Sunday, November 18, 2012

Oh, Suzy Q! Don't Be A Ding Dong And Believe The Ho Hos!

As the gentle reader most likely knows by now, the executives of Hostess has decided that they sucked all the money they could out of the company and the workers and shut down all of their operations immediately.

Just like that, more than 18,000 were put out of work.

The failure of a CEO, Gregory F. Rayburn, immediately blamed the unions in his announcement of the shutdown.

The corporate media ran with it. Radio squawkers parroted this. The echo chamber mindlessly repeated it as gospel truth.

Of course it was easier for those without critical thinking skills to repeat the talking points that unions are bad instead of actually looking at the facts for themselves. That might lead to some inconvenient and uncomfortable truths.

Things like the unions were not the only problem, or even the primary one:
The company, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake’s and Nature’s Pride snacks.
Click to embiggen
Of course, while union members were being told - not even asked, but told - to make even greater concessions than they already had made, the executives were completely blameless. Well, not really:
Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO's with no true experience in the wholesale baking business have left this company unable to compete or survive.
The clearest story of the real course of events comes from who else but a worker that lived through this nightmare roller coaster:
The company of course used it's 'oops' letter to justify asking for concessions from the Union. We gave nothing and gained nothing that year after a 45 minute strike. The status quo continued and I proudly joined the middle class for the first time in my life. I made $14 an hour and had insurance. I even went on vacations for the first time. I had great pride in my job, and the products. We bought a new car for the first and only time in my life. In 2003 I transferred to the Lenexa, KS bakery.

In 2005 it was another contract year and this time there was no way out of concessions. The Union negotiated a deal that would save the company $150 million a year in labor. It was a tough internal battle to get people to vote for it. We turned it down twice. Finally the Union told us it was in our best interest and something had to give. So many of us, including myself, changed our votes and took the offer. Remember that next time you see CEO Rayburn on tv stating that we haven't sacrificed for this company. The company then emerged from bankruptcy. In 2005 before concessions I made $48,000, last year I made $34,000. My pay changed dramatically but at least I was still contributing to my self-funded pension.

In July of 2011 we received a letter from the company. It said that the $3+ per hour that we as a Union contribute to the pension was going to be 'borrowed' by the company until they could be profitable again. Then they would pay it all back. The Union was notified of this the same time and method as the individual members. No contact from the company to the Union on a national level.

This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn't repay. The Union continued to work despite this theft of our self-funded pension contributions for over a year. I consider this money stolen. No other word in the English language describes what they have done to this money.

After securing our hourly cash from the bankruptcy judge they set out on getting approval to force a new contract on us. They had already refused to negotiate outside of court. They received approval from the judge to impose the contract then turned it over to the Union for a vote. You read that right, they got it approved by the judge before ever showing to the Union.

What was this last/best/final offer? You'd never know by watching the main stream media tell the story. So here you go...
1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don't have it now then you never will.

Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.
It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.
That $3+ per hour they steal totaled $50 million last year that they never paid us. They sold $2.5 BILLION in product last year. If they can't make this profitable without stealing my money then good riddance.

I keep hearing how this strike forced them to liquidate. How we should just take it and be glad to have a job. What an unpatriotic view point. The reason these jobs provided me with a middle class opportunity is because people like my father in law and his father fought for my Union rights. I received that pay and those benefits because previous Union members fought for them. I won't sell them, or my coworkers, out.
The story of Hostess is nothing but an example of capitol vultures pulling a Bain job on the company and its workers, then blaming the unions for their treachery and theft.

This is the kind of life that Mitt Romney and Paul Ryan was promoting and Scott Walker is still pushing. This is their idea of being successful and being business friendly.

Hostess would have shut down whether the unions capitulated or not. In fact, it was only the huge concessions the unions had already made that kept it around as long as this. Without those concessions, the executives would have taken the money and ran years ago.

I feel bad for the 18,000+ workers that are now without work, just before the holidays. But I don't blame them. People have to draw the line somewhere. It's just sad that there are so many so-called "patriots" that are still willing to sell out their fellow Americans for this and blame them for standing up for themselves.

For those 18,000 plus that got screwed over by the excessive greed of the executives, know that we still love you and support you:

1 comment:

  1. Thomas Sowell has added a few thoughts on this topic. It will be interesting to see how this pans out.