"Union bosses" and "Wall Street vultures" blamed for Hostess' demise
People are shown standing in the parking lot at the Utah Hostess plant in Ogden, Utah, Thursday, Nov. 15, 2012. / AP
In this highly politicized day and age, even a Twinkie can turn into a political football.
When Hostess announced it was going out of business, citing a labor strike that limited production and distribution of the company's products, a conservative group called Americans for Limited Government was quick to pin the blame.
The group said in a press release that "you can almost hear the union bosses...gleefully celebrating the destruction of one of America's most enduring brands." That claim came despite the fact that these "union bosses" are presumably among the 18,500 workers who are being laid off from the company.
"More than 18,000 workers are unemployed today because of the greed and short-sidedness of labor bosses and their followers who have chosen to destroy their own jobs rather than make concessions that would allow the company to survive," said Bill Wilson, president of Americans for Limited Government. "It is common for parasites to kill their hosts, but it rarely happens in a way where so many people can see it."
Meanwhile the president of the AFL-CIO, Richard Trumka, released a statement calling the closure "a microcosm of what's wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor." Bain Capital is the asset management company founded by former Republican presidential nominee Mitt Romney that invested in faltering companies.
"Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price," he said. "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."
According to CNBC, the forces most responsible for Hostess' decision to close are "two hedge funds that control hundreds of millions of Hostess debt and which have finally decided they won't squeeze any more filling into the Twinkie." It is not clear that Hostess would have lasted this long without such investors: Hostess has faced struggles to maintain market share as Americans' appetites have moved away from junk food and competition has increased, and the company sought bankruptcy in 2004 and again in January. Hostess' debt was most recently purchased by the two funds, Silver Point and Monarch, which generally buy corporate debt at discounts in hopes of turning companies around.
While Hostess had reached an agreement with its largest union, the International Brotherhood of Teamsters, it could not come to an agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which went on strike last week. That union said the demands from management were unreasonable.
"The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share," the union's president, Frank Hurt, said in a statement. "The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company's most valuable asset - its workers."
In July, Fortune wrote that the battle over "who will get what crumbs from a disintegrating corporate cookie" was tied in part to battles over generous employee pension funds. At the time, Hostess reportedly had about $2 billion in unfunded pension liabilities.
"What the hedge funds want is some degree of capitulation from a union whose members will otherwise lose thousands of jobs in liquidation," Fortune's David Kaplan wrote in an extensive article in July. "If the hedge funds don't get it, they've concluded, the company isn't worth saving."
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And now they can sit at home, if they have one left and not work at all, no pay, no benefits....nothing....game over.
Congratulations....
BTW, no more management either, no more raises, no more golden parachutes.
It all over....bye bye....
And since they walked off the job, they should get no unemployment benefits either.
History has shown us that America's best years of job creation and economic growth happened during years of higher taxes and strength in the unions supporting middle class jobs.
______________________________
Name the years.
Is the Union going to support or find jobs for all the workers who lost their jobs until they can find another one.?
Unemployment is already 9.7% (a totally made up number), and now even more are unemployed with the closing of a business that has been in operation for more than 100 years.
What's wrong with this picture.??!!
You people are pathetic!
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History has shown us that America's best years of job creation and economic growth happened during years of higher taxes and strength in the unions supporting middle class jobs. That's a fact, and it's just a shame that the GOP and their conservative minions, feel the need to continue to scapegoat unions and minorities to push their agenda!
FACT: The poorest states are the RED states in the deep south, and they are "right to work" states, giving corporations the upper hand when it comes to wages and benefits, and BOTH the residents and corporations are subsidized by federal tax dollars mainly from the BLUE states!
Guess Who Benefits More From Your Taxes?
There are serious economists who study the difference between what our states pay in taxes and how much they get in return from the U.S. government.
The numbers, for decades now, have been quite clear: With some exceptions, what we regard as RED states are sent a whole lot more of your hard-earned tax dollars than the traditional BLUE states. In effect, supposedly indolent, "tax and spend" liberals actually subsidize the individualistic, pure, and "hard-working lifestyle" of our conservative countrymen.
1. New Mexico ---- Indian reservations, military bases, federal research labs, farm subsidies, retirement programs
2. Mississippi ---- Farm subsidies, military spending, nutrition and anti-poverty aid, retirement programs.
3. Alaska ---- Per capita No 1 recipient of federal benefits; infrastructure projects, DOT and pork projects.
4. Louisiana ---- Disaster relief, farm subsidies, anti-poverty and nutrition aid, military spending.
5. W. Virginia ---- Farm subsidies, anti-poverty and nutrition aid.
6. N. Dakota ---- Farm subsidies, energy subsidies, retirement and anti-poverty programs, Indian reservations.
7. Alabama ---- Retirement programs, anti-poverty and nutrition aid, federal space/military spending, farm subsidies.
8. S. Dakota ---- Retirement programs, nutrition aid, farm subsidies, military spending, Indian reservations.
9. Virginia ---- Civil service pensions, military spending, veterans benefits, retirement, anti-poverty aid.
10. Kentucky ---- Retirement programs, nutritional and anti-poverty aid, farm subsidies.
From the non-partisan Tax Foundation
The goal ought to be to increase corporate profits responsibly and to achieve nearly full employment at wages high enough to insure that these well-paid workers suppport the consumer-driven sectors of the economy. The problem then becomes control of inflation, which is the real job of the FED.
People who get taken in by bashing unions or corporations are being played for suckers by political manipulators.
"But in truth there are no black hats or white knights in this tale. It's about shades of gray, where obstinacy, miscalculation, and lousy luck connived to create corporate catastrophe. Almost none of the parties involved would speak on the record. Still, it's clear from court documents and background interviews with a range of sources that practically nobody involved can shoot straight: The Teamsters remain stuck in a time warp, unwilling to sufficiently adapt in a competitive marketplace. The PE firm failed to turn Hostess around after taking it over. The hedgies can't see beyond their internal rates of return. Et cetera, et cetera, et cetera."
http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/
Now they need to go. Hopefully the states where these workers live will deny unemployment compensation to all those who chose to not work. I sad day for all involved.
I refer everyone to the above comments (unfortunate how cbs doesn't timestamp comments anymore): Maistir professes equanimity, then goes into macro policy and insults. CYD on the other hand smartly quotes the author of the Fortune article and
shows another union's contribution, Wall Street types who throw in the towel when they can't make their targets, other factors and how the situation devolved over time. Not 'just the unions' or 'just Wall St.' But people, especially tea bag kneejerks only see black and white. THAT is sad.