Thursday, November 15, 2012

Ding Dong Death Watch

There are genuinely serious issues facing us today.  Hamas is retaliating for Israels massive missile strike with new, long range missiles hitting the suburbs of Tel Aviv.  We may on the verge of outright war in the Middle East which could easily escalate into a world wide conflict.

Europe has fallen back into a real recession.  Strikes are occurring in many countries and Spain and Greece are on the verge of default once again.  The economic implications for the United States are immense.

General David Petreas has been forced to resign as the head of the C.I.A. in a sex scandal that seems to grow daily.

And the events in Benghazi, Libya are just now beginning to emerge.  Susan Rice, our United Nation's Ambassador has been tarnished by her role in making a series of misleading statements (or attempted cover-up) of events surrounding the murder of Ambassador Stevens. Unfortunately this mess gets uglier by the day at a time when we need President Obama and his entire national security team to focus on world events.

But I today I must spend a few comments about the potential death of a great American Institution, Hostess Bakeries and their flagship confections, the Twinkie and Dong Dong dessert snacks.  If striking bakers don't return to work by the close of business today, the CEO of the bankrupt Hostess Brands, the parent of Hostess, has promised to close the business and liquidate all assets.

While the names Twinkie and Ding Dong will no doubt be sold in the liquidation, it's unlikely the snacks will ever be the same.  

The bakers are fighting a rather small reduction in wages ordered by the bankruptcy court.  The strike is illegal and the court has ordered the strikers to return to work.  If they don't, and the company liquidates, 18,000 employees will all lose their jobs.  

And all America will lose their Twinkies and Ding Dongs, perhaps forever.

There is no doubt in my mind that Hostess has been mismanaged.  They had just clawed their way out of bankruptcy two short years ago.  Now they're already back.  That's not the Baker's Union fault, that's management.

On the other hand Hostess cannot compete with the brilliantly run McKee Foods, maker of Little Debbie Snacks, who operate non-unionized plants with significantly lower costs.  Saddled with huge union costs, high medical benefit costs and gigantic pensions (which the Bankruptcy Court is now proposing to reduce), Hostess simply cannot compete profitably in the cost conscious American marketplace.

Let's hope that calmer minds prevail in each of the crisis we face today, even the Twinkie Crisis.  

ADDENDUM November 23, 2012:  Everyone tried to save Hostess, the Teamsters Union, Management and even the Bankruptcy Judge, but the Baker's Union was determined to close the company and place it into liquidation.  I've read dozens of articles and cannot find one word of explanation from the Baker's Union as to why they refused every effort to resolve this crisis. 18,500 people will now all lose their jobs.  No one believes the 6,500 Baker's Union members will ever get their jobs back, even with new owners.

Why did the union work so aggressively against the interests of their members?  Why do we have 6,500 Baker's Union members suffering this Christmas?  I'd welcome input, especially from any member of the Union, especially the Union Leaders.

Red State has an in depth analysis of this failure and the union's mysterious failure to help thier members: Let Them Eat Cake


Barry Rueger said...

$17 per hour hardly qualify as "high" wages. How much is the CEO getting paid?

Barry Rueger said...

$17 per hour hardly qualify as "high" wages. How much is the CEO getting paid?

Bob Keller said...

Barry, Thanks for finding my blog and joining the conversation.

As I reply to you this morning Hostess has announced they will cease operation and immediately fire all 19,000 employees. The asserts, most importantly product names and recipes will be sold. Buyers will undoubtedly relocate manufacturing to non-union states.

The Teamsters Union had agreed to the proposed new contract and had quite literally begged the Baker's Union to hold a secret ballot of members. The Bakers Union has refused.

Indeed, you are quite correct. $17.00 an hour, or about $36,000.00 a year isn't much, especially compared to the District of North Vancouver Government Salaries you recently posted on your blog. But the fight was also over a rich pension benefit that was unsustainable. The court proposed to reduce it by 2/3rds. Medical insurance was also a factor.

If you'll pardon my pun, American consumers want to have their cake and eat it, too. The Union Lable, proudly displayed on every package of Hostess Twinkies, didn't prod consumers to purchase the Hostess snacks at $3.00 +++ per package instead of the $1.79 packages of comparable non-union Little Debbie snacks.

By the way, the Hostess CEO, who I believe deserves most of the blame for the company's failure was fired about a year ago. The company was being run by an interim turn-around specialist.

Unknown said...
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Unknown said...

You don’t really want to play by the same rules as business. Business owners typically don’t take their share until all of their employees are paid and all of their other business bills are paid.

For every successful rich person, there were many more who tried to become rich but lost everything. Why is it that so many people want a greater share from those who have succeeded, but don’t want to share in the losses of those who failed to become rich?

What if the business you work for fails? How would you like to pay back all of the salary you earned? You got to keep the money, but the business owner or his/her investors lost that money. Do you really want to play by those rules?

And how would you like to work 12+ hours per day trying to abide by all of the regulations increasingly heaped upon businesses by the government?

Unknown said...

A good read on the Subject