Hostess’ previous owners did it no favors. There are valid reasons to adopt a debt-leaning capital structure. There are valid reasons to attempt a tactical bankruptcy. There are even valid reasons to buy a rich product portfolio, chop the company into divisions, and sell the divisions individually.

But moving directly from a tactical bankruptcy, shifting the capital structure toward debt, and then leaving the company together as a going concern? It’s bad M&A practice, unless you believe there’s strong growth potential hidden in the company. But it’s not like Hostess had a robust research and development arm, or there was any good reason to believe that people would be buying more Wonder Bread in five years.

The union was the but-for cause of its corporate death. But for the past decade, it’s been coasting on products it developed in the 1950s. Tastes have changed. Even if socialism hadn’t killed it, capitalism would have.

“BCTGM members showed tremendous courage, solidarity and devotion to principle.” Would that be the principle to make your employer so broke they go out of biz to prove that the Union rules? Ding dong, the witch is dead….

Now, that is something I’d love to watch. Can you imagine Union members sitting around tables in a conference room somewhere developing a business plan? Would they begin with labor rates of what they consider to be an acceptable amount along with contributions into pensions and benefits, and set their market price for their product on that foundation? Or would their viewpoint be somewhat different now that it is their own money that is being risked in the business venture? If they adhered to the first option, would they then be dumbfounded when their market price is so high that demand for product doesn’t yield the sales revenues to sustain business operations?

Boom, called it! It’s not the ridiculous union contracts, massive unfunded pension obligations, or the unrealistic demands of workers in the face of reality that killed the company. Nope, it’s BAIN CAPITAL-Style Wall Street Vultures™.Never mind that 80% of Bain’s companies grew their revenue or that few of them went into bankruptcy.

Why bother with the truth when you can get a sound bite instead?

It works, sometimes. Not often. But businesses with generally-countercyclical business models can do fine with substantial (or even total) worker ownership.

Once everyone’s aboard the boat, with their compensation and benefits tied to equity performance, everyone tends to become concerned about whether the boat will sink. Germany’s had mandatory worker participation in management for the past 30-odd years, and it’s tended to tame their union problem. It causes other problems with cost-inflexibility and labor hoarding, but (as Germany’s economic performance tends to demonstrate) it’s not as catastrophic as one might imagine.

Is this the part in the program where the OWS crowd raises their hands, wiggles their fingers and shouts “Up Twinkees”. (couldn’t resist)

It isn’t meant to be a troll, no. It’s just a reminder that using Atlas Shrugged as a practical guide to anything, rather than a moral parable, is no more sensible than using Star Wars. It’s philosophical fiction, intentionally written as fiction, and clearly labeled as fiction.

It’s one thing to look out for the workers such as working conditions and fair pay for a day’s labor as in the good old days of unions when they served a good cause. It’s another to have an insatiable appetite to squeeze more and more out of an employer that can’t afford more concessions. Most unions are out to destroy their employer for their own selfish, righteous selves, and won’t bargain in good faith for the good of all. Me, me, me comes to mind.

I don’t even pay attention to the up and down votes below my posts. I can tell you why your second click made it negative, however. You are only allowed to vote on a discussion post once. When you click a second time, it thinks that you want to take away your plus vote, so it decrements one.

Those of us who are true Conservatives and Republicans don’t ever wish for a disaster after an election that did not go our way, because we know that we will get the blame, whether it was our fault or not. If you had been reading my posts from other diaries concerning the Hostess Brand employees, you would be able to see that I have great sympathy for the hard-working employees that are being pulled under by the poor choice of one union. As far as those dastardly capitalists who are trying to suck as much money out of this company as they can and break the unions, I might remind them that Dick Gephardt is one of the benefactors of this last-ditch attempt to keep the company alive. Alas, even Gephardt has to pronounce the poor critter dead, and even he can’t blame it on poor management.

Yes, I certainly see your point. I suppose unions can get greedy, but I would HOPE most of them would see that the demise for their company would be the demise for their job.

Sigh. I hate my hope.

Thanks for the info. I didn’t know the new way of the land..still learning.

They can blame whoever they want, the fact remains there are 18,000 fewer union members paying dues to fund the fat cat union bosses. Now let’s encourage every unionized company to relocate to a right-to-work state and keep the ball rolling.

LaborUnionReport,

Change “consciousness” to “consciences”. First of all, my way is correct, second of all, you don’t want to set a precedent by implying there’s any “consciousness” in labor union leadership.

I love your work! I’m on the email list and I give from time to time.

$48,000 in 2005
$34,000 in 2011
$25,000 in 2017

That’s the past and proposed pay decline of a union baker at Hostess. They had already given the company 100′s of millions in concessions. The wages they were being asked to work at simply isn’t a living wage. Meanwhile the CEO of Hostess received a pay increase from $750,000 to $2.2 million.

To top it off, the company had already ‘borrowed’ their pension money. Yes, borrowed. Isn’t it nice to know a company can borrow your pension money, then declare bankruptcy with no obligation to pay it back?

This shouldn’t be an issue of liberal or conservative – vulture capitalism should be anathema to all Americans.

The most ridiculous fact here is that 92% of the union members voted to reject Hostess’s offer and go on strike. In other words some 17,000 workers voted themselves out of a job. However that’s not as outlandish as it sounds, when you consider, Millions of unionist, and non -unionist did exactly that on November 6th.

I don’t blame anyone but the “moribund” product. I had stopped buying Wonder Bread years ago, because it was no longer nutritionally adequate. And I LOVED Hostess treats, but I knew they would kill me, with sugar, saturated-animal/hydrogenated, fats. They SHOULD have used stevia or sorbitol instead of sugar, non-gluten spelt flour(which also should be NOT Bromated), and coconut/extra-virgin Olive oil as fats, not the possibly beef tallow they said they might have used. The calories of the treats could have been decreased by 40% and they could have been “heart-healthy” and I still would have been buying them, because once they were SAFE, the Elevated-CONCEPT was great & marketable.

Two things killed Hostess. 1) On the snack food side little debbie was able to beat them on price on the bread side other brands were able to beat them on price. 2) They missed the emergence of the whole grain movement. Looks at your bread isle yes there is still a lot of white bread but the whole wheat, whole white wheat, and multi-grain breads are getting close to half the shelf space now. It has been only recently that wonder white wheat came out. Wonder was behind the curve on the shifting trends.

$48k plus benefits AND a pension for a “union baker”? Good luck with that. No company in their right mind will spend that kind of money on a worker with negligible skills and no education. This is 2012, not 1950.

So people get together and decide to organize so that can have leverage over negotiation for their services. And conservatives are attacking that basic Democratic principle why? Maybe we should not allow political parties and their collectivist leverage that they can use to “rent seek”.