The ding dongs at Big Labor who refused to make concessions when Hostess Brands, the makers of Twinkies, Drake’s Cakes and Wonder Bread, faced imminent bankruptcy, now find themselves frozen out of the newly constituted company.
Last year, Hostess was struggling for survival, menaced by high labor costs, a more health-conscious consumer and a recession when the bosses of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union cooked up a strike against the 82-year-old company. The union was warned that a strike would lead to the destruction of Hostess, so they turned up the heat. The 18,500 employees got burned.
After the union refused an invitation to the table, the company asked a bankruptcy judge to liquidate the firm’s assets. Approval was granted, snack-food production began winding down, and Twinkies disappeared from store shelves. The unions, with company help to be sure, wrote the recipe for this disaster by saddling Hostess with pension plans that obliged the company to pay the obligations of other companies that had gone out of business. The Hostess business plan grew stale as management had to deal with more than 370 collective-bargaining agreements and 80 health and pension benefit plans. Union rules covered how bread and cakes were delivered, loaded and unloaded, eliminating the flexibility a business needs to remain competitive.
From January 2012, when the company first filed for bankruptcy, to November, when the company shut its doors, Hostess lost $1.1 billion. Thirty-three bakeries, 565 distribution centers and 570 outlet stores were shuttered.
Hostess was not the first to fall before the bakers’ union. Cookie and bread maker Stella D’Oro moved its headquarters from New York City to a non-union bakery in Ohio when the union refused to drop demands that made the company less competitive, including insisting on a rule that employees get a paid holiday on their birthday. Thousands of employees celebrated their birthday on the unemployment lines.
The icing on the cake is that Hostess is back, and the intransigent union bosses are not. A private investment group rescued Hostess from bankruptcy and is moving its operations mostly to right-to-work states where employees cannot be compelled to join a union. Hostess will reopen four bakeries over the next two months, aiming to get its creamy confections in stores by midsummer. New bakeries will be opened in Columbus, Ga.; Emporia, Kan.; and Indianapolis. The company announced Monday it would also reopen a plant in Schiller Park, Ill., where the union would have a foothold.
The new investors intend to invest $60 million in the plants and hire 1,500 employees. The union might have a hard time persuading the new hires that it makes sense to share their paycheck with the organization that put Hostess out of business. Unions will bleed members and jobs to right-to-work states until they get the message. Featherbeds are so 20th century. That’s bad news for union bosses, but that’s the way the chocolate-covered cookie crumbles.
The Washington Times