Hostess Shrugged

Posted: November 16, 2012 by ShortTimer in Economic freedom, Economics, Jobs, Unions

Hostess is dead.  Good job, unions.  6000 Bakers union members just killed 18000 jobs.

Irving, TX – November 16, 2012 – Hostess Brands Inc. today announced that it is winding down operations and has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including its iconic brands and facilities. Bakery operations have been suspended at all plants. Delivery of products will continue and Hostess Brands retail stores will remain open for several days in order to sell already-baked products.

The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the Company’s largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the Company’s ability to produce and deliver products at multiple facilities.

Various news outlets were reporting losses due to the strike being near $10 million, and Hostess had already taken a $15 million dollar hit since September in restructuring.

Really this can be laid at the foot of the Bakery, Confectionary, Tobacco and Grain Millers International Union (BCTGM).  Hell, even the horrifically corrupt thuggish criminal enterprise known as the Teamsters union was negotiating with Hostess to keep the union members’ jobs and keep Hostess open.  From the Teamsters’ website:

On Friday, Nov. 9, the BCTGM began to strike at some Hostess production facilities without notice to the Teamsters despite assurances they would not proceed with job actions without contacting the Teamsters Union. This unannounced action put Teamster members in the difficult position of facing picket lines without knowing their right to honor such a line without being disciplined.

As is our longstanding tradition, Teamster members by and large are honoring Bakery Worker picket lines when encountered and complying with their contractual obligations when not encountering picket lines. The BCTGM leaders are putting Teamster members in a horrible position – asking them to support a strike that will put them out of a job when they haven’t even asked all their members to go on strike.

That strike is now on the verge of forcing the company to liquidate – it is difficult for Teamster members to believe that is what the BCTGM Hostess members ultimately wanted to accomplish when they went out on strike.

Mary Katherine Ham over at HotAir notes there were other issues Hostess was facing, as well as the fact that the Teamsters really had come to a compromise and got screwed by the Bakers.

There’s much discussion of how big names like the Twinkie will be purchased by other companies (Mexican super-bakery Grupo Bimbo being one) but there will no doubt be legal wrangling as the Bakers union goes after the crumbs of Hostess that are being sold off, as well as some spurious claim to ownership of the Hostess bakeries and some interference by the NLRB like Boeing was subjected to.

Much has been made of how Hostess was mismanaged by different hedge funds and capital groups.  The communist propagandists over at DailyKos are blaming “teh evil Wall Street banksters” and AFL-CIO head Richard Trumka is blaming Romney:

What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price. These workers, who consistently make great products Americans love and have offered multiple concessions, want their company to succeed. They have bravely taken a stand against the corporate race-to-the-bottom. And now they and their communities are suffering the tragedy of a needless layoff. This is wrong. It has to stop. It’s wrecking America.

Except it was “Bain-style Wall Street vultures” who’d been putting their own capital and resources into Hostess since 2001 in an effort to save the company.  They kept dumping money into it thinking it could work.  Even the Teamsters (I can’t stress what a big deal that is) saw the writing on the wall for the company and compromised for the sake of saving the goose that lays the golden eggs (or golden snack cakes).  Both the Teamsters and Hostess came together to make the company work.

The Bakers Union is who is ultimately at fault.  Accusing capital investors who were dumping money into Hostess for nearly a decade to save it, providing jobs in the meantime, as the culprit in this is the kind of knee-jerk garbage expected to be spewed by some thug propagandist.  Again, even the Teamsters knew that was bull, and knew that wages and salaries are part of a company’s expenses – and that the strike would hurt the company and ultimately themselves.  When the TEAMSTERS (have I stressed this enough?) know that a strike costing the company almost $10 million in a week is going to hurt both the management and workers in a time of recession, perhaps that should be a clue.

Trumka’s right.  The layoff was needless.  But that’s at the foot of his union stooges, not at the fault of Hostess, or the unions (even the teamsters) who do understand that expenditures above income means failure for the company and the workers – who are one and the same.

Here’s a list of bakery closures, just to help put those 18,000 jobs into perspective.

  • Birmingham, AL: Closed
  • Anchorage, AK: Closed
  • Los Angeles, CA (Hostess): Closed
  • Los Angeles, CA (Dolly): Closed
  • Oakland, CA: Closed
  • Sacramento, CA: Closed
  • Denver, CO: Closed
  • Jacksonville, FL: Closed
  • Orlando, FL: Closed
  • Columbus, GA: Closed
  • Hodgkins, IL: Closed
  • Peoria, IL: Closed
  • Schiller Park, IL: Closed
  • Columbus, IN: Closed
  • Indianapolis, IN: Closed
  • Waterloo, IA: Closed
  • Emporia, KS: Closed
  • Lenexa, KS: Closed
  • Alexandria, LA: Closed
  • Biddeford, ME: Closed
  • Boonville, MO: Closed
  • St. Louis, MO: Closed
  • Billings, MT: Closed
  • Henderson, NV: Closed
  • Wayne, NJ: Closed
  • Rocky Mount, NC: Closed
  • Cincinnati, OH: Closed
  • Defiance, OH: Closed
  • Northwood, OH: Closed
  • Tulsa, OK: Closed
  • Philadelphia, PA: Closed
  • Knoxville, TN: Closed
  • Memphis, TN: Closed
  • Ogden, UT: Closed
  • Salt Lake City, UT: Closed
  • Seattle, WA: Closed


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