If we needed another example of how unions are destroying businesses, we got one last week when Hostess gave up trying to negotiate with the Bakery, Confectionary, Tobacco Workers and Grain Millers union (BCTWG) and decided to liquidate their assets. From the WSJ article:
“Hostess’s owners have decided to liquidate rather than ride out a nationwide strike by one of the largest of its dozen unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. The Texas-based company owned by the private-equity shop Ripplewood Holdings and other hedge funds essentially gave up. On Friday it shut down its 33 bakeries and 565 distribution centers and prepared to fire nearly 18,500 employees en masse and auction off its brand and recipe portfolio.”
So why did Hostess give up? Surprise, union regulations that make it all but impossible to conduct normal business was the final nail in this company’s coffin. From the same WSJ article:
“Hostess posted sales of $2.5 billion in 2011 but lost $341 million and lacked the cash flow to hold out through the bakers union work stoppage that had only lost a few days of production so far. One reason is a labor-rule burden that by comparison makes Detroit look like Hong Kong.”
“The snack giant endured $52 million in workers’ comp claims in 2011, according to its bankruptcy filing this January. Hostess’s 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012.”
“Union work rules usually required cake and bread products to be delivered to a single retail location using two separate trucks. Drivers weren’t allowed to load their own vehicles, and the workers who loaded bread weren’t allowed to load cake. On most delivery routes, another “pull up” employee moved products from back rooms to shelves.”
To be fair, America is trying to move away from fatty foods and the decrease in demand probably didn’t help Hostess but it’s also evident that unsustainable, sweet (pardon the pun) Union deals delivered the final death blow to this company.
Right on cue, Union bosses, like Trumka, are blaming Private Equity firms, Wall-Street, Romney, Bain, Bush, etc. for this latest black eye that the union suffered. But that is not true.
“The problem with Trumka’s lie-filled logic is that Wall Street didn’t call the strike and Trumka fails to address the fact that without Wall Street investors investing in Hostess, the company, with its shrinking market and overly-burdensome union contracts would have likely died years ago.”
There is also a delicious bit of irony to this saga involving the Teamsters and their desire to eliminate the secret ballot for union elections. The Teamsters, who agreed with the latest deal from Hostess, sought to change their preference for voice voting and asked the BCTWG to use the secret ballot process to vote on their latest strike proposal.
“For the last several years, union bosses have been fighting to effectively eliminate workers’ right to vote through secret-ballot elections on whether or not to become unionized. Yet, with 6700 members’ jobs about to be wiped out, when push came to shove last week—knowing how unions can manipulate other methods of voting—the Teamsters called for the bakers’ union to hold a secret-ballot vote to let members determine whether or not to continue the strike that would close Hostess.”
And for the last bit of irony in this latest Union failure, let’s take a look at the BCTWG union from the Union Facts website.
Unions like to paint company management as the ‘fat cats’ who are only interested in their own earnings and not the wages/salaries of the workers. A review the top 10 salaries of the BCTWG union seems to show the real ‘fat cats’ are the union bosses:
How did the BCTWG union distribute its political contributions?
As usual, unions are the useful idiots of the Democratic Party. They funnel almost all their money to elect Democrats but when their jobs are eliminated, their political ‘leaders’ are nowhere to be seen.
Unions are outdated and are destroying businesses all across America and this is just another example. When will the rest of America stand up to these thugs and realize they are parasites that only seeks to destroy the host?
cosmoscon 
I think management has an obligation to confront unions for their employees. Many employees don’t want to be in a union and feel pressured to join. For example, I knew a lot of the employees at a supermarket by my house, and most of them hated the union because it took a lot of their paycheck as “dues” and then squandered most of it on executive pay and perks. You may have read this in my last article ( http://dynamopolitics.com/2012/11/16/unions-choke-off-nations-twinkie-supply-18500-jobs/ ), but I’d like to reiterate – unions have exhausted their purpose.
There are certain things that management is not allowed to do once a Union has been recognized and if the company violates these rules, the NLRB will come down with severe penalties. Once the Union has been formed, the managements hands are basically tied unless the people decide to decertify the union but if that happens an investigation will be forth coming and any attempts by management to influence the vote will cause the election results to be nullified.
A better role for management is to ensure that a union vote never happens. Take care of the employees, listen to them, communicate to them and then a union will not have a fertile ground to form one there.
I liked your post, by the way!
Thanks for stopping by and taking the time to comment. I always enjoy your opinions.
As much as I hate to see 18,000 jobs go away, in this case it’s for the best.
I for one am happy to see Hostess go out of business.
No doubt, the union rules were as sclerotic as the arteries of the people who ate Hostess products: Wonder Bread, Twinkies, Ho Ho’s, Zingers and Ding Dongs. The country will be better off if these Frankenfoods can be relegated to the dust bin of history.
Unfortunately, the brands will probably be purchased out of bankruptcy by Groupo Bimbo,(which is Mexican owned and the largest baking company in the World,) if they can get an exemption from the Justice Department because Bimbo has already had to sell off some of its Sara Lee Brands because they are too big in the US. If you’ve ever eaten a Thomas English Muffin Oroweat bread, or an Entenmann’s doughnut, you’ve eaten Bimbo.
Because people are aging and becoming more health conscious, there has been a decline in the purchase of baked goods. (There is excess baking capacity in the US.)
Hostess was not going to survive in any case. Unfortunately, if I had to bet money, I would say we have not seen the last Twinkie and Ding Dong. They will live on, packed with artificial preservatives and baked by a non union worker in Mexico.