Unions force Hostess into bankruptcy. 18000 to lose jobs. No more Twinkies

[bruinsrme]

Originally Posted by citizenzen

Can you substantiate the claim with something more than hearsay?

It would certainly give your argument more weight.

The hearsay is coming from administrators that are responsible for compliance, administration and billing. Call it what you will but it surely isn't hearsay.
My wife's and brother's facilities have been planning this since the bill was approved.
There are plenty of resources on the web, and no I am not going to post them.
The changes and reimbursements will affect Medicare as well.

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Originally Posted by AlaskaMoose

I haven't used Tri-Care at all since I retired from the military. But I do go to the military pharmacy for meds. It's possible that the military sends a bill to my insurance, but I don't really know. Lately I have been looking into Tri-Care as an option, but since I am planning to retire again about six years from now this is not a priority.

You are correct with that assessment, they do bill your insurance.

[jeremy h]

Originally Posted by SporkLover

We've lost our competitive edge in the world. Other economies and labor forces can now achieve things once thought only achievable by industrialized nations lead by the USA. That is gone. FoxConn is a shining example of that. China used to only be able to produce inferior toys, and downright awful pencils (who remembers those made in china pencils that disintegrated in sharpeners, and whose erasers only colored paper pink?). That's not to say that China or other countries deserve to be inferior...

If I was in the States I wouldn't panic. The US seems to be heading for abundant energy (gas) and manufacturing will return. China is heading for wage inflation - it's happening already. Right at the moment none of us can compete but that will change.

I think politicians don't read enough history. In the nineteenth century Britain was the workshop of the world, then it was Germany, then it was America, then it was Japan... (it nearly always starts with toys... from cheap German tinplate toys at the turn of the Century to the 'cheap plastic Japanese rubbish' as my Dad used to say in the early 70's!) - However these cycles of uncharacteristic dominance have got shorter each time. As people became increasingly comfortable they lost their 'edge'.

There was a documentary here a few nights ago that was very interesting showing some of China's billion and millionaires. They pretty much all lead very austere and frugal lives and some still only spent a few dollars a day - their sons and daughters though, who had only known lives of plenty, were a pretty self indulgent bunch. In 50 years time Chinese chat boards will be wondering where exactly it was that they lost their edge...

[garybUK]

Funny because, apart from in specialist shops you couldn't get twinkies here; however the other week in Manchester City Centre, they were giving away free twinkies; seemed like they were going to start selling them in Supermarkets.... now they've up tits up.

Had them in the states, awful little beasts; made me feel sick after just 1... very chemical taste.

[Huntn]

My guess is that Twinkies will reappear in the near future.

[citizenzen]

Originally Posted by bruinsrme

The hearsay is coming from administrators that are responsible for compliance, administration and billing.

Then your sources have some level of relevant experience. You had previously described them as simply, "health professionals".

But this doesn't mean they couldn't be mistaken about these matters. As far as I understand it, much of Obamacare has yet to be implemented. I suspect that even those responsible for compliance, administration and billing will need time under the plan to accurately determine the real impacts of it.

Originally Posted by bruinsrme

Call it what you will but it surely isn't hearsay.

You post is by definition hearsay.

Hearsay is information gathered by one person from another person concerning some event, condition, or thing of which the first person had no direct experience.

http://en.wikipedia.org/wiki/Hearsay

That doesn't mean it is without some value. And I was hoping you could help me determine its value.

Originally Posted by bruinsrme

There are plenty of resources on the web, and no I am not going to post them.

This is the part I understand the least. It's not as if I'm asking what is Elvis Presley's middle name. I'm looking for unbiased information on the impact of Obamacare. If you know where this information is, why would you refuse to share it?

You made some claims.

I'm asking you to provide information to substantiate them.

[jnpy!$4g3cwk]

The Twinkie, it turns out, was introduced way back in 1930. In our memories, however, the iconic snack will forever be identified with the 1950s, when Hostess popularized the brand by sponsoring “The Howdy Doody Show.” And the demise of Hostess has unleashed a wave of baby boomer nostalgia for a seemingly more innocent time.

Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.

http://www.nytimes.com/2012/11/19/op...anifesto.html?


Krugman goes on to summarize how how very high marginal tax rates did indeed crimp executive's ability to consume in the 50's, and how that coincided with an era of unprecedented prosperity.

In summary:

Which brings us back to the nostalgia thing.

There are, let’s face it, some people in our political life who pine for the days when minorities and women knew their place, gays stayed firmly in the closet and congressmen asked, “Are you now or have you ever been?” The rest of us, however, are very glad those days are gone. We are, morally, a much better nation than we were. Oh, and the food has improved a lot, too.

Along the way, however, we’ve forgotten something important — namely, that economic justice and economic growth aren’t incompatible. America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.

[citizenzen]

Originally Posted by jnpy!$4g3cwk

Krugman goes on to summarize how how very high marginal tax rates did indeed crimp executive's ability to consume in the 50's, and how that coincided with an era of unprecedented prosperity.

He also links to a 1955 Fortune article on the lifestyles of CEOs in that era.

It's a very interesting read.

One of the things that I'm struck with is how that time was a departure from the opulence that industry leaders were used to leading. It would seem to me that the disparity in wealth we see today is a return to conditions executives enjoyed in the early part of the 20th century.

We may point to the 1950s as a model of economic growth and prosperity for the middle class, but it's understandable after reading the article why executives would be loathe to return to that.

[kavika411]

Originally Posted by Paul Krugman

There are, let’s face it, some people in our political life who pine for the days when minorities and women knew their place, gays stayed firmly in the closet and congressmen asked, “Are you now or have you ever been?”

Classic Krugman. A charge is leveled that the costs associated with a union workforce contributed to the demise of Hostess, and Krugman swoops in with conflations of racism, sexism, homophobia and McCarthyism. Indeed, because only a racist, sexist, homophobic communist-hater could make the argument that union demands can greatly weaken an already financially embattled company doing business in a razor-thin margins industry. Yep, that's the only explanation.

No wonder he's the go-to guy for so many people.

[takao]

Originally Posted by kavika411

Classic Krugman. A charge is leveled that the costs associated with a union workforce contributed to the demise of Hostess, and Krugman swoops in with conflations of racism, sexism, homophobia and McCarthyism. Indeed, because only a racist, sexist, homophobic communist-hater could make the argument that union demands can greatly weaken an already financially embattled company doing business in a razor-thin margins industry. Yep, that's the only explanation.

No wonder he's the go-to guy for so many people.

well companies who can succesfully work together with unions and manage to survive on slim margins tend to last for a long time

for example Walmart with it's anti-union stance failed miserable (threw away billions) in Germany when they suddenly had to work with a unionized work force while working with german retail razor thin margins against a competion who has been handling unions, very low margins and low prices since decades

the newcomer Walmart wasn't used to this and imploded in the market

other example car manufacturers:
the workers in the VW, BMW, Mercedes and Opel factories are unionized at similar, very high, levels ... yet it's still US led Opel who has the problems

[samiwas]

Some things I have learned from this thread:

1. Unions greatly inflate wages. A typical factory worker barely able to afford to feed his family is still making too much.
2. Executives can't make too much. They need to make millions, even tens of millions, to be viable. For this position, millions is not inflated.
3. If workers concede to reduced wages one year, while the executives receive raises, they should also do the same the next year if asked. And again the next year. And the next. They should do whatever is needed to keep the company going, even as the executives continue to increase their pay. This is the only sensible route.

Am I missing any?

[thekev]

Originally Posted by takao

the newcomer Walmart wasn't used to this and imploded in the market

It's not like you're really missing anything.

[WestonHarvey1]

Originally Posted by samiwas

Some things I have learned from this thread:

1. Unions greatly inflate wages. A typical factory worker barely able to afford to feed his family is still making too much.
2. Executives can't make too much. They need to make millions, even tens of millions, to be viable. For this position, millions is not inflated.
3. If workers concede to reduced wages one year, while the executives receive raises, they should also do the same the next year if asked. And again the next year. And the next. They should do whatever is needed to keep the company going, even as the executives continue to increase their pay. This is the only sensible route.

Am I missing any?

You're missing the only factual thing that matters, which is in this particular case, a union's leadership was willing to tank 18,000 jobs rather than give in to a few small concessions to potentially save those jobs.

The brands will be purchased, possibly by a Mexican baking company Groupo Bimbo, so the union has effectively shipped those jobs to Mexico. Some of the brands may be picked up by larger American bakeries, but it is possible they'll be able to retool some of their existing capacity and add few if any of those 18,000 jobs back.

So, at least in this case, unions aren't always a benefit to workers. That's a fact.

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Originally Posted by kavika411

Classic Krugman. ...

No wonder he's the go-to guy for so many people.

I'm left scratching my head why he used Twinkies as the hook for his column. The Hostess situation completely undermines his worldview.

[balamw]

Originally Posted by WestonHarvey1

rather than give in to a few small concessions to potentially save those jobs.

From the previously linked article.

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.

I think the size of the concessions that were being asked for isn't clearly definable as "small." $34K to $25K is a 26% pay cut. From the 2005 salary this would represent a 48% pay cut over 12 years.

Never mind the reported cuts in benefits as well.

B

[MacNut]

Originally Posted by balamw

From the previously linked article.



I think the size of the concessions that were being asked for isn't clearly definable as "small." $34K to $25K is a 26% pay cut. From the 2005 salary this would represent a 48% pay cut over 12 years.

Never mind the reported cuts in benefits as well.

B

If the company is in chapter 11 don't they have the ability to gut the contracts to stay afloat?

[Moyank24]

Originally Posted by WestonHarvey1

You're missing the only factual thing that matters, which is in this particular case, a union's leadership was willing to tank 18,000 jobs rather than give in to a few small concessions to potentially save those jobs.

The brands will be purchased, possibly by a Mexican baking company Groupo Bimbo, so the union has effectively shipped those jobs to Mexico. Some of the brands may be picked up by larger American bakeries, but it is possible they'll be able to retool some of their existing capacity and add few if any of those 18,000 jobs back.

So, at least in this case, unions aren't always a benefit to workers. That's a fact.

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I'm left scratching my head why he used Twinkies as the hook for his column. The Hostess situation completely undermines his worldview.

It certainly seems easy for you to call them "a few small concessions" when you aren't the one being asked to make them.

I wonder if the executives would have been willing to concede their bonuses or a portion of their salaries in an effort to keep the company afloat.

It also seems naive to assign all of the blame on the union. If the salary (including benefits and pensions) of 18,000 people are making or breaking this company, one would think that the problems are a bit more far reaching. And the fact that they have gone bankrupt more than once in the past few years would lead me to believe that blaming only the union is ridiculous. There seems to be plenty of blame to go around.

[MacNut]

Originally Posted by Moyank24

It certainly seems easy for you to call them "a few small concessions" when you aren't the one being asked to make them.

I wonder if the executives would have been willing to concede their bonuses or a portion of their salaries in an effort to keep the company afloat.

It also seems naive to assign all of the blame on the union. If the salary (including benefits and pensions) of 18,000 people are making or breaking this company, one would think that the problems are a bit more far reaching. And the fact that they have gone bankrupt more than once in the past few years would lead me to believe that blaming only the union is ridiculous. There seems to be plenty of blame to go around.

The union that turned down the deal only accounted for 30% of the work force.

[Moyank24]

Originally Posted by MacNut

The union that turned down the deal only accounted for 30% of the work force.

Exactly my point.

[MacNut]

Originally Posted by Moyank24

Exactly my point.

I think the company was going under no matter what deals were made. There seemed to be a lot of bloat. Unfortunately the brands will get absorbed into other companies and most likely the jobs are lost either way.

[balamw]

Originally Posted by MacNut

If the company is in chapter 11 don't they have the ability to gut the contracts to stay afloat?

Don't the unions/workers also have the ability to reject the offer and simply walk away? As they appear to have done here?

The point of my post was not to allocate blame, but merely to put some perspective on some of the qualifiers that are bandied about. I certainly would think twice if I were told that I had to take a pay cut and that after five years I'd be making ~3/4ths of my current salary, putting my salary five years from now to not a whole lot more than minimum wage.

I wouldn't call that a small concession.

Originally Posted by MacNut

I think the company was going under no matter what deals were made. There seemed to be a lot of bloat. Unfortunately the brands will get absorbed into other companies and most likely the jobs are lost either way.

This much seems clear. There really wasn't an easy way out of this. However, I wouldn't count the jobs as lost just quite yet. It would be far easier for the new owner to turn on the factory with at least some of the previous workers than it would be to simply merge production into one of their existing factories. Odds are that the new owner might be able to offer a slightly better deal if they aren't already circling the bowl.

B

[MacNut]

Originally Posted by balamw

Don't the unions/workers also have the ability to reject the offer and simply walk away? As they appear to have done here?

The point of my post was not to allocate blame, but merely to put some perspective on some of the qualifiers that are bandied about. I certainly would think twice if I were told that I had to take a pay cut and that after five years I'd be making ~3/4ths of my current salary, putting my salary five years from now to not a whole lot more than minimum wage.

I wouldn't call that a small concession.

B

How many of those salaries were too high to begin with? When unions and companies negotiate do they think short term to keep things running and not look at the long term effects these raises have.

We saw it with the car companies and I think we will continue to see this trend get worse before it gets better.

[balamw]

Originally Posted by MacNut

How many of those salaries were too high to begin with?

From whose point of view?

I suspect that management always sees their payroll as too high, while the workforce might disagree.

B

[MacNut]

Originally Posted by balamw

From whose point of view?

I suspect that management always sees their payroll as too high, while the workforce might disagree.

B

Just like in sports it is hard to determine what a fair salary is as market value inflates the numbers. Should wages be determined on skill level and not union bargaining technique?

Edit: According to twitter it appears they may be back at work.

Via CNBC: Twinkies Saved! Hostess, Bakers Union Agree to Mediation, Avoiding Shutdown (Story developing)

[MacNut]

A bankruptcy judge Monday asked if he were to help mediate between Hostess Brands Inc. and its striking union whether it could help avoid pulling the plug on the baker of Ho Hos, Twinkies and Wonder Bread.

At a hearing Monday on Hostess's request to begin the process of shutting down its business, Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., asked attorneys representing Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International union whether mediation could help the two resolve their issues and avoid the loss of more than 18,000 jobs.

"To me not to have gone through that step leaves a huge question mark over this case, which I think—I may be wrong—but I think will only be answered in litigation. And that's no one's desired outcome," the judge said.

Judge Drain called a brief recess of Monday's hearing for Hostess and the bakers union to consider a possible mediation.

At the start of the hearing, Hostess attorney Heather Lennox told Judge Drain that the strike the bakers union launched Nov. 9 to protest labor concessions hurt the company's finances beyond repair.

Judge Drain acknowledged the company took a "significant economic hit" as a result of the strike but asked whether liquidation was the right path to take.

"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," the judge said. Such differences "might be better worked out with a neutral third party in private as opposed to raising these issues in public."

The judge offered to serve as mediator but acknowledged mediation would only work if both sides were willing to commit their best efforts.

"I'm also strongly suggesting that the parties should be willing to do it," he said. "I'm giving the union, as well as the debtors and their lenders, the last chance".

http://online.wsj.com/article/SB1000...googlenews_wsj

[balamw]

Originally Posted by MacNut

Should wages be determined on skill level and not union bargaining technique?

Often times management and workers also disagree on the level of skill required to accomplish a job.

I've seen it happen time and again, particularly when a task it outsourced from one place to another, even within a company. It always seems to take more skill/experience/training than initial estimates might suggest.

Good news if they've found some way beyond the impasse.

B

[WestonHarvey1]

Originally Posted by Moyank24

It certainly seems easy for you to call them "a few small concessions" when you aren't the one being asked to make them.

So it's better to have no job at all?

The CEO supposedly made $2.2 million a year. They also supposedly paid out $1.75 million in executive bonuses last year. If they had given up all that money and distributed it to their union workers, that would have amounted to $220 a person. And they'd still be out of business. Why even mention it?