The 2%’s Twinkie Defense

17Nov12

It Leaves a Bitter Taste

Initially, this seems to be a non-Stratford issue. But once you bite into it, unlike the product, there is actually something meaningful inside that effects Stratford. 50 people in Bridgeport including Stratford residents will lose their jobs . For the past few days what appeared to be a man-bites-dog story (Twinkies) has turned into an anti-union propaganda campaign. According to the company’s CEO, Gregory F. Rayburn, Hostess is shutting down due to the unions’ unwillingness to negotiate lower wages, cuts in health insurance as well as the loss of their pensions. Somehow Mr. Rayburn continues to leave out the $100 million in concessions the unions accepted as recently as 10 months ago. He somehow also leaves out a few details about the company’s management issues.

As the national appetite for junk food waned, the company fell on hard times, struggling against rising labor and commodity costs. In 2004, it filed for bankruptcy for the first time…But the new private equity backers loaded the company with debt, making it difficult to invest in new equipment. Earlier this year, Hostess had more than $860 million of debt. The combination of debt and labor costs has hurt profits. The company posted revenue of $2.5 billion in the fiscal year 2011, the last available data. But it reported a net loss of $341 million. The Teamsters, which has 6,700 members at Hostess, said it played an instrumental role in ousting Hostess’s previous chief executive, Brian J. Driscoll, this year after the board tripled his compensation to $2.55 million. (Seriously? Losing $341 Million gets you a paycheck of $2.55 million?)
http://dealbook.nytimes.com/2012/11/16/hostess-brands-says-it-will-liquidate/

And what will happen to Rayburn after laying off 18,500 employees? “The CEO is going to get 1 percent of everything he liquidates,” charged Pierro, a union steward.http://www.ctpost.com/local/article/End-of-the-Twinkie-4043677.php
Note: 1% of, say $1 billion, is $10,000,000. Just sayin’….

Of course if you watch Fox News this is entirely a union issue. It is all about obstinate workers making unreasonable demands. Somehow the delivery truck driver or the line worker is being unreasonable and unwilling to give up anything to help management. But that version has all the substance of…well, a Twinkie.

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14 Responses to “The 2%’s Twinkie Defense”

  1. You forgot a few things.

    *Most of those earlier poor managment decisions and executive bonuses happened while the company was controlled by Ripplewood. Ripplewood is run by Tim Collins, who is a very pro-union democrat.

    *When Rayburn came on as CEO earlier this year, he immediately cut all the top executive’s pay to $1/year.

    *The truck drivers and line workers were not the issue. They had ALREADY agreed to concessions. Those concessions also included 25% ownership in the company, as well as giving the unions a seat on the board of directors. It wasn’t like they were being asked to give up something with nothing in return. It was only the baker’s union that somehow came to the conclusion that no job at all was better then the deal the Teamsters and everyone else took.
    If the friggin Teamsters ok’ed the deal, you take the deal. If it had sucked that bad they would have been the first to strike.

  2. 2 jezebel282

    Chris,

    “Ripplewood is run by Tim Collins, who is a very pro-union democrat.”
    LOL! Well that sure explains everything.

    “When Rayburn came on as CEO earlier this year, he immediately cut all the top executive’s pay to $1/year.”
    And their stocks, warrants and options?

    “If it had sucked that bad they would have been the first to strike.”
    Errr…they did strike.

  3. 3 mikereynolds

    Management is certainly to blame for some of the mess. The Bakers Union thought Hostess was bluffing. The stakes? 18,000 jobs. They went all in. They lost.

  4. 4 jezebel282

    Chris,

    “If it had sucked that bad they would have been the first to strike.”

    Thank you for your post. It led me to do a bit more research. This article appears to be one you can sink your teeth into (I gotta stop doing that):

    http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles

    It turns out that the unions have been cooperating all along. They just don’t qualify as the “evil doers” Fox News makes them out to be. Competition from Bimbo Bakeries (yeah, honest, “Bimbo”) seems to have played a large part too.

    In any event, my question becomes if Fox News is so “fair and balanced” why do we always have to look it up for ourselves?

  5. 5 jezebel282

    And then there is Walmart, where the average “Associate” makes a whopping $8.16 without benefits (depending upon whom you ask). Walmart plans to open their stores at 8 PM on Thanksgiving.

    Some “associates” are planning a job action as result. They are asking for better conditions, reliable work schedules and affordable healthcare.

    Locally, Stratford’s Walmart is open from 6 :45 am – 12 :00 am seven days a week. It makes you wonder about the worth of the anticipated revenue from the extra 10 hours and 45 minutes of shopping time.

    Personally, I will not considering stepping foot inside a Walmart this holiday season. It’s a free market, you know.

  6. 6 anyonebutharkins

    I agree Jez. Walmart is horrible to their employees! They have also recently came out and said that they will not allow any employee to work over 30 hours because they don’t want to have to provide healthcare. They are the biggest scum-b** companies around. They make MORE than enough profit to treat their employees correctly. I have hated them for years.

  7. 7 jezebel282

    Anyone,

    I can’t help but think that this is some heartless and soulless executive in Bentonville Arkansas that is betting that the American consumer is equally heartless and soulless.

    It would be sad to think that would be true. How could anyone walk into a Walmart on Thanksgiving evening and look an “associate” in the eye. “My desire for underwear made in Pakistan is more important than you or your family.”

  8. 8 anyonebutharkins

    LOL! Exactly.

  9. 9 jezebel282

    You can add Target, Toys R Us, Khol’s (midnight) & Sears to the list of Blackhearted retailers. Unlike Walmart, at least Target will pay their employees time and a half.

    Et tu Toys R Us?

  10. 10 anyonebutharkins

    This all just makes me nuts. “Black Friday” is planned all year. Prices are manipulated, raised, dropped all year long. No retailer is going to lose a profit. It’s like Khols. You get discounts and coupons IF you use your Kohls card. AND pay interest! They bank upon shop-a-holics. There is no deal really there. If you pay your bill in full every month, then yes, maybe. But they count on the fact that most Americans do not. Same thing with all retailers.

  11. 11 jezebel282

    Decades ago the Republicans under Reagan decided that usury laws would be based upon the laws of the state where the issuer had an “address” instead of where the user lived. Almost immediately, credit companies moved back-office operations to Delaware and North Dakota where there few (Delaware) or no usury laws (North Dakota). Which is why credit card companies can charge whatever interest they want. 28%, 30% or higher….like Khol’s. The Khol’s credit card has to be the worst deal ever.

    Ummm…kinda like the way Republicans want health insurers to be able to sell across state lines. Deregulation by geography.

    But your point is well taken. If you let it, no holiday will be about family or friends. It will be about what kind of “deal” you can get and how much you think your loved one craves that million-bits-in-one drill made in China or that blouse made in Bangla Desh.

  12. 12 cstratct

    Interesting. Your point about selling insurance across state lines was part of a debate that occurred about a year or two ago with Portia. The argument was that selling across state lines would lower costs and create more competition, the whole free market battle cry. I believe mention was made during those discussions that the same thing would happen, the insurance companies would migrate to the states with the fewest regulations and requirements and people in the rest of the country would wind up having to play by those states’ rules.

    The race to the bottom (be it for health care, education, or any other good or service) doesn’t necessarily lead greater security, economic freedom or free markets.

  13. 13 jezebel282

    CS,

    “doesn’t necessarily lead greater security, economic freedom or free markets.”

    That is based upon the assumption that there is such a thing as a “free market”. In health insurance there are only a handful of companies, none of which tolerate competition within their markets. It’s seems sometimes that the biggest “freedom” in the “free market” is paying lobbyist to write favorable legislation for the representative you donated to.

  14. 14 jezebel282

    One more thing to think about: With all this fiscal cliff bulls$%^t going on about “entitlements” the single thing not mentioned is the simple fact that income over $110,000/year is exempt from Social Security deductions. How did that happen?

    How is it fair that the only solution is to reduce benefits?


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