Friday, November 16, 2012

No Ho-Ho's For Santa....

 Another American business icon is getting ready to bite the bullet and go out of business. Hostess Brands, which makes baked goods such  as Twinkies, Devil Dogs and Wonder Bread, announced this past Friday that it is asking a federal bankruptcy court for permission to close its operations. Hostess is blaming a strike by bakers protesting a new contract.

Nearly 18,500 workers will be losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide, as well as 570 outlet stores. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union represents around 5,000 Hostess employees. 

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said CEO Gregory Rayburn.

 The company was trying to reorganize through a bankruptcy and was asking for an 8% cut to employees' wages, a reduction in health benefits, and a freeze in pension plan payments for more than two years. The company would also not pay $2 billion it owes to many of its creditors, including vendors.To help offset some of the reductions, the plan would also give its unionized employees a 25% equity stake in the company, and two seats on its board of directors, and an interest-bearing note worth $100 million.
Hey Ladies, are you smiling today?

So it may have been trying to reduce its costs and overhead in the current economy but those 18,500 workers would have still had jobs. I can understand both sides to a degree and I also admit that if it weren't for unions, this country's workers would have remained close to slave laborers making unlivable wages under horrible working conditions. Just look back at working conditions in the early part of the 1900's. But I also believe that unions can demand too much from companies that aren't in a position to agree to the requested contracts. At times, I think that unions don't care what happens to workers that go on strike, just as long as they can get the employees to stop work and use that as a bargaining tool. 
 It appears that this time an American company could not withstand a strike and couldn't increase its contract offer. 

It should be noted that the 7,500 members of the Teamsters union that work at Hostess narrowly approved the contract. They have been sharply critical of the smaller Bakers' union decision to strike, saying it was forcing the company to the cusp of liquidation.
If you're happy and you know it raise your hands....

 So the 18,000-plus workers will now be out of a job. They went from a proposed 8% decrease in pay to a 100% decrease! Yes, they'll be on the government dole for the allotted unemployment period. Yes, they can say they stood up for what they thought was right. They'll also find that they won't be bringing home as much money and that money will stop at some point. They will suddenly be without health insurance. And they'll be competing against each other to find other work. The suppliers and vendors for Hostess will also suffer and perhaps some of those will have to close their doors. The towns that the workers lived in will suffer from a lack of business. It just keeps trickling down until it affects thousands more people.

Hostess is the No. 2 bread baker in the country and had annual sales of about $2.5 billion. The company said it had been making 500 million Twinkies and 127 million loaves of Wonder Bread annually before Friday's shutdown. It was founded in 1930 in Kansas City by
Ralph Leroy Nafziger as a wholesaler selling bread loaves wrapped in gingham to grocery stores.

So say goodbye to Beefsteak, Butternut, Home Pride, Merita, and Nature's Pride breads. Say goodbye to Millbrook, Standish Farms and Sweetheart brands. And wave goodbye to little ole Dolly Madison. Say goodbye to another American business institution. 

Happy Thanksgiving to you turkeys.

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