feel that if these employees [Bakers] were so unhappy ... then they should have quit so the company could continue on and the remaining employees that want to work could."

As far as the pensions, yes it's a raw deal, but retirement pales in comparison to paying the bills this month.

On that note: Unions: Please stop screwing your members by demanding pensions over 401ks. You're Hurting America.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Beltayn » Tue Nov 20, 2012 4:22 pm UTC

The point was that it was a 48% pay cut in total. The fact that it was broken up into increments doesn't allow you to claim it was *just* an 8% cut without being deliberately intellectually dishonest.

A cut that large means that for the majority of those people with mortgages and kids in college, they wouldnt be able to pay the bills regardless, even if they took the deal.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby kiklion » Tue Nov 20, 2012 4:26 pm UTC

Tirian wrote:
kiklion wrote:What can the employee's claim by Hostess going bankrupt in November, instead of Hostess going bankrupt in January? All of those unfunded pension amounts would still be owed and would still be unfunded, come January, Hostess still would have paid no money into the pension fund and the union would have lost the same amount as they lost now, and they would have had the same claim into the pension insurance fund as they have now. The only difference, is the union members losing their jobs 2 months early.


When the company liquidates, a judge decides how much of the liquidated assets go to the pensioners, and if you do it earlier rather than later then there will be more assets and fewer creditors to compete with. Evidently the union members did the math and concluded that the bankruptcy courts would honor their obligations better than the Hostess board of directors, and I'm not comfortable second-guessing them.


I can't find the source now, but my understanding was that the pension was covered by the Pension Benefit Guaranty Corporation http://en.wikipedia.org/wiki/Pension_Be ... orporation, as such if they went bankrupt later, only the PBGC would be hit harder. Since I can't find the source, they may not be covered or may fall through some cracks due to limitations.

Beltayn wrote:The point was that it was a 48% pay cut in total. The fact that it was broken up into increments doesn't allow you to claim it was *just* an 8% cut without being deliberately intellectually dishonest.

A cut that large means that for the majority of those people with mortgages and kids in college, they wouldnt be able to pay the bills regardless, even if they took the deal.


Why does it matter what percent the pay cut was, as long as it was still worth going to work for? The statement starts with what he earned in 2005, so if he started in 2002 making $22,000 a year then can we say they chose to strike because they didn't get a big enough raise? You can't just go back in time an arbitrary amount. The previous contract was accepted, they agreed 'It is worth spending my time to go to work for $x" they refused the current contract, it does not matter what percent lower this one is than the last one, all that matters is if the amount they were offered is worth their time to go to work for.

"The point is the jobs they're offering us aren't worth saving," he said Friday. "It instantly casts me into poverty. I wouldn't be able to make my house payment. My take-home would be less than unemployment benefits. Being on unemployment while we search for a new job, that's a better choice than working these hours for poverty wages."


From the link Beltayn provided. This is very important, I was ignoring unemployment benefits before. If the worker's are assuming they can get a job before the unemployment benefits end (which, with unemployment benefits lasting almost 2 years http://www.edd.ca.gov/unemployment/Fede ... nsions.htm seems likely) then if unemployment pays more it is almost definitely not worth it to work.

~Edit: This actually baffles me now. http://www.legal-aid.org/selfhelp/emplo ... _info.html states that you must be actively looking for a job and cannot refuse without 'good cause'. http://www.azlawhelp.org/articles_info. ... ticleid=50 states that 'good cause' includes if the work is available due to a strike, but after the bankruptcy, if Hostess reorganizes and seeks to hire new people under the most recent proposed contract, I wonder if they would have 'good cause' to refuse to work. There would be no on going strike, the work is available due to restructuring.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Heisenberg » Tue Nov 20, 2012 5:38 pm UTC

Beltayn wrote:The point was that it was a 48% pay cut in total. The fact that it was broken up into increments doesn't allow you to claim it was *just* an 8% cut without being deliberately intellectually dishonest.
For one paper-pushing "clerk," assuming he's not exaggerating. However, according to the numbers, the average pay cut would be 8%. It would be dishonest to assume that one unverified report from a disgruntled employee is representative of the entire company.
Beltayn wrote:A cut that large means that for the majority of those people with mortgages and kids in college, they wouldnt be able to pay the bills regardless, even if they took the deal.
So you decide to quit their job for them, ensuring that the number of bills they pay goes from "some" to "none"? How benevolent of you.

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Re: Hostess Closing Down after Strike (Twinkies No More?)

Postby Zamfir » Tue Nov 20, 2012 5:55 pm UTC

I can't find the source now, but my understanding was that the pension was covered by the Pension Benefit Guaranty Corporation http://en.wikipedia.org/wiki/Pension_Be ... orporation, as such if they went bankrupt later, only the PBGC would be hit harder. Since I can't find the source, they may not be covered or may fall through some cracks due to limitations.

Thing is, if you agree to accept a lower pension to save the company, and the company goes under anyway, you now have a lower claim. perhaps I am misreading, but it seems as if one of the management's demand was that the pension fund would receive 25% stock in the company and 100 million in debt, instead of the missing money( which was presumably more than a 100 million).

So you decide to quit their job for them, ensuring that the number of bills they pay goes from "some" to "none"? How benevolent of you.

Of course. That's how collective bargaining works. Your negotiation position is stronger if you can threaten to leave en masse, but that only works if you are indeed willing to stop en masse, if push comes to shove. Otherwise you're back at square one, as interchangeable individuals in a highly asymmetric bargaining position.

The same happens on the other side of the table. Investors give up their individual ability to withdraw money from the company, because a company has more strength if its working capital cannot jump ship. So you only get money out if the collective of owners votes for dividends.


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