16 November 2012

Hostess Redo

Hostess has not been profitable since 2004.  FACT!

They tried everything that businesses try to get back to profitability for five years.  FACT!

In 2009 they declared bankruptcy and were purchased by investment capital firms.  Labor and pension liability costs were determined to be a core cause of the lack of profit combined with a declining market for their products.

By 2011 they were left with two unpalatable choices.  Dramatic downsizing or bankruptcy (again).

They needed the union's permission to downsize because that would have meant laying off a sizable portion of the workforce.  This permission was denied.  Other means of reducing overhead were also suggested and rejected by the unions.

So they went to the courts and asked to be allowed to go bankrupt again and this was granted.

There are three paths a bankrupt company can take.  Get purchased by someone willing to sink some capital into the place.  Completely restructure and become leaner and meaner.  Give up and sell the store.

The first option had been exhausted in the 2009 bankruptcy.

The second option is what all the kerfluffle has been about lately.  The accountants and the courts looked hard at the situation and came up with the now infamous 8% cut in pay and benefits.  The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) says that there's a 27-32% cut to benefits.

The Teamsters took the deal.  The BCTGM did not, and went on strike.

Management at Hostess determined that they cannot weather such a strike and asked the bankruptcy court for permission to begin liquidation, which was granted.

This is the culmination of eight plus years of the union not accepting reality.  Hostess has roughly five times the capacity than it has been producing.  It is not 1/5 the size in terms of employees or pension obligations as when it needed all of that capacity.

Once again, the unions have decided that 0% is more than whatever was being offered.  Even if the 32% cut to benefits is true, 68% is more than 0% and after liquidation ZERO FUCKING PERCENT IS WHAT YOU FUCKING GET YOU FUCKING MORONS!  If you can't work out the math or don't understand that then you're just too stupid to let outdoors without supervision and a helmet.


The Union rank and file seem to think they won?  Hey, dipshit, you're fired.  You didn't win, you showed every business owner and entrepreneur exactly what they need to do to be rid of you and your extortionate tactics.

It's no coincidence that every single business which is union dominated is in poor financial help.

h/t Mike

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