Killing the Goose (But the Eggs are "Free," Right?)

[_Quasimodo]

It is kind of amazing to look back to our ancestors (1950s generation) and see people who got good paying jobs with just a high school education or less. What made their world different from ours?

Stronger unions.

[_ajax18]

Stronger unions.

Well unless you can pull off a global unionization, I don't see how you're going to increase workers wages to where wages once were in this country.

[_Quasimodo]

Stronger unions.

Well unless you can pull off a global unionization, I don't see how you're going to increase workers wages to where wages once were in this country.

Maybe. Wages in developing countries do have an influence. That is just unavoidable unless one wants to create a totally isolationist economy (which I don't think will work).

Once the Republican recession eases, I think you will find wages increasing.

[_Kevin Graham]

"The labor unions which have driven the makers of Twinkies into bankruptcy..."

Jesus, this Sowell fellow is either dishonest or he's just an idiot, which makes it easy to understand why someone of Droopy's education (or lack thereof) would worship him so. Anyone remotely familiar with the Hostess situation knows that the unions didn't "drive" the company into bankruptcy.

Sowell is clearly one of those pseudo-intellects who feeds FOX News their talking points.

Obviously!

Reuters: Hostess Filed For Its First Bankruptcy In 2004. In March, Reuters reported that Hostess "filed for its first bankruptcy in 2004, citing declining sales, high food costs, excess capacity and worker benefit expenses." [Reuters, 3/6/12]

Forbes: The Company Exited Bankruptcy In 2009. In July, Forbes reported that "Hostess was able to exit bankruptcy in 2009" because of an "equity infusion of $130 million" from a private equity firm, as well as "substantial concessions by the two big unions" and lenders that "agreed to say in the game rather than drive Hostess into liquidation." [Forbes, 7/26/12]

Huffington Post: Hostess Re-Entered Bankruptcy In 2012. In January, The Huffington Post reported that "Hostess Brands is hoping to cut its high costs as it heads back into bankruptcy protection for the second time in less than a decade." [The Huffington Post, 1/11/12]

Forbes: Hostess Exited Bankruptcy Because Of "Substantial Concessions By The Two Big Unions." Forbes explained that Hostess was able to exit bankruptcy in 2009 for three reasons, including that "substantial concessions" were made "by the two big unions" -- the Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. Forbes further explained that "annual labor cost savings to the company were about $110 million" and that "thousands of union members lost their jobs." [Forbes, 7/26/12]

Hostess Had Stopped Contributing To Pensions And Wanted To Cut Worker Pay Further. According to The Kansas City Star, union leaders reported that Hostess had stopped contributing to workers' pensions and wanted to cut wages and benefits "by 27 to 32 percent."

Hostess Raised Executive Salary By 35% To 80%. According to The Wall Street Journal, in April Hostess' creditors noted that Hostess had dramatically increased executive pay, including increasing CEO compensation from $750,000 to $2.25 million. According to the Journal, Hostess' creditors called the move "a possible effort to 'sidestep' Bankruptcy Code compensation programs"

CNBC: After Bankruptcy Hostess' "Sales Declined And Attempts To Roll-Out New Products More In Line With Changing Consumer Tastes Flopped." CNBC reported that the first round of bankruptcy "wasn't enough to save" Hostess, adding: "The company's sales declined and attempts to roll-out new products more in line with changing consumer tastes flopped." [CNBC, 11/16/12]

Forbes: Hostess Has Had Six CEOs In A Decade. When CEO Greg Rayburn took over Hostess in March 2012, he became the sixth CEO of the company in a decade. [Forbes, 7/26/12]

Associated Press: "Hostess' Snacks Don't Neatly Fit Into The U.S. Trend Toward A Healthier Lifestyle." In a report on the second bankruptcy, the Associated Press reported that "health-conscious Americans favor yogurt and energy bars over the dessert cakes and white bread they devoured 30 years ago." AP further noted that "Hostess' snacks don't neatly fit into the U.S. trend toward a healthier lifestyle that includes a diet rich in whole wheat foods, fruits and vegetables." [Associated Press, 1/11/12, via The Huffington Post]

Wash. Post: Hostess Has Been "Rife With ... Problems" Beyond Labor Issues, Including "Management's Failure To Freshen Up A Stale Product Line." In January, The Washington Post reported that the "failure of the [Hostess] brand, for decades a staple of American kids' diets, is a parable, rife with the problems that have plagued some of the country's oldest and most famous brands -- a combination of pension burdens, labor rules, crippling debt from financial engineers and management's failure to freshen up a stale product line and keep up with consumers' changing tastes." [The Washington Post, 1/11/12]

Wash. Post: January Bankruptcy Filing Shows Hostess "Would Have Lost Money Without Any Pension Costs At All." The Washington Post reported in January that Hostess "lost $250 million in the less than three years since it emerged from its previous bankruptcy. That means it would have lost money without any pension costs at all." The Post noted that Hostess "lost money in 30 of the past 37 quarters." [The Washington Post, 1/11/12]

NY Times: Hostess "Does Not Have Much Of A Finance Department." In a report on the second bankruptcy, The New York Times' Deal Book noted that "something is a bit odd at Hostess."


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Of course, leave it to those demonized "leftists" to show these so-called Conservative intellectuals, what real research is about.

[_cinepro]

So, if the problem wasn't really the unions, then in what way does this outcome benefit management and the shareholders? What did they expect to gain from bluffing the unions and then following through with the bluff and unnecessarily shutting down the company that they couldn't have had without the strike?


Based on this article, it sounds like no one at the bakers union thought that far ahead:

With the threat of liquidation looming, the Teamsters, in an unusual move, called on the bakery workers to hold a vote to determine whether the rank-and-file workers wanted to end their strike and accept Hostess’s offer — or face layoffs. Last Thursday, Mr. Hall of the Teamsters told the bakery workers that Teamsters members could not believe liquidation and layoffs were what the bakery workers “ultimately wanted to accomplish when they went out on strike.”

But the bakery union declined to hold such a vote. The next day, the company announced plans to liquidate and sell off its assets.

“There was this whole theory that the company was bluffing about liquidation and there was some white knight that was going to come and buy the company” Mr. Hall said.

http://dealbook.nytimes.com/2012/11/19/ ... mediation/

Oops.

[_Kevin Graham]

It doesn't benefit shareholders, but it benefits management in that they provide themselves with these golden parachutes while the company collapses. Nothing you just posted says the reason the company went bankrupt was because of the union strikes, and you haven't even begun to deal with Hostess' history of poor management/bankruptcies, which resulted in poor sales. As I have always said, consumer demand will determine the health of a business. Demand dropped, and so business went down. This isn't difficult to understand. Blaming the unions is typical of those who don't want to take responsibility for their own actions.

I don't know how anyone in their right mind can demonize these folks when they weren't protesting for pay increases. They were protesting another pay decrease, this time by 8%. In the meantime, management has run the company into the ground and given themselves pay raises.

Yes, clearly the villain here is the union!