Farewell, Hostess . . .

[john doe]

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

Bribes, every one of them.

[pam]

Yeh and look how far it's gotten me. :)

[prisonchaplain]

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.

I wonder how far apart we really are. You say unions can abuse their powers, protect poor performers, and put companies into straight jackets of benefits that make them uncompetitive. I admit these abuses, but point out that companies can bully individual workers into accepting lower wages, minimal benefits, and engage in practices that are sometimes based on personalities, and sometimes on an effort to squeeze profits by firing higher waged workers (with greater seniority).

Unless you are arguing that unions are totally unnecessary, do we not both state the truth? My appeal is to a classic conservative economist, Adam Smith (Wealth of Nations). I say that unions can provide workers leverage that is sometimes needed. In dark economic times the pressure runs against unions, because people come to fear for their jobs. However, it may be that such times are exactly when unions are needed.

[annewandering]

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.

I am going to assume you arent a union representative? So what would he be bribing you for?

Interesting you knew Simplot and his family. My moms family lived next to him growing up. She was a bit younger but her older siblings used to play together all the time. Of course that was long before he made all his money. I do believe it had a positive effect on the relationship between the company and the union during his life. There was mutual respect.

Hostess and the union obviously had no respect for each other. At one time they seemed to try to work together. For whatever reason that ability broke down. I dont suppose we will ever agree on why.

[pam]

So what would he be bribing you for?

I never said I was being bribed. Those of us that worked with the Simplot account got little gifts from them all the time. They weren't bribes.

[bytebear]

I wonder how far apart we really are. You say unions can abuse their powers, protect poor performers, and put companies into straight jackets of benefits that make them uncompetitive. I admit these abuses, but point out that companies can bully individual workers into accepting lower wages, minimal benefits, and engage in practices that are sometimes based on personalities, and sometimes on an effort to squeeze profits by firing higher waged workers (with greater seniority).

Unless you are arguing that unions are totally unnecessary, do we not both state the truth? My appeal is to a classic conservative economist, Adam Smith (Wealth of Nations). I say that unions can provide workers leverage that is sometimes needed. In dark economic times the pressure runs against unions, because people come to fear for their jobs. However, it may be that such times are exactly when unions are needed.

Well, not exactly. I don't think we need unions any more. I think child labor laws and government safety regulations protect workers enough (sometimes too much but that's another story). As for "fair wages" I think the idea of pensions is a two edged sword. It protects the worker who is ill prepared for retirement, but hinders the worker who is good with money and invests in their future. I am thinking of the worker who lives week to week not saving any money, perhaps by circumstance, but sometimes by choice (wasting money on booze, women and gambling, etc.). The employer then can set up a savings fund, which is essentially what a pension is. The union protects the worker who isn't good with money, but that's not necessarily good for the worker who might be better off having the cash on hand. But the employer gets off good too. He can pay his workers less money by offering them a pension, but just like any other investment, if they die (or in your heartless case, gets fired) the employer doesn't have to pay out. So it's a good deal for him, unless the balance tips, as in the case of baby boomer retirees, or poor management or a bad economy. So that's the scenario I see today. And the 401k program solves the problem, because it allows a voluntary investment, and company perks (my company matches up to a certain %), but I get the money regardless of what happens to the company. I have had maybe 5 401k's over the years, all of which I still get to keep, even though I have left the companies for whatever reason. And I can choose not to pay into that fund, and screw my future for a few extra bucks each paycheck. But that's my problem, not my employer's. Again, no need for the union to protect me.

Now, if a corporation is corrupt, I believe the free market will balance out the corruption assuming there is competition. Hostess had both. And that's part of the reason it failed. And I am ok with failure, because there is always a better company to take it's place. We lost Woolworth, but have Wal-Mart, and in 50 years we'll have something else.

[prisonchaplain]

If I were an employer I would want to run my company such that the workers would not want to pay the union dues, because my benefits met a slightly higher than average rate for the industry. I believe that Delta Airlines follows this approach. Whether unions will continue their decline or see a rebound (again, due to companies taking advantage of the bad economy to feign the need to pay and benefit cuts) remains to be seen. Greed can cut both ways.

[bytebear]

If I were an employer I would want to run my company such that the workers would not want to pay the union dues, because my benefits met a slightly higher than average rate for the industry. I believe that Delta Airlines follows this approach. Whether unions will continue their decline or see a rebound (again, due to companies taking advantage of the bad economy to feign the need to pay and benefit cuts) remains to be seen. Greed can cut both ways.

Me too. What I have seen is when a union enters a business, the workers suffer, and are strong armed by the union. Public votes under intimidation, strike when many workers are content with the working environment, and forced union dues against the will of the worker. I see workers get a few more crumbs from the table, while the union bosses get the lions share of reward. Maybe it's my Mormonism speaking, but I don't like the lack of free agency a union creates.

Edited November 19, 2012 by bytebear

[john doe]

I never said I was being bribed. Those of us that worked with the Simplot account got little gifts from them all the time. They weren't bribes.

Oh, come on Pam, you know you were getting bribes and kick-backs. Just like when your dentist or insurance agent send you desk calendars and refrigerator magnets. Evil, pure evil, isn't that right Anne?

[prisonchaplain]

I always thought I was bribing my dentist, insurance agent, etc. by providing the free advertising they get when I put out their gaudy trinkets for trusted loved ones and colleagues to see.

[john doe]

Oh, so you admit it! I can see the headline now: "Pastor admits to bribery, doesn't know if he gave them or received them".

[prisonchaplain]

I was rather hoping that once the election was over I could avoid more MSNBC headlines...

[Guest]

I always find it idiotic to say things like, "The eeeevvvvilll CEO got $3.5million while the company went bankrupt"... without knowing the actual financials.

$3.5 million is a very small number for a CEO managing a company the size of Hostess. Winn-Dixie - this relatively small grocery chain in the South-East gave their CEO a $10 million bonus to see the company through bankruptcy. The CEO, not only managed the company through the bankruptcy process, he was able to get the company to a successful restructuring coming out of bankruptcy stronger than the day he got hired on. That's his specialty - managing a failing company. $10 million dollars. Of course, there were tons of people - including the newspapers - who whined and moaned and complained about the "$10million bonus while the company goes bankrupt". Winn-Dixie was lucky the CEO didn't just quit on them because of bad press. Winn-Dixie was pressured by everybody to renege on their $10 million promise to the CEO, but they stood firm and paid the CEO every single dollar that he deserved.

The problem with class-warfare is people's eyes haze when given a large dollar amount. They don't realize that the dollar amount is connected to a skillset that has a very large value.

$3.5 million - the brain freezes on that amount and stops to think what that $3.5 million is paying for. A CEO worth his salt is valued a lot more than that. I see a company the size of hostess and I hear he only gets $3.5 million - well, I'd be thinking more, that's another reason they're failing. You get what you pay for.

[LittleWyvern]

I just read something interesting about Hostess earlier: it appears as if they've been in a bad financial state since at least 2004.

Hostess filed for bankruptcy in January [2102], its second trip to bankruptcy court since 2004. It previously emerged from restructuring in 2009 after a four-and-a-half year process. The company is now controlled by a group of investment firms, including hedge funds Silver Point Capital and Monarch Alternative Capital.

Which seems to say that Hostess was having profitability problems that predated (and were perhaps aggravated by) the union mess. I'm sure another company will buy the various brands and patents previously held by Hostess and do a better job at being profitable.

[NeuroTypical]

Wanna hear a funny story?

My dad was the seceretary of his union. He was a good man, who believed in helping folks, and he staunchly supported many things his union did. When I was a kid I'd go to his shop and help him type out union cards. He'd tell me stories about how the union helped people find work, pay bills, cover for people with medical issues, etc. I also remember he would have knock-down yelling swearing arguments with other union leaders on the phone. On one particular yelling match I remember my dad yelling something to the tune of "this strongarm [beep] makes us look like a bunch of [bleeping] thugs!"

My wife's parents ran a nonunion business, but had a union as a customer. They told her a story when she was a girl about how the union once sent two big burly rude representatives to her father's business, and tried to bully him into doing something they wanted. Thinly veiled threats of violence included. My wife's dad didn't stand for such nonsense, and probably could have taken them both if things had gotten physical, and firmly declined.

You may have guessed the funny part - my dad's union was the same union who sent the thugs to 'negotiate' with my wife's dad. We sat down just this year and counted years and timeframes and whatnot, and it just fits. Didn't realize it until now.

Man, I wish I had a time machine. They only met each other a couple of times when my wife and I were engaged. I could have introduced a real cool topic for conversation!

Edited November 19, 2012 by Loudmouth_Mormon

[LittleWyvern]

Here's an interesting development: there's still a chance that Hostess can remain in business.

Hostess Brands Inc. agreed in court on Monday to enter private mediation with its lenders and leaders of a striking union to try to avert the liquidation of the maker of Twinkies snack cakes and Wonder Bread.

Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), agreed to mediation at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who preferred it to the more expensive, public hearing regarding the company's liquidation.

"My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter," Drain said.

[talisyn]

Ahh, the evil unions. Tell you what, every one who works for hourly wages who thinks unions are not necessary give up vacations, days off, overtime after 40hrs/week, safety regulations (no more lock-out/tag-out! you don't need all those fingers, anyways), and take your under-14 children out of school and put them to work full time. That being said, Unions are only as good as the people who run them. When the economy really turned south for us, about 2009, the company went to the union and asked for a hold on our yearly wage increase for 6 months. We agreed, and the company put the $250,000 that would have gone to our $0.50/hr raise into new machinery for our plant, and we became the number 1 french fry plant for the company. This is what good companies do, and this is what good unions do. My mom talked about her parents being in leadership roles for their union. I learned a lot from my grandparents, but what really sticks is them saying that the company has a right to earn lots of money and the workers have a responsibility to work hard to accomplish this goal, the mutual respect not having to be said.

Now, about Hostess

From a friend:

"As we hear the latest reports about Hostess, it's important to remember several key facts:

-Hostess has been sold three times since the 1980's.

-In the most recent sale, a private equity firm named Ripplewood Holdings (similar in style to Bain Capital) purchased Hostess.

-In 2004, Hostess files bankruptcy. Workers concede $110 million in yearly wage and benefit cuts to help restore company.

-During the same period, CEO compensation is increased from $750,000 to $2,550,000.

-15 months ago, Hostess stops contributing to employee retirement plan, contrary to legal agreement.

-In 2011, Hostess declares bankruptcy once again, demands a 32% cut in wages and benefits, bringing majority of workers bellow poverty threshold, threatens to close 9 facilities.

-Workers refuse accept most recent pay cuts.

-In bankruptcy court documents filed in March 2012, it is revealed that company's failure is not do to labor costs, instead points out these findings:

=years of underinvestment in products, facilities, & equipment

=long term neglect of brand

=failure of distribution system

=failure to innovate and create new products

=half of competitors operate with equal or higher labor costs

=lack of management accountability.

Now someone explain to me how it was the striking workers that caused this?"

Also, this real-life person's experience: Daily Kos: Inside the Hostess Bankery

'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.'

Also, Pam, I know that the typed word can rarely convey the writer's emotion, instead relying on the recipient's own reaction. But Anne was kidding about the bribery part, it was suppose to be a 'lol' moment.

Edited November 20, 2012 by talisyn
2nd sentence, got rushed and used 'doesn't'. my apologies :(

[pam]

Also, Pam, I know that the typed word can rarely convey the writer's emotion, instead relying on the recipient's own reaction. But Anne was kidding about the bribery part, it was suppose to be a 'lol' moment.

Good to know but it helps to use an emoticon or something to convey that. :)

[Just_A_Guy]

Now, about Hostess

From a friend:

"As we hear the latest reports about Hostess, it's important to remember several key facts:

. . .

-In 2004, Hostess files bankruptcy. Workers concede $110 million in yearly wage and benefit cuts to help restore company.

-During the same period, CEO compensation is increased from $750,000 to $2,550,000.

That's been partially addressed earlier in the thread. Was previous CEO compensation on par with industry average?

-In bankruptcy court documents filed in March 2012, it is revealed that company's failure is not do to labor costs, instead points out these findings:

=years of underinvestment in products, facilities, & equipment

=long term neglect of brand

=failure of distribution system

=failure to innovate and create new products

=half of competitors operate with equal or higher labor costs

=lack of management accountability.

I tried to pull these documents, but as of this evening there are 1,766 individual documents filed in the Hostess bankruptcy and I'm not that interested in this. :)

Suffice it to say that I think it highly doubtful that Hostess said "well, shoot, judge, this was the problem the whole time." I suspect it's more a situation where some disgruntled creditor or employee filed all kinds of accusations, many of which would be hotly contested by management.

Moreover, the above-stated factors - besides smacking of Monday-morning quarterbacking - ignore the crucial question of: Where was the money going? Based on the numbers you've offered, money saved by wage cuts outnumbers money spent on management raises by fifty to one. If it didn't go into infrastructure, "brand management" (advertising), or research and development - where did it all go? Was Hostess leveraged in some way? Were extra dividends improperly paid out to the stockholders?

Also, this real-life person's experience: Daily Kos: Inside the Hostess Bankery

'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.

Your source seems to have neglected to mention that the employers were also offered a one-quarter ownership stake in the company (with, presumably, full stock voting rights), as well as their own dedicated representation on the board of directors.

As for insurance premiums: Health insurance is generally more expensive since Obamacare passed. Some of us (ahem!) warned about this back when the bill was under consideration. You can - as the Administration deftly demonstrated - force businesses to quit speaking out about the problem (Caterpillar and Verizon come to mind); but you can't (yet) make them absorb the higher costs.

[prisonchaplain]

Daily Kos: Inside the Hostess Bankery

This source is extremely liberal--opposite to National Review or American Spectator. The story may be 100% accurate, but coming from this site, I'd be highly suspect.

[talisyn]

Because liberal sites are always wrong?

[Guest]

Because liberal sites are always wrong?

Read all of the words, not just the ones that make you hot under the collar:

This source is extremely liberal--opposite to National Review or American Spectator. The story may be 100% accurate, but coming from this site, I'd be highly suspect.

(emphasis mine)

Edited November 20, 2012 by Eowyn

[talisyn]

That's been partially addressed earlier in the thread. Was previous CEO compensation on par with industry average?

I tried to pull these documents, but as of this evening there are 1,766 individual documents filed in the Hostess bankruptcy and I'm not that interested in this. :)

Suffice it to say that I think it highly doubtful that Hostess said "well, shoot, judge, this was the problem the whole time." I suspect it's more a situation where some disgruntled creditor or employee filed all kinds of accusations, many of which would be hotly contested by management.

Moreover, the above-stated factors - besides smacking of Monday-morning quarterbacking - ignore the crucial question of: Where was the money going? Based on the numbers you've offered, money saved by wage cuts outnumbers money spent on management raises by fifty to one. If it didn't go into infrastructure, "brand management" (advertising), or research and development - where did it all go? Was Hostess leveraged in some way? Were extra dividends improperly paid out to the stockholders?

Your source seems to have neglected to mention that the employers were also offered a one-quarter ownership stake in the company (with, presumably, full stock voting rights), as well as their own dedicated representation on the board of directors.

As for insurance premiums: Health insurance is generally more expensive since Obamacare passed. Some of us (ahem!) warned about this back when the bill was under consideration. You can - as the Administration deftly demonstrated - force businesses to quit speaking out about the problem (Caterpillar and Verizon come to mind); but you can't (yet) make them absorb the higher costs.

Thank you for your reply. I know they were offered a 1/4 stake in Hostess, but I didn't mention it in addition because being offered a stake in a failing company doesn't sound like a great deal to me lol. It sounds like you are saying Obamacare is the reason insurance prices are high. I have had the exact same insurance for 6 years, and every year the price has gone higher. Pres. Obama has been in office for 4 years

As for the money, where was it going? I don't know. It can be said with complete truthfulness that the money can go to wherever the managers want it to go. They don't have to spend it on replacing aging equipment. They don't have to increase employee wages. But getting wage concessions and raiding an employee-contributing pension fund without repaying the employees and then years later blaming the fed-up employees is not a very nice thing to do.

Edited November 20, 2012 by talisyn

[prisonchaplain]

Because liberal sites are always wrong?

I avoid quoting sites like drudge.com and theblaze.com, because they are slanted conservative. Likewise newsmax, human events, worldnet daily, etc. Ironically, there are fewer hard left sites. The media is viewed by us as leaning left, but I still respect that cnn, msnbc, etc. are offering mainstream news from an attempted objective viewpoint.

Daily Kos fits into the hard left category, without shame. They are liberal, they know it, and they want the world to see it. So, yes, to those of us who are not liberal, their stories will be dubious. I would immediately want to see how a more mainstream site covered it.

[HoosierGuy]

This source is extremely liberal--opposite to National Review or American Spectator. The story may be 100% accurate, but coming from this site, I'd be highly suspect.

Ugh. ...and so it goes.

How in the world can you have your products in every store (including wallyworld) and in many convenience stores across the whole U.S. and make well known bread (Wonderbread) and lose money?

It's the corporations fault, not the union workers. The heads of Hostess are upset they have to still deal with paying pensions and unions when so many other U.S. businesses have either shipped their jobs to slave labor China or broke unions and are now paying their American workers a non living wage.

This is all about the head honchos of Hostess wanting to break the union. They want to be like Apple - make lots of money at the expense of slave labor in China or pay American workers a lousy wage.

The heads of Hostess are evil, evil, evil. People either stand with the greedy Hostess corporate people or you stand and protect the starving American children and their hard working moms and dads.