Hostess Mediation Fails, Liquidation To Proceed; Furious Laid Off Workers Now Turn On Labor Union

Tyler Durden's picture




 

Last week, when discussing the next steps for the company, and specifically the hope that mediation may resolve the epic animosity between management and workers, we stated that "What makes a mediation improbable is that the antagonism between the feuding sides has certainly hit a level of no return: "Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation." Sure enough, moments ago we learned that mediation has now failed and the liquidation may proceed. And since in America nobody understands that proper sequence of events involved in a bankruptcy liquidation, where the valuable parts always end up being acquired by someone, in this case the Twinkie brand and recipe, let the pointless Ebay bidding wars over twinkies continue. As for what really happens next, if indeed Bimbo is prohibited from acquiring the assets in the Stalking Horse auction due to anti-trust limitations, then the buyer will almost certainly be a "financial", i.e., another PE firm, whose coming means the end of any hopes and dreams of preserving union status at fresh start Hostess, or whatever the new firm will be named.

From the WSJ:

Hostess Brands Inc. said Tuesday night it would proceed with liquidation plans after mediation fails.

Earlier Tuesday, the head of the bakers union whose strike precipitated Hostess liquidation plans didn't attend a last-ditch mediation session and wasn't hopeful about its prospects, he said.

"I'm not too optimistic about this mediation," Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said when reached earlier Tuesday afternoon in Columbus, Ohio. He said he couldn't get to New York, where the session was taking place; instead, he said, the union's secretary-treasurer was attending.

 

The mediation came at a judge's suggestion after the Twinkie maker said Friday that a week-long strike by the bakers left the company no choice but to seek a bankruptcy judge's approval for liquidation.

 

The judge, Robert Drain, urged mediation, citing among other things the hope for saving some 18,500 jobs. The company filed for bankruptcy protection for the second time in January.

 

The judge indicated Monday that if mediation wasn't successful, Hostess could return to court Wednesday to pursue its liquidation plan.

 

Doug Mansky, a Hostess driver in Detroit and a member of the International Brotherhood of Teamsters, was in the process of moving to a cheaper condominium on Tuesday, after his union had agreed to an 8% pay cut that he said would shave $200 a week from his income. After Judge Drain cleared Hostess to impose the same new labor terms on the bakers union, they went on strike.

 

"I hope things work out. I'm going to be 49 and trying to find a job in a market that's terrible," Mr. Mansky said.

Sadly, the reality of learning just how bad the labor market truly is, all smoke and mirrors of a recovery aside, will now have to be experienced by not only Mr. Manksy but 18,499 of his fellow co-workers, who may have been duped into hoping by their union that by holding out a hardline stance, they would gain something.

They have now lost everything. And not too unexpectedly, the workers are now turning on the Union!

[S]ome Hostess workers in another union awaiting the
mediation results criticized Mr. Hurt, the 20-year president of the
bakers union, who defended his decisions and actions during the
company's bankruptcy process.

 

Scott Quenneville, a Hostess truck driver represented by the Teamsters, said he feels his colleagues were misled by Mr. Hurt into believing that a buyer would swoop in for the company. Mr. Hurt on Sunday said he thought there was a good chance a buyer would emerge who would give union members their jobs back.

 

"Frank misled a lot of people. He was not going to settle for anything less than closing the company down, because they didn't want that 8% pay cut," said Mr. Quenneville. "If you don't want the job, leave the job. Why ruin 18,000 jobs?"

 

"I didn't mislead anybody on anything," Mr. Hurt said. He said he didn't tell workers preparing to strike that a buyer for Hostess was definitely waiting in the wings.

 

Mr. Hurt said, "I don't want anybody to think that anybody is guaranteeing anyone anything, but we did know that there were people taking a look at this company."

This would be a truly fantastic drama, if people's lives were not at stake. And no, not one former Hostess worker will retain their job at the new company: that much is certain.

As we said, if only people had a basic understanding of how bankruptcy truly worked, and what the real state of the economy was, then Hostess' workers may have had a chance and some amicable comrpomise would have been possible.

Then again, if people in America actually understood economics and simple finance, then the "Ohio outcome", and many others, would have likely been quite different.

Now we can only hope we were not correct about the ultimate outcome too: namely that the US government will effectively hijack the bankruptcy process, and in doing so "bailout" a junk food maker, just so 18k votes can be preserved at the expense of creditors and making yet another mockery of the bankruptcy process, and property rights in the US.

Then again, this is precisely what the Union was likely hoping for all along, because once the government starts bailing everyone out, just where does it draw the line?

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Tue, 11/20/2012 - 22:45 | 3000894 grid-b-gone
grid-b-gone's picture

When Detroit used the 2008 crash to cut starting workers' pay to $14/hr while continuing to pay existing workers double that rate, the die was cast.

What the unions saw as a huge victory was little more than a peek at the true market for labor in the U.S. today.

BLS says the average hourly rate is about $22. Easily filling auto jobs at $14 tells PE to rerun their buyout numbers using 36% cheaper labor, and even more with benefit concessions. 

Two earners at $14 who have health coverage can still raise a family above the living standard of most of the world. It's still a letdown from when auto jobs each were a $90K package.

So the unions get to delay big cuts to their dues stream a little longer. New workers get an OK job in a tough economy. PE gets to realise their expected investment payback. Established union workers get to hold most of their gains from the boom years (though screwing their fellow union brothers can't be good karma). The bleeding of jobs to other countries is slowed or reversed. Management gets the market reset they could not pull off on their own, and ...

the true market takes one more step toward revealing its point of equilibrium

What PE, workers who get paychecks from taxes, and management need to understand is that this process is also lowering the average income of the U.S. customer base. Zero % money is also lowering fixed incomes of retirees. Higher school loan totals are lowering the spending power of new college grads entering the workforce.

As a result, products and real estate will continue to see downward pressure as those higher-income union workers exit this world and the core customer becomes the couple each making $14/hr.

We are not Japan? Keep looking.

Tue, 11/20/2012 - 23:31 | 3001007 Ident 7777 economy
Ident 7777 economy's picture

"Two earners at $14 who have health coverage can still raise a family above the living standard of most of the world. It's still a letdown from when auto jobs each were a $90K package."

 

NOW you're catching on ...

Wed, 11/21/2012 - 02:46 | 3001303 SoCalBusted
SoCalBusted's picture

+1 and ask a Delphi (ex) employee how things went for them.

Wed, 11/21/2012 - 06:59 | 3001409 Go Tribe
Go Tribe's picture

$14 an hour to run computers running machines to make cars seems a little steep. Not sure why we need an auto industry in America, they are holding us back.

Tue, 11/20/2012 - 23:13 | 3000950 WillyGroper
WillyGroper's picture

You left out a layer. It's the CEO's that get paid what the market can bear, not the worker bee's.

Tue, 11/20/2012 - 21:19 | 3000610 Popo
Popo's picture

Let the bankruptcy tsunami begin. Unions have destroyed American competition. We live in a world where scientists, engineers and programmers make half as much as union truck drivers and elementary school teachers. Of course we're losing. Lets see this joke of an economy fall apart already. True capitalists welcome the coming implosion, and anyone trying to stave it off (bankers, unions, politicians) is part of the problem.

Tue, 11/20/2012 - 21:37 | 3000692 dark pools of soros
dark pools of soros's picture

yes cause all USA companies are full of sound honest management teams making endless sacrifices and brilliant decisions... not a snake in the grass here..  none at all

Tue, 11/20/2012 - 22:40 | 3000878 dtwn
dtwn's picture

Scientist here, I can confirm the low pay for many scientists.  The starting salary for a life sciences postdoc (that is like a residency for new PhDs where they develop independent research over the next 2-6 years) is $39,264.  That's after another 5-7 years of training/school beyond a bachelor's degree.  If a truck driver delivering unhealthy food makes substantially more than people who generate knowledge that saves/improves lives, there is something wrong with this nation.  Although the science research market is distorted to begin with as half of it is funded by the government.  As such, imbalances occur for example where there are something like 100,000 excess or under-employed postdocs in the nation.  Let the unions and much government-funded education end and let the market figure out the true cost of labor.

Wed, 11/21/2012 - 00:14 | 3001125 SpykerSpeed
SpykerSpeed's picture

Thanks for the insight, good post.

Wed, 11/21/2012 - 00:41 | 3001173 willwork4food
willwork4food's picture

Great post dtwn. I still can't believe that wonder bread and twinkies generates so much money to afford a 6 figure income for a fucking truck driver. I doubt he/she even has a semi license., prob a step van.

Gotta have my DING DONGS.

Wed, 11/21/2012 - 02:51 | 3001306 SoCalBusted
SoCalBusted's picture

fuck the brand.  Let's create our own and call it "Twin Keys"...Already have a logo in mind.

Then we can pay the truck drivers $75K and be rich!

Wed, 11/21/2012 - 01:58 | 3001276 Anusocracy
Anusocracy's picture

You won't know the true cost of labor as long as government is around.

Wed, 11/21/2012 - 09:18 | 3001581 ncdirtdigger
ncdirtdigger's picture

You should learn to spread spackling. Those guys make way more than you.

Wed, 11/21/2012 - 10:33 | 3001773 Big Corked Boots
Big Corked Boots's picture

BTDT - that job taken over by Mexicans two decades ago. Fail.

Tue, 11/20/2012 - 23:13 | 3000951 centerline
centerline's picture

While I believe in the neverending struggle between labor and employers (ebb and flow), the current system is built to implode and the unions are playing into it like fools.

I have a master's degree in engineering... am a licensed engineer who takes PERSONAL liability everyday... fighting idiots who execute my work and think thier 3rd grade education combined with years of doing things wrong makes them an expert too... fighting business folks who want to tell me I am wrong only because they can (with no basis, no legal or ass-kicking recourse, etc.)... am on call 24/7... etc and etc and etc to the point of frustration and anxiety.  Meanwhile, I know people who drive around everyday, getting full pension benefits (I know they won't see them - different story), no stress, no liability, etc. and make more than me.  I will tell you that "going Galt" is coming.  Us engineers, architects, doctors and the like are going to be the ones to say fuck this and leave... or just change careers.  

Tue, 11/20/2012 - 23:34 | 3001015 Ident 7777 economy
Ident 7777 economy's picture

Real estate ... if the market ever picks up ... meanwhile work on your golf game ...

Tue, 11/20/2012 - 23:31 | 3001006 jcrockett870
jcrockett870's picture

Hold the phone Popo.  My husband is a high school Earth science and chemistry teacher and makes a third of that union truck driver's estimated income.  Where the hell do you get off thinking elementary school teachers make 125,000 a year?  What planet are you on?  We'd love to get the damn unions off our back and out of our paycheck, scarfing money out of our check so they can turn around and send us Obama propaganda in the mail every week. You could say, well get out of the public sector.  Sure, but that would open up a vacancy for a libtard moron to take over his classroom and indoctrinate those children with global warming, green energy, sustainablility crap. 

Tue, 11/20/2012 - 23:31 | 3001008 WillyGroper
WillyGroper's picture

ur full of it. CEO's have destroyed the jobs. you can't compete on a wage slave scale. WTF do you not get?

Wed, 11/21/2012 - 07:03 | 3001410 Go Tribe
Go Tribe's picture

You nailed it. Factory workers are a drag on our economy, sorry to be so blunt. The real value is from those who innovate and manage. People who fuck off in high school and never get beyond buying the next pack of cigarettes and Twinkies need to see their jobs shipped overseas.

Wed, 11/21/2012 - 10:31 | 3001768 Ident 7777 economy
Ident 7777 economy's picture

People who fuck off in high school and never get beyond buying the next pack of cigarettes and Twinkies need to see their jobs shipped overseas. "

Tough to find any argument against that ... Darwin's Law as applied to economics ("Survival of the willing-to-work ... extinction for those who aren't willing-to-work"?)

 

Wed, 11/21/2012 - 14:17 | 3002630 ronaldawg
ronaldawg's picture

Yeah - but those people are now being fed and housed by the government - what is the solution to that?

Wed, 11/21/2012 - 14:16 | 3002627 ronaldawg
ronaldawg's picture

I agree bring it all down - let's start from scratch - I'm ready.

Also lawyers are a problem - they make considerably more than any productive person - what do they produce?  Pain and misery. 

Tort reform has to occur as part of any restructuring/solution.

Tue, 11/20/2012 - 23:14 | 3000958 Slightly Insane
Slightly Insane's picture

"Mike the wise guy"

Have you ever run a company, and paid the costs to all the parasites?  (Unemployment Insurance (exc. mod factor), Liability Insurance, Health Insurance, Workman's Compensation Insurance, Social Insecurity, Medicaid, (the employer pays 1/2 of the last two).  This is all insurance, yet they cannot insure against anything.  The whole game is a ruse.  Then there are the accounting rules, (absolute insanity), and fees like "franchise fees, and manditory training bullshit by the EPA (pick your state), or OSHA.  The assholes in government don't realize that when "private industry" has been finished off .... that they will have to regulate what?  Your Government and communist unions have duped the idiots into thinking that they can force an employer to take zero profit.  Good luck with that. 

My bet is that someone like China will walk over, and pick up the pieces.   All the rules will have been changed.  There will be NO health insurance, or any other type of insurance.  In the inbetween time, destroy all capital, and drive the ambition to work out of the american .... so he will be truely worthless.  Do yourself a favor, and leave the game .... quit playing and paying.  There game will be over when you quit playing it.

Tue, 11/20/2012 - 23:47 | 3001020 Ident 7777 economy
Ident 7777 economy's picture

Asking this of someone who has trouble running his own life? ... chases moonbeams and chemtrails to boot.

Wed, 11/21/2012 - 00:29 | 3001151 Michaelwiseguy
Michaelwiseguy's picture

30 Years as an excellent CNC machinist. My last job, precision diamond tool insert maker, started me at $10/hr. I lasted 14 months there and got myself fired. I'm on my 5th John Galt sabbatical now. My previous sabbatical lasted 5 years. My $1/4 million home is paid off.

Wed, 11/21/2012 - 00:43 | 3001180 dogbreath
dogbreath's picture

you would get a job at $25+/hr in your first week in alberta.

 

http://ca.indeed.com/CNC-Machinist-jobs-in-Alberta

Wed, 11/21/2012 - 23:33 | 3003888 Angus McHugepenis
Angus McHugepenis's picture

dogbreath: not sure why you got a couple down arrows for your comment. Our warehouse is right next door to a CNC shop in Alberta and that guy is working 18 hours a day, 7 days a week. He's married with 2 small kids and the kids probably can't remember what Daddy even looks like at this stage. I think he'd pay $35/hour just to get some personal down time and have a responsible person with some CNC experience to open up the shop and run things one or two days a week.

The only way you can even hire general labor here is to pay $15/hour CASH. Only recently graduated high school students and recovering crack-heads will work for that price.

Wed, 11/21/2012 - 02:54 | 3001308 SoCalBusted
SoCalBusted's picture

+1 just for " John Galt sabbatical "...I'm gong to use that!

Wed, 11/21/2012 - 10:07 | 3001691 Ident 7777 economy
Ident 7777 economy's picture

30 Years as an excellent CNC machinist. "

There is no way 30 years as 'excellent' ... 15 or 20 perhaps, since the initial balance of those years (10 or 15) was an apprentice learning the trade from a 'master'.

Wed, 11/21/2012 - 23:20 | 3003866 Angus McHugepenis
Angus McHugepenis's picture

As a business, where is the CONTRACT you signed with all the agencies you're bitching about? What do their CORPORATE ACTS, STATUTES AND BYLAWS have to do with YOUR CORPORATATION? And why can't you simply INVOICE any person or Corporation for your time when they try to forcefully demand your time? Why are you even asking government for PERMISSION to make a living? Are you fucking insane (apparently so due to your name)? Are you supposed to starve to death with great ideas in your head because you are afraid of government and think you have to follow their crazy bylaws?

Make stuff, build shit, create useful things with your imagination. Whatever you do, don't ever think you need PERMISSION from a corrupt CORPORATION to do so. I have personally told CRA and cops to fuck off unless they wish to play (and pay) by my rules and my CORPORATE contracts. So far it's working. Use their own rules against them.

Wed, 11/21/2012 - 14:03 | 3002563 ronaldawg
ronaldawg's picture

I don't understand - most people on ZH should have the mental power to see why Unions are bad and even unnecessary.  But the Unions just pulled off Obama getting elected.  That means at least 52% of the people still believe in the union bullshit.... WHY?

 

P.S.  There are still people on ZH supporting unions.... WHY?????

Wed, 11/21/2012 - 14:03 | 3002564 ronaldawg
ronaldawg's picture

I don't understand - most people on ZH should have the mental power to see why Unions are bad and even unnecessary.  But the Unions just pulled off Obama getting elected.  That means at least 52% of the people still believe in the union bullshit.... WHY?

 

P.S.  There are still people on ZH supporting unions.... WHY?????

Tue, 11/20/2012 - 20:45 | 3000519 Gully Foyle
Gully Foyle's picture

Vampyroteuthis ...

Now subtract taxes and fees and dues.

For some reason people who bitch about the heavy hand of government in their own pocket forget it exists when discussing the wages of working men.

(Biden 2016, this is the trip, this is the trip itself)

 

Tue, 11/20/2012 - 20:49 | 3000535 UP Forester
UP Forester's picture

How much do they take out of your Social Security Disability check?

Tue, 11/20/2012 - 21:01 | 3000576 Gully Foyle
Gully Foyle's picture

UP Forester

How much did they take from my paycheck is what you meant.

If I pay into it I deserve to get it back. If I pay into welfare I deserve to use it if I need it.

Don't attempt to demean Social Security as charity, that is  ignorant.

(Biden 2016, Hunk, hunk of burning love)


Tue, 11/20/2012 - 21:19 | 3000631 cosmyccowboy
cosmyccowboy's picture

as one who takes credit apps on a daily basis, you wouldn't believe the amount of fine healthy 20, 30 and 40 year old men and women drawing SSI!!!

Tue, 11/20/2012 - 21:39 | 3000703 UP Forester
UP Forester's picture

Plenty of them come through the Emergency Room, most of them with roofing tar or engine oil all over their hands.

Wed, 11/21/2012 - 10:32 | 3001058 Ident 7777 economy
Ident 7777 economy's picture

How does that happen? Where are the 'shop rags' (or Gunk hand cleaner)?

 

Post does not pass the smell test ...

Tue, 11/20/2012 - 23:19 | 3000970 Slightly Insane
Slightly Insane's picture

Vampy ...... the question is WHO LEVIES THE TAXES, FEES, AND DUES (don't forget all the other Bull crap ... like insurance (workman's comp, gen liability, health, .... then the retirement crap ... what a joke)?

 

Who?  an then for WHAT?  and then WHAT DO THEY DO WITH THE MONEY?   THEN ASK WHY?

Wed, 11/21/2012 - 06:07 | 3001381 Urban Redneck
Urban Redneck's picture

Now subtract taxes and fees and dues. Then add back all the cost components to calculate the fully loaded cost of the employee to the employer.

 for example-

Fully loaded cost per employee $175K

Employee Benefit Package $125K

Take home pay $75K

The cost of government and unions would be 100K per employee.  What the employee takes home of that is irrelevant to the corporation, but labor supporters are stupid when they think that that the actual costs born by the employer are irrelevant to their continued employment.

Tue, 11/20/2012 - 21:36 | 3000695 Oldballplayer
Oldballplayer's picture

What does a teamster earn where you are?

Has it dawned on anyone why these guys get so worked up about their jobs? They are high paying, non- green, little skilled jobs.

And now.........it's gone.

Tue, 11/20/2012 - 23:13 | 3000955 Matt
Matt's picture

Last I heard, there are something like 75,000 open truck driving jobs in America. However, instead of nice little trips from the bakery to the grocery store, most of them will be long haul.

Tue, 11/20/2012 - 22:49 | 3000904 Slightly Insane
Slightly Insane's picture

I made the same calculation, except $200/0.08 = $2,500.   That's $130,000 per year.  The driver was worried about making $200 less per week ($2,300 per week = $119,600 per year).  I know alot of assholes who would kill to make that kind of dough ..... shit I'ld drive a tank or a Honey Wagon for that.  I feel bad for the driverbeing mislead by the union jerkoff into "no job" ..... never gonna make that kinda dough again ......

Tue, 11/20/2012 - 23:12 | 3000947 jballz
jballz's picture

 

If he was making that it is probably because he's been there for 20+ years. Most of the workers made $18 an hour. 

Your problem is you are brainwashed. You think what is totally normal is for all profits, no matter how obsecene, should be siphoned off by bankers and creditors, with the people who actually make the company work and PRODUCE something left perpetually impoverished.

You think this is 'normal'. This is the 'right way' of doing things.

It's a fucking disease.

If the company hadn't been raped 7 ways to sunday by equity extraction hitmen the company COULD pay the people who built the fucking brand 6 figures, satisfy their retirements, and have a decent quality of life for 20,000 people and their families.

Fuck them, they should work for 50 cents an hour. You could find someone would do that job for 50 cents an hour if it weren'f for unions so fuck them. Let them work RIGHT ALONGSIDE THEIR MOTHERFUCKING CHI COM KIDS AT FOXCONN. FUCK THE UNIONS. FUCK ABOLITION BRING BACK SLAVERY GODDAMIT!

cheers..

 

 

Wed, 11/21/2012 - 00:50 | 3001193 willwork4food
willwork4food's picture

Aren't we almost to a full moon by now?

Wed, 11/21/2012 - 10:33 | 3001776 Ident 7777 economy
Ident 7777 economy's picture

Must be ... moonbats come out at dusk ...

Wed, 11/21/2012 - 07:35 | 3001432 Disenchanted
Disenchanted's picture

 

 

 

That Hostess truck driver was not making 130k/year. I'll guarantee...

 

Here's what a Teamster UPS driver can do:

 

Averages are so misleading. The average UPS driver's pay at this time 09/01/2012 is about $78,000 cash, and benefits of about $30,000 ($31.78 Hr /$47.67 Hr OT)

But drivers with enough seniority can get more overtime by "bumping" junior employees and with 15 hours a week of OT can earn over $100,000. With 20 hours a week of OT can earn over $111,000 cash, over $30,000 in benefits.

 

That Hostess driver ain't making the UPS bucks. The UPS driver with 15 hours overtime can make over 100k per year. That's 55 hours a week in one of the most dangerous professions there is. They're earning their money.

Wed, 11/21/2012 - 09:23 | 3001590 ncdirtdigger
ncdirtdigger's picture

Most dangerous professions?  When did UPS start picking up passangers in Detroit?

Wed, 11/21/2012 - 09:43 | 3001631 Disenchanted
Disenchanted's picture

 

 

truck driving in general...anywhere.

 

also one of the most stressful.

 

#8 as of 2010(workplace fatalities) BLS:

 

8. Driver/Sales Workers and Truck Drivers: 21.8 per 100,000 -- Up from #17 in 2008.

 

Wed, 11/21/2012 - 10:35 | 3001782 Ident 7777 economy
Ident 7777 economy's picture

 

"  ... #8 ... "

 

7 categories in front of that ... 

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