The Corrosive Impact Of Unions In Action

If you wanna see a real life example of how the parasite kills the host look no further than Hostess Brands Inc.

Rocky Mount, N.C. — Hostess Brands Inc. filed a motion in federal bankruptcy court early Friday, seeking permission to shutter operations and end production of the snack cakes and breads known to generations of Americans.

The Texas-based company said in a statement on its website that it will try to sell its assets, including the iconic Twinkie, Ding Dong and Wonder Bread brands. Bakery operations have been suspended at all 36 plants, including one in Rocky Mount, following a week-long strike by thousands of workers protesting 8 percent wage cuts and benefit concessions.

In its statement, Hostess said the strike “crippled the company’s ability to produce and deliver products at multiple facilities.”

Already-baked products will continue to be delivered, and the company said its retail stores will remain open for a few days to sell off remaining stock.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Chief Executive Gregory Rayburn said. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

In essence, the union was negotiating either an 8% wage cut or a 100% wage cut.  The union decided that they wanted the 100% version.

However, unlike in other cases where the economic realities are hidden and not immediately obvious to the employees, the workers at the plant here in Rocky Mount North Carolina are keenly aware of the decision they are making:

The company has about 18,300 employees, including about 275 in Rocky Mount.

“We’re not in the dark. We know exactly what’s going to happen,” Hoffman said, “They’re going to shut the plant. They’re going to shut down all the (plants in the) United States.”

I have to hand it to the workers here in Rocky Mount.  North Carolina is a “right to work” state where workers can’t be forced to join a union.  Further, these workers were not yet affected by the contractual mess, they were simply honoring the picket lines of those workers elsewhere.   However, the actions of these employees acting on behalf of their unions have caused the corporation to go bankrupt.  The business will be sold off and these workers have lost their job in an economy that has continued to sputter along.

18,000+ employees out of work due to the union.

Amazing.

A note concerning Twinkies and GM.  I’ll bet you a candy bar that Hostess will sell everything.  The machines, the the trucks, the buildings and THE NAMES.  Someone will come along and buy the name “Hostess” and the name of every product they make.  And they begin to produce these products but in a manner that is more able to offer a return on investment.

The same thing would have happened to GM.

4 responses to “The Corrosive Impact Of Unions In Action

  1. Here’s a really good explanation of why the unions were not the problem: http://prospect.org/article/twinkie-defense

    • Here’s a really good explanation of why the unions were not the problem:

      Not that I care about the whims of a union, but the Teamsters agreed to the terms. And after seeing the books, advices the bakers to do the same.

      And to be sure, we’re not lamenting the end of a brand as much as we’re simply pointing out that the union voted to lose their job rather than keep it at an 8% cut.

      • Just out of curiosity, what if the company offered a 15% pay cut? A 20% pay cut? An 80% pay cut?

        Given the employment situation, under your usual argument, you would expect either:
        1) There are many other similar jobs, and even a 1% pay cut would lead to everyone leaving Hostess, and they fold because they can’t offer competitive wages. This is, obviously, not really going to happen.
        2) There are a dearth of other jobs, and thus they should accept pay cuts all the way down to 5% of their current wages, because that’s better than nothing. They should be happy to take any money at all for the virtue of working.

        Clearly option 1 isn’t real, and option 2 seems heartless. We live somewhere in between, but then you have to ask how much of a pay cut a worker should accept. One of the best parts of unions (and I am the first to admit there are flaws as well) is that a company isn’t able to pit workers against each other.

        If you have 10 employees and a bad economy, you can walk in and say “I’m going to fire two people and pay the remaining 8 about 75% their normal salary,” and people will fight over those 8 jobs. From a purely laissez-faire standpoint, that’s probably a good thing, but from a human standpoint it’s probably not. I’m genuinely curious how you would see that situation, because I suspect we look at things very differently.

        • Just out of curiosity, what if the company offered a 15% pay cut? A 20% pay cut? An 80% pay cut?

          First we would have to stipulate a non-racket environment. Right now the workers have the right to strike and not be fired.

          Right, #1 isn’t real. And yes, these workers just found out that the real
          minimum wage is $0.00. At some point, the production offered by the worker isn’t worth the wage they demand. They can negotiate or not.

          But speaking of heartless, isn’t the union, in obtaining better wages for their members, acting in a selfish and h heartless manner by reducing the amount of jobs otherwise offered?

          If you have 10 employees and a bad economy…

          You can do that to the workforce. And if you can obtain equal productivity out of the staff, you should. Heck, you should have done it before. Further, if you are able to make the case that market conditions have brought us to this point, the staff will understand. But if you fail to make that case, they will feel abused and productivity will not be linear and the organization will suffer.

          It is always [always?] better to become more productive at every single opportunity. Good times or bad. Only by becoming more productive do we increase the wealth of the nation.

          Now, consider our Twinkie makers.

          Suppose that we have a First Lady that is making every effort to stamp out unhealthy foods. Maybe even making schools remove soda and snack machines. Heck, in some cities you might even have mayors begin to legislate salt and soda bans. Now combine that with a law that forces every employer over 50 employees to offer health insurance.

          With the decreased demand and the increased cost, you can imagine the pickle you might find yourself in.

          I’m not blaming Obama for the demise of the Twinkie, I’m just saying that it might be time for it to go the way of the buggy whip. Or, if you’re a Mitt Romney kinda guy, to move the business overseas to avoid the healthcare hit and miss the union vig.

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