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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jballz's picture

Strangely post bankruptcy there was enough money for 6 and 7 figure pay raises for management.

What is more obscene? A driver making 100k a year to drop off twinkies, or an executive whose only job is to oversee the dipshit driver, who drives the company into the fucking ground and expects a 2 mil salary to do it?

Fuck you union haters, you're don't know shit about anything.

Lednbrass's picture

Both are entirely ridiculous, and as such the company winds up in this very predictable liquidation.

Should have saved those Union dues for some English classes.

centerline's picture

+1 LnB.  Nice to see you around these days.

jballz's picture

Companies don't run without labor. Companies do run without debt service piled upon them by LBO artists. This idea that workers who produce are supposed to be held at the lowest common denominator with no consideration of the fact that THEY are the ones who actually build the equity is warped. Thank god we have unions.

As for my English, my phone is a little buggy with the spell checker. You'd be surprised how hard it is to just say

Fuck you !!

Hi Ho Silver's picture

Unions contracts demanding different product lines be delivered by different drivers? You can't run a business that way! Not these days. Hostess was doomed from the time those agreements were made. It was all just a matter of time after that.

RIP Hostess

cranky-old-geezer's picture

 

 

60 yrs ago when America was rockin thru the biggest boom in its history unions were raping companies up one side and down the other. 

Today the boom is over.  Manufacturing has been shipped overseas taking trillions of dollars of jobs with it.   What's left is burdened with upteen layers of taxes, regulations, and god knows what other expenses that never existed during the boom.

But unions still try to rape companies, demanding boom wages and benefits in a bust economy.

Hostess choosing bankruptcy rather than give in to union demands is an omen of things to come.  Unions are goin' down.

Nobody owes union leeches an upper middle class income for doing a job boatloads of other people would gladly do for half the pay.

Suck it up union leeches, your days of high rollin' are nearly over.  This bust economy is gonna catch up with you and overtake you just like it has everyone else.

Nobody gives a fuck if your dad and granddad were union.  They were lucky.  Your luck has run out.

Go Tribe's picture

Greatest Generation nothing but leeches.

Angus McHugepenis's picture

Geezer: I wish I could have written that. Thanks for telling it like it really is. As I mentioned in a previous comment, I'm sure there's many 65 year old unemployed ex-union men living with their 90 year old mothers right now. And they're probably blaming the company rather than themselves for their current situation. Meanwhile they haven't worked in a decade or more and are living off our productive generosity.

Ident 7777 economy's picture

 

jballz:

 

" Strangely post bankruptcy there was enough money for 6 and 7 figure pay raises for management. "

 

A. It ain't YOUR fing money

B. So-called retention 'bonuses' are paid to keep said personnel on staff to HANDLE THE WIND-DOWN (it's in the court briefing posted on ZH previously)

C. This is a FREE COUNTRY (mostly, so far, subject to change going forward) ...

 

lakecity55's picture

I was UMW and Trumka lied his ass off.

He was at a rally at Little Washington one time. The dude was very obviously living Large on my dime.

Miners have a dangerous job, but this guy only cared for his mafia inspired lifestyle.

He's just another bum who didn't get a silver spoon but realised he could still rip off everyone and live large with communism.

willwork4food's picture

Damn Vamp, you're spot on. Shit I work my ass off for what? This guy needs to have a welcome to the real world party.

dbomb12's picture

"Lee Iacocca met with union leaders and boldly told them he had thousands of jobs for $17 an hour, but none at $20"

I guess that works with the UAW but not with Bakers Union, I am sure Ol Frank hurt isn't worried with his $210,672 per year and lifetime pension 80% of salary!

 

 

mrdenis's picture

Ah Hell that would hardlt pay yer property taxes for a week in jersey !

Taterboy's picture

Go to college or become a Twinkie truck driver? Hmmm?

FrankDrakman's picture

Let's see, $200/0.08 equals $2400 per week.

When you're the union, math is hard.

ronaldawg's picture

Are you certain it wasn't a typo of $200 per month instead of $200 per week?

Buck Johnson's picture

They thought it would work and it didn't, now they are running around trying to find a job that paid the same amount and they can't.  They essentially gave up their jobs.

AAA21's picture

If we have GOVERNMENT MOTORS why can't we have GOVERNMENT TWINKIE!??  Well, maybe not - 'cause Michelle would definitely not approve!

ACP's picture

Looks like they all failed to "rise above," BITCHEZ!

max2205's picture

The exec retainage bonuses will trickle down to those fired...not

Ness.'s picture

But those union dues will still keep still keep on flowing from the taxpayer, to the union member, to the union leaders, tothe  local 'politicians', and will eventually end up in the DNC coffers.  Rinse and repeat.  Or should I say.. 'Strike, raise and repeat'?

 

Chicago PS teacher's just received a 17% raise... HS graduation rate in the CPS is 47%.

 

patb's picture

The unions should buyup the remnant assets under a 363 bankruptcy

Savyindallas's picture

They could do it if a Bank would loan them money   -fat chance. Banks don't loan money anymore-too risky. Uncle Ben gives them free money for specualtion and for a nice profit.

Matt's picture

49 years old, making $130,000 per year. If only there was some way for a person making that kind of money, to be able to make a large purchase, without having to borrow money from a bank ...

I wonder how many of these 18,500 workers have any significant savings, outside of, possibly, their homes?

TraderTimm's picture

Good job unions, proving irrelevancy yet again.

Corporations aren't that much better, either.

 

Ajas's picture

Seriously.  8% is $200/wk.  With drivers bringing in $130k/yr no wonder they BK'ed

Gully Foyle's picture

Ajas

Now subtract taxes fees and dues for that salary. Then subtract food, utilities, insurance and so forth.

Doesn't look so good in the end.

(Biden 2016 I am the GOD OF HELLFIRE and I bring you FIRE!)

Augustus's picture

Gulley,

You might not think it looks too good.

With the average household income about $50,000 / yr., the fellow is probably in the top 25%.  With all the responsibilities of a Twinkie Delivery schedule.  I'm really tearing up.

dtwn's picture

Yeah, not gonna tear up either.  When a relative makes $40K in good years, and is going to lose money this year working her ass off as a small-business manufacturer, there isn't much sympathy to give to a gear jockey paid 6 figures.

Lednbrass's picture

Top 25%? Thats top 5% on individual income.

Urban Redneck's picture

Try running a business some time.  The labor expense incurred by the employer is much higher that the employees see.

Waterfallsparkles's picture

Do not forget to add in Workmans Compensation, Unemploymnet Insurance, Retirement Benefits.  Add in the cost of the Truck.  The capital to buy the Truck, the Insurance, the repairs, the tires, the Gas, oil changes.  The cost of the Truck staying idle if the Employee calls in sick.

These are things that the Employee never consider.

Angus McHugepenis's picture

Gully: How come when I click your account I get a page saying "Access Denied"? I haven't seen that before with any other member here. And yes, I'm logged in, not just surfing.

yabyum's picture

They went BK because the make really shitty food.

Oh regional Indian's picture

It's a big stretch to call Twinkies "food". More like "Filler". Or how about "Bloater"?

ori

TheFourthStooge-ing's picture

Artificially flavored, artificially colored, partially hydrogenated, high fructose styrofoam, filled with a whipped, creamy emulsion of corn syrup and titanium dioxide.

willwork4food's picture

O yum. Funny how the discretionary income of many people afforded this company to make billions. Boggles the mind.

kliguy38's picture

yeh......sure those dirty unions.....I guess after the bankers got the pensions from the hostess proles they need to bundle it up sans union for the next banker buy out.....hehehhehe ...heck this is a great racket.....AND ITS LEGAL....thats the best part

Angus McHugepenis's picture

Have you ever actually been in charge of supervising UNION workers? I have, going right back to the mid 80's. I can say this with utmost confidence: The unions fuck themselves. One of the union negotiators I dealt with who was a dye-in-the-wool socialist actually took the postition of HEAD COMPANY NEGOTIATOR for fucking NESTLE in Toronto shortly after doing Gods work for the union that he represented for the workers at our plant (totally unrelated to Nestle). Needless to say all the socialists at our plant were fucking STUNNED that their head union guy went company.

In 1985 we were paying forklift operators $14/hour. That's the same as they are making TODAY. Except for inflation, etc. Guess what happened to the DOLLAR since 1985? And guess what finally happened to our plant in 1989?

Shall I give you an example of how a guy I know who was unemployed for the longest time all of a sudden became a "business agent" for a union and was paid $600/week with a "union company car"?...

Here's the bottom line on this: Unions are a fucking BUSINESS and they operate EXACTLY LIKE any other business. People bitch about paying taxes to the government but they think nothing of paying their UNION DUES for the same ass-raping they get from the government.

I need a fucking beer!

 

ironsky's picture

My old man was both UMW and USW at different points in his life. He always hated the "grievance man" more than the foreman.

Angus McHugepenis's picture

Yeah, I know where your old man is coming from. A fucking idiotic "grievance" could shut down production for a day. A fucking DAY! The workers sure know how to slit their own throats. Most of them were middle aged and making good money. They will never reclaim those glory days, or their pension money.

I'm guessing there's a bunch of 65 year old (union) men living with their 90 year old mothers right now.

ronaldawg's picture

That's a good point - what happens to their Union pensions?  Were they fully funded?  Are they going to lost in bankruptcy and shipped off to PBGC?

I guess the union double-fucked it self - double plus good.

kliguy38's picture

Actually Angus I broke a union in my business.......I had over a hundred employees now 70+......it was purely business...but that doesn't excuse stealing their pensions no more than it excuses their tactics. When you demonize working people and treat them like shit then you will reap the wind......whether its unions or non union the working guy is getting fucked in every orifice of his being and at the same time the small business man is getting it up his ass from the same banksters.........divide and conquer

Temporalist's picture

"divide and conquer" and the gov will fix it

Angus McHugepenis's picture

kliguy38: Thanks for another good opinion/example. We really need to be aware of the divide and conquer play. And it's always in play.

I'm a working guy and I have no intention of demonizing anyone except the corrupt banksters and politicians. I learned long ago not to be swayed by idiot union workers either. Talk to me straight and I'll be straight and honest with you. If I smell an agenda I will fucking demonize the shit out of you.

LetThemEatRand's picture

This is the basic problem with the corporate system.   The top management walks away with millions, shareholders lose everything and workers lose everything, but the brand will continue because it has inherent value.  A new set of management at a new entity that buys the brand will make millions selling Twinkies in the future.  If old management stood to lose what they pulled out in bonuses and exhorbitant salary at hundreds of times workers salary (which obviously were not deserved -- see outcome), these outcomes would likely be quite different.  But the corporate system protects them and it is virtually impossible to claw back even clearly outrageous pay received while the company was tanking head first into oblivion.

john39's picture

fights with the union may have been the straw that broke the camel's back... but you can probably safely assume that the managment loaded the company up with debt and probably made any number of stupid decisions running it into the ground.