Farewell, Hostess . . .

[prisonchaplain]

While I tend to view myself as conservative, I agree with Adam Smith that collective bargaining tends to give employees a more level playing field in benefits negotiations. Capital has the assets and structures, it is not unreasonable for workers to bargain as a united entity. Ironically, his work is over 150 years old.

Do unions sometimes abuse their powers. Indeed. However, do companies sometimes squeeze employees, driving them to ever greater amounts of work, for unreasonably low wages without benefits? I would reckon that such is how unions got their traction. There's no rule that says workers who unite to engage in collective bargaining cannot be a legitimate part of the free enterprise system.

[Vort]

Unions exist because they're necessary. Few will dispute that. But unions are every bit as soulless and corrupt as the corporations they supposedly counterbalance.

[MarginOfError]

While I tend to view myself as conservative, I agree with Adam Smith that collective bargaining tends to give employees a more level playing field in benefits negotiations. Capital has the assets and structures, it is not unreasonable for workers to bargain as a united entity. Ironically, his work is over 150 years old.

Do unions sometimes abuse their powers. Indeed. However, do companies sometimes squeeze employees, driving them to ever greater amounts of work, for unreasonably low wages without benefits? I would reckon that such is how unions got their traction. There's no rule that says workers who unite to engage in collective bargaining cannot be a legitimate part of the free enterprise system.

This tends to be about how I view unions. I think unions are wise and beneficial so long as both the companies and the unions see themselves as partners in an enterprise, not rivals in a competition.

[Dravin]

There's no rule that says workers who unite to engage in collective bargaining cannot be a legitimate part of the free enterprise system.

I'm inclined to see it simply as one group bargaining for a better outcome for themselves with the other. It's like Vlasic and Kroger bargaining over what rate Kroger is going to buy pickles.

Unions exist because they're necessary. Few will dispute that. But unions are every bit as soulless and corrupt as the corporations they supposedly counterbalance.

I wouldn't use the negative phrasing, but I'm inclined to agree that neither unions nor businesses have any inherent moral leg up on the other.

Edited November 17, 2012 by Dravin

[Saldrin]

I don't think unions are necessary, they are a throw back to an earlier point in human history.

does a better job of improving the worker's lot. as the video says in a free labor market "the whole pie is bigger" (not a hostess pun)

[Dravin]

Unions are part of a free market. At its essence a union is simply an outgrowth of the freedom of labor to choose where and for how much it sells its value. A union saying, "Give us an extra week of vacation or we walk away." is simply a different version of Vlasic saying, "Give us an extra 5 cents per jar of pickles or we walk away." I think the mindset that places the idea of unions outside of the free market is drawing an artificial distinction. Though I will grant that legal protections for unions (or even businesses for that matter) are interruptions introduced into the freedom of the market.

Edited November 17, 2012 by Dravin

[Just_A_Guy]

Skippy, I agree that the brands will go on; but I would be flabbergasted to see Hostess restructure now. If what I'm reading is correct, Hostess has already asked the court to liquidate - in legal parlance, they will have filed a motion to convert from Chapter 11 to Chapter 7 bankruptcy. Union lawyers will huff and puff, but at the end of the day the motion is very likely to be granted. Even if it isn't, Hostess can close their Chapter 11 case and wind down their affairs outside of bankruptcy under state law.

The only hope for Hostess is if management changes their minds, or the employees or some white knight venture capitalist comes in with a buy-out offer.

(Mitt Romney, call your office.)

[skippy740]

The ONE union I can think of that's 'necessary' are the Disney unions - particularly for theme park employees.

I say this because there are positions within the theme park that have little to no marketable skills OUTSIDE this venue. When you have training, but little demand, it can be easy to be taken advantage of... because "where else are you gonna go?"

(BTW, I can't recall if there has ever been a union strike at any Disney park.)

I was doing some job searching for the future after I complete my technical school training. Was kinda surprised that Boeing has a union. But based on this definition, it's understandable.

[annewandering]

Unions did not throw the workers under the bus. The workers vote to accept or decline offers from the companies. The workers, in this case, had already accepted lower wages and fewer benefits with the proviso that the money saved would go into the business in the form up updating machinery, product etc. Instead it was put into higher wages for the higher management. Last year the company even abandoned the pension plan, against agreement.

All in all the company seemed bent on failing. The workers have said that they knew they would probably lose their jobs but they figured, in their own words, they would 'take one' for other workers to keep other companies from doing the same to their workers.

We will see how it plays out.

[bytebear]

The workers rely on the unions to tell the truth, and tend to strong arm them into going their way. They hardly gave workers all the information and options. I don't know any union ever who said to the workers they would probably lose their jobs if they strike. Often money is taken from members paychecks to further the union agenda, even if the members disagree with that agenda (which they would be punished for voicing). It's hardy a democratic system. Workers have very little power.

Edited November 17, 2012 by bytebear

[prisonchaplain]

The workers rely on the unions to tell the truth, and tend to strong arm them into going their way. They hardly gave workers all the information and options. I don't know any union ever who said to the workers they would probably lose their jobs if they strike. Often money is taken from members paychecks to further the union agenda, even if the members disagree with that agenda (which they would be punished for voicing). It's hardy a democratic system. Workers have very little power.

Those arguing that neither the company nor the union have a claim to moral superiority are correct. This comment seems to skewer the union while making no mention of company underhandedness. Have companies never pretended to be in much more dire straights than they are? Have they never threatened bankruptcies and severe lay-offs more as a leverage against union demands than a true statement of circumstances? Have we forgotten about the Pinkertons?

Again, I'm no liberal. Unions do get corrupt and political. I agree that members should have the right to refuse contributing to political action committees as part of their dues. However, it's unfair to suggest that the sins are all on the side of unions and employees.

[bytebear]

Those arguing that neither the company nor the union have a claim to moral superiority are correct. This comment seems to skewer the union while making no mention of company underhandedness. Have companies never pretended to be in much more dire straights than they are? Have they never threatened bankruptcies and severe lay-offs more as a leverage against union demands than a true statement of circumstances? Have we forgotten about the Pinkertons?

Again, I'm no liberal. Unions do get corrupt and political. I agree that members should have the right to refuse contributing to political action committees as part of their dues. However, it's unfair to suggest that the sins are all on the side of unions and employees.

But do you really think this is the case here? I have more sympathy toward private sector unions (don't even get me started on California which is now #1 in poverty!), but statistics clearly show that union members get far more than non union equivalents. It simply costs more to run a unionized company. Sometimes by 20% or more. Pension retirement packages are antiquated, and cost companies millions, and they simply can't compete against companies who have more modern retirement plans, which still protect workers and cost less to manage. It all falls under competition, and Hostess cannot compete. That is in part due to their own business decisions,but also in large part because of the union demands they had to accommodate.

[Just_A_Guy]

Unions did not throw the workers under the bus. The workers vote to accept or decline offers from the companies.

The votes were all voice votes - and anyone who watched the Democratic Convention this year saw the problem with voice votes (God and Jerusalem are only back on the party platform because of Antonio Villagairosa's temporary bout of hearing loss). That was the crux of the Teamsters' disagreement with the bakers' union - the Teamsters thought the bakers should do a secret ballot rather than an easily-manipulated voice vote.

The workers, in this case, had already accepted lower wages and fewer benefits with the proviso that the money saved would go into the business in the form up updating machinery, product etc. Instead it was put into higher wages for the higher management. Last year the company even abandoned the pension plan, against agreement.

That all sounds wonderful from a class-warfare standpoint, but it's ultimately meaningless unless you have access to the full company financials. It may well be that there were some pre-bankruptcy shenanigans among management--and if so, the shareholders will make the management cough it up via the bankruptcy court process. But as I pointed out earlier: the $3.5 million for the top executive would have given $194 to each employee; but it wouldn't have kept the company running.

All in all the company seemed bent on failing.

All in all, Obama seems bent on prolonging the recession. (See how easy that was?)

The workers have said that they knew they would probably lose their jobs but they figured, in their own words, they would 'take one' for other workers to keep other companies from doing the same to their workers.

We will see how it plays out.

The current deal included 25% company ownership for the employees and could have put Hostess on track to become the largest employee-owned company in the United States, if the union played its cards right in the long run. Instead, they took their cards and went home - permanently.

[pam]

I just happened to stop by the corner c-store and the Hostess shelves are completely empty. So sad.

[skippy740]

I'm waiting for the "just kidding" announcement... and that it was only a ploy to increase the sale of their products for the short-term. :)

[pam]

Well if we start seeing an abundance of "annoucements" from other food manufacturers...they would have learned how to increase their sales. :)

[Guest]

My BIL is the area rep for his teacher's union. They don't listen to him, they do what they've decided to do. He finds the whole organization pointless.

My dad was a journeyman electrician, though, and was always proud to be a union man. They've taken good care of him.

Like anything, they're not all the same. It depends on the union.

[Vort]

Btw, and not to be overly pedantic, but if Hostess is declaring bankruptcy, they will not fare well...

[prisonchaplain]

But do you really think this is the case here? I have more sympathy toward private sector unions (don't even get me started on California which is now #1 in poverty!), but statistics clearly show that union members get far more than non union equivalents. It simply costs more to run a unionized company. Sometimes by 20% or more. Pension retirement packages are antiquated, and cost companies millions, and they simply can't compete against companies who have more modern retirement plans, which still protect workers and cost less to manage. It all falls under competition, and Hostess cannot compete. That is in part due to their own business decisions,but also in large part because of the union demands they had to accommodate.

It costs companies more to pay their workers better wages, give them better benefits, and offer them decent retirements? On this you are correct. Companies who manage to hire workers for less wages, offer them fewer benefits, and only offer them incentive contributions towards their own retirement accounts save money and have an advantage in competition. Also true.

So companies say get rid of the unions and allow us to lower wages, cut benefits, and gut retirement programs. Workers who are unionized say that if you pay workers better, improve morale, that you can get a better product, win better community support, and still make a decent profit.

At one extreme you'd have fat, lazy, do-nothing workers bankrupting their employers with their opulent salary packages. At the other, you'd have slave labor, barely surviving. Again, I suggest that both sides have reasonable interests. Capital has the advantage of assets and structure. Labor is reasonable to unite under collective bargaining.

[bytebear]

Except that with a competitive work force, you compete for good workers, and that gives you as a company incentive to give them higher wages, and better benefit than your competitor. It also gives the worker incentive to do better work than their coworker if they know that pay raises and bonuses are directly correlated to work performance. Unions remove all incentives for better work performance, perhaps causing productivity and quality to go down, causing consumer dissatisfaction. Again, this is far more obvious in the public sector where profit and solvency are not part of the equation.

Example: 401K plans cost the same as Pensions up front, and in the long run pay out the same. The difference is the employee is responsible for managing their retirement, and are not guaranteed a return if they manage their money unwisely. In California, public sector pensions are required to increase each year regardless of the economy, so while everyone else's retirement stagnated, pension employees had increases. It's a fairly common practice, and it costs the government billions. It would put any private company out of business in a heartbeat, but California just creates more consumers by increasing taxes. No competition, no worries, just bleed the consumer. Hostess had competition.

Edited November 17, 2012 by bytebear

[prisonchaplain]

Except that with a competitive work force, you compete for good workers, and that gives you as a company incentive to give them higher wages, and better benefit than your competitor. It also gives the worker incentive to do better work than their coworker if they know that pay raises and bonuses are directly correlated to work performance. Unions remove all incentives for better work performance, perhaps causing productivity and quality to go down, causing consumer dissatisfaction. Again, this is far more obvious in the public sector where profit and solvency are not part of the equation.

In many industries companies believe there are an abundance of unskilled workers willing to take their jobs, and that they would get roughly the same production out of $10/hour workers and $12/hour workers. So, they will threaten workers with the fear of job loss, reminding them of the weak economy, and try to drive down wages and remove or reduce benefits. Also, what you call unions taking away incentive to work well, members would call protection against unfair labor practices. To use an extreme example, you have a worker at year 28, making $25 an hour. He's eligible for retirement in two years. There are candidates pounding at the HR door, willing to start at $12. Older worker seems to be getting slow, making mistakes, expressing insubordination to his foreman...let's fire him. Unions prevent those kind of shennanigans.

[bytebear]

In many industries companies believe there are an abundance of unskilled workers willing to take their jobs, and that they would get roughly the same production out of $10/hour workers and $12/hour workers. So, they will threaten workers with the fear of job loss, reminding them of the weak economy, and try to drive down wages and remove or reduce benefits. Also, what you call unions taking away incentive to work well, members would call protection against unfair labor practices. To use an extreme example, you have a worker at year 28, making $25 an hour. He's eligible for retirement in two years. There are candidates pounding at the HR door, willing to start at $12. Older worker seems to be getting slow, making mistakes, expressing insubordination to his foreman...let's fire him. Unions prevent those kind of shennanigans.

I think you need to define "unfair" because it seems to change over time. In California it seems unfair to ask that retirement be raised to age 62. It also seems unfair to ask workers not to double dip into pensions by "consulting" after retirement. These are not extreme example, but the current state of affairs. Perhaps we do have a different understanding of what is fair.

And in your example, the 401K vs. pension also protects the worker who cannot have his retirement account touched since it goes out of the hands of the employer the moment the money is put in. You could fire the employee two years before retirement, but there is no benefit.

And, I do believe if one who has worked for a company for 28 years has no describable skills that differentiate him from a new hire, he does not deserve the higher wage.

Edited November 18, 2012 by bytebear

[annewandering]

My parents were union leaders in the company they worked for. My father was elected as business agent because the agent they had was corrupt. He was buddies with the company in bad ways like getting a company vehicle for his own use. His cronies got free passes on a lot of crap and job bid favoritism. Now that is an example of a bad union.

When my dad became business agent all that stopped. My mom was a union steward. I know many times she really didnt like a person but she defended them. If there were bad circumstances like health she would work for compromises to being fired. She knew the owner of the company since childhood. JR Simplot. Simplots also owns Micron. Anyway he knew my parents wouldnt put up with the bribes so he stopped doing that. He was a tough bargainer but conditions were pretty good and wages did go up. Both the union and the company respected each other. Times have changed. The company closed here after JR died. Unions have been broken here in Idaho. Conditions are not better for the workers. Simplots have closed three plants in Idaho and are going to open one with only about 250 workers, having modernized and eliminated hundreds of jobs.

I wish companies would be honorable in dealing with their workers but most wont on their own. Hostess is pretty good example of disregard for workers. The workers give up wages and benefits to keep the company afloat and the high level execs raise their wages instead of putting the money back into the company. Not just the CEO by the way. Many, if not all, of the higher level people doubled or more their wages in the last years. The workers just got fed up with it all.

[Just_A_Guy]

Hostess is pretty good example of disregard for workers. The workers give up wages and benefits to keep the company afloat and the high level execs raise their wages instead of putting the money back into the company. Not just the CEO by the way. Many, if not all, of the higher level people doubled or more their wages in the last years.

I addressed this in my prior post. Have you seen the financials? Would the pay raises to management, if re-distributed to the workers, truly have kept them from striking or otherwise made a serious dent in Hostess' debt?

A desire to spread the misery without really accomplishing anything, is a stupid reason to go on strike.

The workers just got fed up with it all.

Well, then, I guess they've done themselves a favor, haven't they?

[pam]

Simplots also owns Micron.

Not entirely true. He provided start up capital for Micron. At the time of his death in 2008, it's reported he owned about 22% of the shares.

I know a lot about the JR Simplot company. I've had the pleasure of meeting him and some of his family. When I worked in insurance, we handled the Simplot account.

In fact I have lots of little Simplot "gifts" from clocks, to pens, to timers and every year I got a bag of potatoes.

Edited November 18, 2012 by pam