Ding Dong, the Twinkie’s Dead. . . Almost

I’m not particularly a Twinkie fan. I don’t think I’ve had a Ho-Ho or a Ding-Dong in years. . . but I’d kind of like to have the choice, right?

As much as my diet likes Hostess’ recent news, it’s not good news for this country.

It’s one company- it’s 18,500 workers, which isn’t even close to half a percent of the current U.S. population of 314,797,496- so why does it matter?

Hostess, which in January had filed for chapter 11 protection (following over four years of restructuring from a previous bankruptcy in 2004, ending in 2009), recently announced that it would be shutting its doors permanently, thanks to the massive dent that its workers’ strike had on the already fledgling company. CEO Gregory Rayburn said that “we deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.” The company was already struggling in an economy that has been tough for all industries, and in an effort to keep the ship afloat, the company had tried numerous times to negotiate with the various unions represented within its infrastructure. . . to no avail.

It’s shocking, I know- how dare a struggling company ask its workers to take a pay/benefits cut in the hopes that the company would stay financially solvent enough to keep them EMPLOYED, period! Heinous, I tell you– heinous!

In very brief sum, that’s exactly what happened. The company stated unequivocally that things would have to change within “its current cost structure, much of which is determined by union wages and pension costs,” or the company would have no alternative but to close its doors. Their outrageous demands? CNN reports that:

The new contract cut salaries across the company by 8% in the first year of the five-year agreement. Salaries were then scheduled to bump up 3% in the next three years and 1% in the final year.

Hostess also reduced its pension obligations and its contribution to the employees’ health care plan. In exchange, the company offered concessions, including a 25% equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.

So in other words, by the time this was all said and done, workers would have taken a pay cut of just 4% (after the 9 year period, 5 years @ 8% less than 2012 rates, 3 years @ 5% less than 2012 rates, and then at the end, just 4% less than 2012 rates.) This, of course, is assuming an economy on track as it currently finds itself.

Just a thought- can Americans go on strike nation wide? After all, we’ve all seen an average 8.2% reduction in take-home pay during the four years Barack Obama has been in office. We’ve been asked to shoulder a doubling (and, depending on your state, a tripling!) of the price of a gallon of gas. Our seniors were asked to take a cut from Medicare of over 700 billion dollars. Despite promises that we could keep our health insurance of choice, we’ve been asked to pay more for our premiums as costs skyrocket. And, starting in 2013, the expiration of the Bush tax cuts coupled with taxes associated with Obamcare will ask us to foot a massive tax increase.

But I’ve digressed.

Frank Hurt is president of one of the unions affected, and issued the following statement following the announcement:

“Our members decided they were not going to take any more abuse from a company they have given so much to for so many years. They decided that they were not going to agree to another round of outrageous wage and benefit cuts and give up their pension only to see yet another management team fail and Wall Street vulture capitalists and ‘restructuring specialists’ walk away with untold millions of dollars.”

First of all, I’m going to go out on a limb and say it’s a pretty safe bet that those workers would rather have their jobs than see their unions “make a point” with the so-called villainous Hostess “ruling class.” Secondly, while Wall Street a la Mitt Romney and Bain Capital have become easy targets over the last few months thanks to blatantly fallacious explanations of “venture capital,” I hate to break it to you, Mr. Hurt, but the private equity firms that invested in Hostess in the hopes of building it back up (and thus cashing in on a little profit) aren’t going to get much from a company that’s insolvent. . . and as a result of shutting its doors your precious workers are in a world of hurt. . . forgive the pun. For the seven millionth time, venture capitalists loan money to make money. It is in their best interest to make that company successful!

As I type these words it has just recently come across the wire that Hostess and members of one of the primary unions involved will in fact sit down to mediation after all. Though, may it be duly noted, that this is not a concession on either part. According to TheBlaze.com:

“The bankruptcy judge hearing the case noted that neither party had gone through the critical step of mediation and suggested they do that before any further action be taken.

‘Moving to a liquidation is also a significant economic hit, and I think that many people, myself included, have serious questions as to the logic behind the decision to strike and a concern that it may be as a result of differences as far as information and goals,’ U.S. Bankruptcy Judge Robert Drain said on Monday.’I’m giving the union, as well as the debtors and their lenders, the last chance,’ he added. Both parties agreed. However, if both parties fail to come to an agreement, the bankruptcy hearing will resume Wednesday at 11 a.m ET.”

If no agreement is reached, the company will likely close its doors as planned, and a certain Mexican bakery giant could have a pretty sweet deal. That’s right- Grupo Bimbo has been sniffing around the Hostess brand. . . we’ll have to wait and see.

In the meantime- I return to my original point. While this one company represents a fraction of the overall economy, it is a phenomenal representative of precisely what’s wrong with this nation. It’s the mentality that NO MATTER WHAT, you are entitled to whatever it is you feel is “fair.” Is it “fair” that a person may have to take a pay cut here and there? Is it fair that someone loses his or her home because they lost their job? Not particularly…but that is real life! What I am trying to convey with this piece is that we’ve lost the concept of the relationship between fairness and life. Our citizenry has been brought up to believe that life is supposed to be fair. . .when anyone who has been around the block can report that this is certainly NOT the case. As our mothers used to tell us as we pouted about whatever now-meaningless problem that faced us in our early years, “Well kiddo, life ISN’T fair.”

Here’s the deal, KIDDOS. No one is holding a gun to the heads of those 18,500+ workers at Hostess and forcing them to work there. Despite our terrible economy, our citizens still have some of the easiest paths to employment on the planet, and are more than free to walk away and find a better job. Hostess is faced with a dire financial picture. Rather than force its workers into the unemployment lines, the company asked that each worker UNDERSTAND the situation and cooperate with a pay cut. This is significant- with the mess that Hostess is in, wouldn’t it just be easier for its execs to dump the whole mess for a couple billion from Grupo Bimbo or whichever company bid highest, and walk away? Certainly.

Instead, they tried to do what they could to keep jobs available for its employees. In turn, the unions that are meant to “protect” the best interests of their workers somehow saw a 100% pay cut as preferable to an 8% cut. Who is looking out for whom here? We are living in a new reality in this nation- as Hostess and so many other companies in the throes of union negotiations know. . . the concept of fairness has been stretched beyond recognition. It’s quite humorous, really, to see union leadership talking about the so-called “self-serving Wall Street vultures,” when nothing demonstrates a self-serving nature better than the incredible selfishness displayed by the unions in the Hostess affair. Furthermore, these are the same people who vote politicians into office who talk all day about a higher tax burden as a “fair share,” yet when it comes to chipping in a little more in the name of saving a company, the unions dig in their heels. How incredibly hypocritical.

Just consider this: at the end of the day, which entity–the unions or Hostess–TRULY had the best interests of the employee at heart?

4 thoughts on “Ding Dong, the Twinkie’s Dead. . . Almost

  1. The unions were formed by people who were working in terrible conditions; earning a meager salary, which was their only motivation for working in those conditions; and working outrageous hours so that the companies could produce more and make more money to line the pockets of the owners who made those jobs possible. Unfortunately, like everything else in our country, the unions themselves became corrupt. Sin has a way of sneaking its way into everything good. Now the unions have become the new controllers of industry. How sad that something that was intended for the benefit of the worker has turned into something for the benefit of the unions.

    • Precisely. The unions have become the behemoth that they were originally created to deal with. You hit the nail on the head though, when you bring up sin’s influence on the world. As Lord Acton once said, “Power corrupts, and absolute power corrupts absolutely.” The unions have raked in a lot of power throughout their existence. . . and as such quite a bit of corruption.

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