Archive for Friday, November 16, 2012

Twinkie manufacturer Hostess moves to liquidate after crippling strike

Company will close plants in Lenexa and Emporia

November 16, 2012, 9:09 a.m. Updated November 16, 2012, 11:29 a.m.

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Twinkies may not last forever after all.

Diana McKinley from the Seattle local 9 pickets on Thursday, Nov. 15, 2012 at Hostess plant in Sacramento, Calif. She is a 33 year employee of Hostess in Seattle. Hostess, the maker of Twinkies and Wonder Bread, says it will announce that it's going out of business if striking workers don't come back to their jobs by this afternoon. The local Hostess plant near Arden Fair employs about 300 people.

Diana McKinley from the Seattle local 9 pickets on Thursday, Nov. 15, 2012 at Hostess plant in Sacramento, Calif. She is a 33 year employee of Hostess in Seattle. Hostess, the maker of Twinkies and Wonder Bread, says it will announce that it's going out of business if striking workers don't come back to their jobs by this afternoon. The local Hostess plant near Arden Fair employs about 300 people.

Hostess Brands Inc., which makes Ding Dongs, Wonder Bread and other snacks, filed a motion Friday with U.S. Bankruptcy Court seeking permission to shutter its operations. The move comes after the company said striking workers across the country crippled its ability to maintain production.

The closing would mean the loss of about 18,500 jobs. The company said employees at its 33 factories were sent home and operations suspended Friday and its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

Hostess CEO Greg Rayburn said in an interview that there was no buyer waiting to buy the company. But without giving details, he said that there has been interest in some of its 30 brands, which include Dolly Madison, Drake's and Nature's Pride snacks.

Rayburn said the financial impact of the strike makes it too late to save the company even if workers have a change of heart. That's because the company was operating on thin margins and stalling production meant the loss of critical sales.

"The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products," Rayburn said.

Hostess, based in Irving, Texas, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade, as it struggled with increased competition, Americans' move toward healthier eating and the high pension, wage and medical costs related to its unionized workforce.

The move to liquidate comes after a long battle with its unions. Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages. The bakers union represents about 30 percent of the company's workforce.

Rayburn said the union's leadership had misled members into believing there was a buyer in the wings who would rescue the company. He said the union hadn't returned the company's calls for the past month.

A representative for the bakers union did not immediately return a call seeking comment.

Although many workers decided to cross picket lines this week, the company said it wasn't enough to keep operations at normal levels; three plants were closed earlier this week.

The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters. The Teamsters had urged the bakery union this week to hold a secret ballot on whether to continue striking.

Hostess has said the company is unprofitable under its current cost structure, in large part because of its union wages and pension costs. Rayburn said that sales volumes had been flat to slightly down leading up the bankruptcy filing. In a statement on the company website, he said all employees will eventually lose their jobs, "some sooner than others."

"Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the (company) can offer you at this time," Rayburn wrote.

The liquidation hearing will go before a bankruptcy judge Monday afternoon. Rayburn said he's confident the judge will approve the motion.

"There's no other alternative," he said.

The move to liquidate was unwelcomed news to some customers.

Adil Ahmed, whose family still eats Hostess treats during the holidays, said he rushed to the supermarket Friday morning after hearing the news. Growing up in New Jersey, he said his Southeast Asian family bought Wonder Bread to dip in curries and loaded up on sweets from a nearby warehouse for the holidays.

"I have nephews and nieces — we have to pass on the tradition to the next generation," said Ahmed, a 25-year-old union worker in Baltimore. He bought four boxes of Twinkies and other snacks for a family get together this weekend.

Comments

avarom 3 years, 2 months ago

The quickest way to get rid of people legally ....let them strike, offer them nothing...and then file bankruptcy to protect assets. This company will open somewhere else at a lower wage and no benefits, and because of job shortages... they will have plenty of applicants. People have to learn that its better to keep a job, then to lose one. Plus, they all just lost their severance pay and benefits. So, its a win-win for the Company!! The Unions never think out the whole plan......now they just lost all this money in union dues....Dummies!

windjammer 3 years, 2 months ago

That statement makes no sense pro or con.

John Hamm 3 years, 2 months ago

They had filed Bankruptcy a few years ago, came out, had problems filed again. All other unions accepted the offer but the Baker's union wouldn't they wanted more - thinking the company would have to cave in to their demands.

avarom 3 years, 2 months ago

The company filed bankruptcy several times.....its a twinkie conspiracy and there are different levels of banruptcy filings. Chapter 11 is a chapter of the United States' Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy (although liquidation can go under this chapter), while Chapter 13 provides a reorganization process for the majority of private individuals. Filing Chapter 11, allows the company to Reorganize legally....like United Airlines did. A company undergoing Chapter 11 reorganization is effectively operating under the "protection" of the court until it emerges. An example is the airline industry in the United States; in 2006 over half the industry's seating capacity was on airlines that were in Chapter 11] These airlines were able to stop making debt payments, break their previously agreed upon labor union contracts, freeing up cash to expand routes or weather a price war against competitors — all with the bankruptcy court's approval.

Tomato 3 years, 2 months ago

The company is liquidating. Hostess will no longer exist. It's assets will be auctioned off. According to the Wall Street Journal, the private equity firm that owns Hostess is not expected to receive anything after liquidation.

This is a total loss for the owners of Hostess. This was a lose-lose for everybody.

avarom 3 years, 2 months ago

I don't agree with that statement...there recipes are worth millions...they will sell them, trademark under a new brand and open a new company with a different name, and then hire cheaper hourly paid employees with less benefits. Corporate American is a big game of screwing the American middle class out of their money! Here is syllabus of companies owned by Hostess (HOSTSP).Hostess owns the following brands in the United States: Baker's Inn, Beefsteak, Blue Ribbon , Butternut Breads, Colombo, sourdough bread bakery, based in Oakland, California Cotton's Di Carlo,Dolly Madison, Drake's, Dutch Hearth, Eddy's, Good Hearth ,Holsom Home Pride, Hostess, J.J. Nissen, Merita, Millbrook, Mrs. Cubbison's Foods, Nature's Pride, Parisian, Standish Farms, Sweetheart Bakery, Twinkie, Toscana, sourdough bread bakery, with Colombo and Parisian Bakery, part of the San Francisco French Bread Company, acquired by Hostess in 1984, Wonder Bread.....I believe they're going to change their marketing to better and healther products and re-brand under a different name.

avarom 3 years, 2 months ago

This was just a ploy to get rid out Union Labor!!!!!!!!!!!!!!!!

gr 3 years, 2 months ago

And the mafia union destroys another company. Not that the company was beneficial to health, but when they come for your company, who will be left to stand up for you? Expect bigger things with the mafia in the future. Assuming this country has much of a future.

Alyosha 3 years, 2 months ago

"mafia unions" is hardly a well-considered phrase. You can measure the degree to which people have become radicalized about workers' rights and unions by comparing this silly adolescent phrase with how President Einsenhower, a Republican, saw labor unions: "Labor is the United States. The men and women, who with their minds, their hearts and hands, create the wealth that is shared in this country—they are America."

Silly mindless statements equating labor unions and workers' rights with the "mafia" demonstrate only that the speaker of such statements either hasn't the ability or can't be morally or ethically bothered to actually think: they just emote like a child.

optimist 3 years, 2 months ago

If a company were to employ the same tactics against an employee there would be an outcry and rightfully so. Eisenhower wasn't necessarily referring to the union but the worker. He understood the value of the individual worker as most of us do. Those that walked out on the company and forced its resulting closure have nobody to blame but themselves. They were a part of a team and they chose to be adversarial instead of try to work for the best interests of everyone. I feel for those that decided to be reasonable and returned to work, albeit in a futile attempt to save their company and their jobs. Now the only thing that is certain is none of them have jobs going into the holidays. I really do feel for those that tried to behave reasonably. How sad.

just_another_bozo_on_this_bus 3 years, 2 months ago

"He understood the value of the individual worker as most of us do."

Apparently the company didn't value the workers all that much, slashing their pay and benefits while nearly doubling the already lucrative compensation packages of their top executives (who likely never made a single twinkie.)

orbit 3 years, 2 months ago

"If a company were to employ the same tactics against an employee there would be an outcry"...Uhhhhh, ever hear the term "lockout"?

Katara 3 years, 2 months ago

Hostess already underwent bankruptcy in 2004. Having to file for bankruptcy again in 8 years tells you that the company was being financially mismanaged.

The workers had already agreed to cuts in pay and benefits and then were asked to accept even more cuts while Hostess raised the pay of their upper level management. This also tells you the company was being mismanaged financially.

The strike isn't what broke Hostess, although unions are easy to scapegoat by uninformed people.

The people in charge failed to take care of the company financially and failed to pay attention to what was going on around them. People are eating less junk food. Hostess snacks are significantly higher in price than its competitors (again, the workers took a cut while upper management got raises) and the quality of their product went down significantly.

Travis Shinkle 3 years, 2 months ago

In non-"right-to-work" states, the union is a virtual mob: the unions collect dues from all workers, even the ones who do not want to join, and fights all "freedom of choice" options.

Do you think it is fair when workers are forced to join an union? It is a "legal" extortion of monies from those who do not want to be apart of an union...

Katara 3 years, 2 months ago

Monies collected that are used for political action by the unions are refunded back the non-union workers in non-right to work states.

Workers who don't wish to be part of the union still benefit from the union. In most businesses with a union presence, non-union workers are paid the same wage as union workers and receive the same benefits. It is a HR nightmare for the company to keep track of all sorts of individual contracts for the same job title.

Do you think it is fair that workers who don't want to be part of a union to get the same wages and benefits and without going through their own negotiation to gain that?

A lot of folks see that as riding on the union's coattails.

jafs 3 years, 2 months ago

Yes.

I think they should be voluntary, but that non union employees forfeit the right to any union derived benefits, personally.

Liberty275 3 years, 2 months ago

" "Labor is the United States. The men and women, who with their minds, their hearts and hands, create the wealth that is shared in this country—they are America.""

Labor isn't unions. Unions are scams that charge people money for a job, then drives those jobs overseas.

Katara 3 years, 2 months ago

Many non-union jobs have gone overseas. Think about IT departments. Those are not generally union jobs but they are certainly amongst the most outsourced overseas.

Unions really factor in very little in outsourcing but they make a great scapegoat for it.

Were you aware that Walmart refuses to allow union organization in their stores in the U.S. but bargains with the union in China for their stores.

http://www.forbes.com/2008/07/25/walmart-china-unions-lead-cx_mk_0725acftu.html

http://www.washingtonpost.com/business/economy/wal-mart-works-with-unions-abroad-but-not-at-home/2011/06/07/AG0nOPLH_story.html

John Hamm 3 years, 2 months ago

Hostess made many more products than Twinkies.

Terry Sexton 3 years, 2 months ago

When I told my friend, Gus, there wouldn't be any more HoHo's, he thought they canceled Santa Claus. Then he ran out to WallyWorld for a deep fat fryer & a case of twinkies. I guess it's his turn to fix Thanksgiving dinner.

overthemoon 3 years, 2 months ago

When you work many years for a company that refuses to update its product despite poor sales and then find that your pension has been looted by 'wall street investors', you're supposed to stand by, not complain, and be 'happy to have a job'??

jafs 3 years, 2 months ago

Apparently so, for those on the right.

chootspa 3 years, 2 months ago

Yes. And when the CEO has a 4.2 million dollar golden parachute, closing was clearly the fault of union workers who went on strike after the company cut their wages and stopped contributing to their pensions last year.

terlynn_1370 3 years, 2 months ago

If the company I was working for said they'd close if the strike happened, I'd be really leary about playing chicken with them. I think I'd continue working and look for another job.

optimist 3 years, 1 month ago

Looting pensions... sounds more like a reference to the Federal Governments and what politicians have done to Social Security. If any of what you say is remotely true this administration would be so far up their business it wouldn't be funny. The fact that they aren't says there is no sign of criminality or wrongdoing here.

Hooligan_016 3 years, 2 months ago

Hostess closing is not solely the fault of the union strike. Declining profits for years now (due to health conscious choices) and poor management with inflated salaries also contributed to this result.

Jeff Goodrick 3 years, 2 months ago

Interstate Bakery has been in trouble for some time now I was suprised they lasted this long. Hostess will be bought up by Bimbo or Flowers bakery,but the bread division will not be around. The company was wanting an 8% pay cut from the union, but that would of not saved the bakery, just make it last a little bit longer so it could break up the company into smaller companies. Twinkies and Ho Ho's will still be around just another company

simomandsimonsays 3 years, 2 months ago

I am so sorry for those who lost their jobs, well at least the ones who wanted to work. I certainly don't feel bad for the union bosses who don't return company calls. How arrogant! Sadly we will see more of this when Obamacare goes into effect. Employers are saying we can't afford these extra cost and compete. You can hate this all you want to but it's a simple and we should all prepare for it. Good luck former Hostess employees. It's a sad day.

Chris Phillips 3 years, 2 months ago

WE ARE TOO BIG TO LET THEM FAIL!!! Oh, wait a second...maybe this could be to our benefit...

Fred Whitehead Jr. 3 years, 2 months ago

This mess is nothing new, but I fault the unions. There has been a severe economic rrecession for some time now, and many companies have financial problems. For these idiots to go out on strike at this time is pretty stupid.

Oh, I know, all this economic news is the fault of the government, Republicans, Democrats, China, and sun spots. and is cauculated to cause employers to want to screw their work force.

In my view, half of something is better than all of nothing..

But tell that to some of these idiot union dudes who now will have NO income at all.

Was it worth it to put all those people out of a job given the already bad job market?

Tea, anyone??

Joe Berns 3 years, 2 months ago

Some creditors question Hostess pay raises approved in late July. They knew this was coming and padded their wallets before closing the company. Forcing their workers to take pay cuts while they line their pockets. I'm no fan of unions, but this is just plain wrong.

Brian Driscoll, CEO, around $750,000 to $2,550,000

Gary Wandschneider, EVP, $500,000 to $900,000

John Stewart, EVP, $400,000 to $700,000

David Loeser, EVP, $375,000 to $656,256

Kent Magill, EVP, $375,000 to $656,256

Richard Seban, EVP, $375,000 to $656,256

John Akeson, SVP, $300,000 to $480,000

Steven Birgfeld, SVP, $240,000 to $360,000

Martha Ross, SVP, $240,000 to $360,000

Rob Kissick, SVP, $182,000 to $273,008

NOTE: Some executives didn't take full raise.

msezdsit 3 years, 2 months ago

Right, upper management managed this company into bankruptcy and gave themselves raises for it. They did a money grab before they went out of business (that they caused) and then blamed it on the unions.

Cait McKnelly 3 years, 2 months ago

Poor Hostess. Little Debbie finally did them in. By the way, Little Debbie does a Twinkie knock off called Cloud Cakes. You don't have to panic.

progressive_thinker 3 years, 2 months ago

Yeah, but do they work with all of the recipes in the Twinkie cookbook? Will the Twinkie sushi be as good? Only time will tell...........

Cait McKnelly 3 years, 2 months ago

Actually, thinker, I've been told that in some ways Cloud Cakes work betterin some recipes because they are considered "denser". (/shrug Dun't look at me.:P )

Richard Heckler 3 years, 2 months ago

This is part of an orchestrated effort to bust unions and lower wages across the board. The cuts should start at the top say about a 75% cut to keep workers on the job pumping money into this economy. Conservatives are terrible business managers.

BRING ON NEW EMPLOYMENT = THE GREATEST REPUBLICAN FEAR ON EARTH!!!

Repubs fear a dramatically improved quality of life for all WOULD keep them out of control for decades….. we would hope.

Keep in mind a prospering america can overcome repub fear mongering... it must.

What is the repub party afraid? Why do they ALWAYS say no?

What do Repubs fear?

--- Fear a dramatically improved quality of life for all americans

--- Fear Jobs Jobs Jobs for americans

--- Fear New USA industry thus new wealth for america

--- Fear new cleaner energy sources because it would create so many new jobs and reduce rates across the board

--- Fear Medicare Single Payer Insurance for = huge tax dollar savings to government,public schools,small business and all of us in general. Single Payer Medicare is the answer. -http://www.healthcare-now.org/ -http://www.pnhp.org

--- Fear Clean Collar Industries which produce jobs that cannot be outsourced

Joe Berns 3 years, 2 months ago

This has nothing to do with politics, please keep that crap to other topics where we don't have to read your drivel.

just_another_bozo_on_this_bus 3 years, 2 months ago

Wrong-- it has everything to do with the class-warfare/race-to-the-bottom/union-busting politics that so dominate from the right these days.

progressive_thinker 3 years, 2 months ago

Merrill is spot on. Although somewhat difficult to work through Merrill's verbiage, the facts are essentially correct. CEO compensation is a huge drag on the US economy and manufacturing in general. http://www.economicpopulist.org/content/ceo-pay-tax-you

Restructuring how profits are shared among workers and executives is the key to getting our economy going.

jafs 3 years, 2 months ago

Can a moderator explain to me how this post doesn't violate the tos?

somedude20 3 years, 2 months ago

Well, stock up on Hostess junk food as it will become a scarce commodity to those who enjoy that crap!!!

Liberty275 3 years, 2 months ago

Somebody had a box of Twinkies on ebay for $200,000.

Katara 3 years, 2 months ago

Those are the poor man's Beef Wellington.

Katara 3 years, 2 months ago

Also I think you should change your avatar to:

Alyosha 3 years, 2 months ago

Again, laughable and jejune.

In fact, labor and workers are the true makers — "Labor is the United States. The men and women, who with their minds, their hearts and hands, create the wealth that is shared in this country—they are America" President Eisenhower — and management the true takers.

Good companies understand this. Unethical and immoral companies treat their workers like a natural resource.

John Hamm 3 years, 2 months ago

"Labor" is NOT "Unions" big difference, very big difference.

Kendall Simmons 3 years, 2 months ago

The Hostess CEO got a raise from $750,000 to $2,550,000...a 240% increase. The rest of the top 10 executives got raises ranging from 50% to 80%.

Then these executives demanded 8% cuts in pay for the people who actually produce the food. Exactly WHOSE "entitlement mentality" should be questioned here???

Katara 3 years, 2 months ago

Hostess also stopped funding the workers' pension.

Katara 3 years, 2 months ago

Hmmm.. what was that again about the unions destroying the automobile industry?

"General Motors Co. and the state announced Monday that GM will create 2,000 new jobs in Michigan, beginning with up to 1,500 at a new information technology innovation center in Warren."

http://www.detroitnews.com/article/20121008/AUTO0103/210080340

NoisyCrickets 3 years, 2 months ago

unskilled labor + low price goods = low compensation

Unions are supposed to prevent exploitation of vulnerable employees. I can understand unions where it's the only business in town. I can understand trade unions for skilled workers in industries with few employers. I can understand unions that prevent human rights violations. I don't understand a union choosing to run a company out of business. The CEO's compensation is zilch compared to what a man of his education/resume/background could likely make at other companies. His salary and "bonuses" if spread out over his workforce would have been zilch. You make cheap goods in bulk with cheap labor. You shouldn't get paid much.

just_another_bozo_on_this_bus 3 years, 2 months ago

Should she fetch your slippers and shake you a martini?

Kendall Simmons 3 years, 2 months ago

His education/resume/background led him to giving himself a 240% raise while asking his workers to take an 8% cut in pay. Perhaps he would have gotten the support he needed if he had taken a cut in pay, even though it would have been more symbolic than anything. Instead, he was a rat deserting a sinking ship and grabbing everything for himself before he jumped off.

chootspa 3 years, 2 months ago

His skill at running the company was also zilch compared to what people at successful companies earn, too. If he'd been a better manager, maybe we could argue that he deserved more pay.

Joe Hyde 3 years, 2 months ago

A few years ago one of my friends retired from Hostess/Dolly Madison. Many of her friends, also her brother and his wife, were until today employed by Dolly Madison in Emporia and all are now jobless.

My friend tells me that for a number of years the higher management types at Hostess Brands have been awarding themselves huge and escalating pay/benefit hikes (packing their 'chutes as it were) while simultaneously ordering ever-deeper cuts in the hourly pay and benefits of factory shift workers who physically make the products and pack them for shipping.

For salaried factory workers it's near impossible not to become embittered when you're being progressively impoverished in such disdainful manner.

Betty Bartholomew 3 years, 2 months ago

"Bakery, Confectionery, Tobacco Workers and Grain Millers International Union"

Three of these things belong together, three of these things are kind of the same, but one of these things just doesn't belong here, now it's time to play our game, it's time to play our game...

bd 3 years, 2 months ago

I will fund my retirement in 10 years by hoarding twinkies and selling them off on ebay later!!!!!! :)

just_another_bozo_on_this_bus 3 years, 2 months ago

It's a good thing they have absolutely no nutritional content-- otherwise, proper storage to prevent spoilage could be an expensive proposition.

Kathy Theis-Getto 3 years, 2 months ago

Bd: good idea! I have heard twinkies have about 39 ingredients, none of which are fresh. The twinkie will not rot, nor grow mold, just dry out. I would think a person could make a few bucks deep-frying them.

jhawkinsf 3 years, 2 months ago

I can't speak to the specifics of this company and this labor dispute, but if a company is run poorly (top heavy in compensation, not keeping up with the times, etc.) and the labor force asks for more than the company is willing to give (this is a privately held company, they do have the right to say yes or no), then you're going to have a situation like this. It sounds to me like the company leaders and the labor leaders deserve each other. I'm sure they'll all make out fine in the long run. As for the average working guy, you just got screwed by both.

just_another_bozo_on_this_bus 3 years, 2 months ago

If the labor leaders had told the union workers they should have taken whatever crumbs the company was willing to throw them, what would your assessment have been?

BTW, strikes don't happen just on the say so of a "union boss." It takes a vote of the workers.

jhawkinsf 3 years, 2 months ago

The workers should have been free to accept or reject whatever offer was on the table. They would then suffer the consequences, both good and bad of their decisions. The exact same thing would be true for the company.

BTW - Management negotiators are usually authorized to speak for the company as a whole while the union negotiators are usually authorized to speak for their members as a whole. If either did not represent the actual wishes of those they represent, then shame on them.

just_another_bozo_on_this_bus 3 years, 2 months ago

"The workers should have been free to accept or reject whatever offer was on the table. "

It appears they were and they rejected it.

If the company was really serious about saving itself, they wouldn't have given such substantial raises to the top brass while demanding substantial cuts from its work force.

This has the look of a Bain Capital type situation where vulture capitalists have loaded the company up with debt, slicing out a big portion of that debt to pay their "consulting and management fees," not really caring whether the company survived or not because they've already made $millions, and chopping the company up and selling off its assets will make them $millions more.

jhawkinsf 3 years, 2 months ago

You might be spot on. Then again, I would have expected the union to squeeze every penny out of the company that they were able to and they would have done that for years. I would have expected the union to fight for their workers, even the bad ones. I would have expected the union to get every last benefit they could, despite knowing the company has been in bankruptcy twice in recent years. In other words, the company and the union are engaged in an adversarial relationship, each not concerned with the other. Most times, a resolution is found. Sometimes not.

On the plus side, if the company is liquidating their assets, and considering they are assets of a company that is known to be going out of business, this is the perfect opportunity for some entrepreneur to pick up those assets for a fraction of what they would have been worth before the strike. Maybe the union can do it. They already have a skilled labor pool from which they can pick, pay them whatever they think is fair. It's a risk, but they could surely do it. If they don't have the resources, each member can pitch in what they can to become shareholder. Mortgage their house and they can become bigger shareholders. Take the risk that the former owner took. If they did that, I suspect they would find that they could reduce their labor force and reduce wages to remain competitive or they too could go into bankruptcy or go out of business. Maybe they would survive with lower top end compensation. But the opportunity is there. Do you think they'll seize the day, or just bemoan the loss while blaming the other guy?

just_another_bozo_on_this_bus 3 years, 2 months ago

I expect that even if any of these groups of workers wants to buy any particular asset, finding the capital to do so would be extremely difficult. Wall Street doesn't float the capital for such acquisitions merely to provide jobs-- they want a fairly immediate return on their investment.

BTW, check the link I provided below-- unions made considerable concessions to keep the company afloat. I'm sure they would have taken an ownership share in exchange for concessions if it had ever been offered.

jhawkinsf 3 years, 2 months ago

Capital may be difficult to get. Another way of saying that, though is that there is substantial risk. That's the risk the workers and union didn't take and wouldn't take. They can take it now, though I'd bet they don't. That's the part of the equation you never want to look at. Initial risk. Putting all your assets on the line for an idea, an idea that might fail and you lose everything. There can be a reward, though. Maybe. Those executive salaries. Those bonuses. That's the reward. Maybe. In exchange for risk.

Sure the unions made concessions. But they did so in a dying industry. That's like saying the union that represented horse drawn carriages made concessions. Frankly, from what I've seen and read, this is a company that deserved to die. I feel bad for the workers, but they had to see this coming. Their union had to see this coming.

just_another_bozo_on_this_bus 3 years, 2 months ago

You don't get the kind of capital it takes to buy any of the valuable assets of such a company unless you're part of the Wall Street club, and local unions are not part of that club. To suggest that that they are slackers for not taking an opportunity that doesn't even remotely exist is pure straw man.

The processed food industry is nowhere near dying, and many of the brands, even though I won't touch them with a ten-foot pole, still have plenty of appeal. Many of the concessions that were made were in exchange for investments in new equipment and product development, which never happened. Did they see it coming? I'm sure. But so did the passengers on the Titanic.

jhawkinsf 3 years, 2 months ago

One of the unions that did reach and agreement with this company was the Teamsters. They're not part of the club? The mafia club or the Wall Street club? The point is that they have the resources, along with the other unions to buy this one company. But they're not going to. Not that I think they really should.

I'm not going to research this entire industry, but my gut tells me that a more health conscience society means this industry has some serious adapting to do before it becomes healthy. I wouldn't touch this whole industry with a ten foot pole. I wouldn't have invested in Hostess had they been a public company nor would I invest in a similar company. If I worked at such a twice bankrupted company, I'd have had job applications out for years and if I were a union representative, I'd have cautioned my members to seek employment elsewhere. If the union didn't, they didn't serve their member well and they deserve to die just as this poorly run business deserves to die.

jafs 3 years, 2 months ago

And yet, the CEO's who ran it poorly walk away with millions in salary, benefits and severance packages while those at the bottom and middle are SOL.

jhawkinsf 3 years, 2 months ago

Maybe, maybe not. As a privately held company, we may never know all the details. Personally, I've done things like mortgage my home to float my business. I've signed promissory notes. The point is that with risk comes reward, or at least the possibility of it. I agree, from what I've heard, this business was run poorly. But think of it another way. Suppose you drove a truck that delivered these goods. One year ago, another company was hiring at a slightly higher pay. Or maybe that company was 5 miles away from your home while Hostess was 10 miles away. Or maybe the other company's hours were 9-5 while you had to start Hostess at 4 in the morning. There could be a million reasons. So you leave. As an employee, you have that freedom. You always will. Not so with an owner. He's tied to that business, day and night, until he sells, assuming there is a buyer.

I mentioned this earlier, Bozo brushed my suggestion off, but if each employee mortgaged their homes to the tune of $100,000, they could pool their resources and have 1.8 billion dollars. They have a ready and skilled labor pool. They could risk everything and garner the huge rewards. Personally, I wouldn't invest in Twinkies, but if they believe in their business, they can do it. But if they don't believe in their own business, I don't know how you can fault the former owners for coming to the same conclusion.

When you say those at the bottom walked away with nothing, is that true? Without taking the risk of initial investments, they were still paid their wages. During times of bankruptcy, they were paid their wages. They had paid professionals looking after their interests in terms of pensions and benefits (their union). If the people at the bottom have been failed, I'm not sure you can put all of the blame on the company. Surely the union could have, should have seen this coming. After two bankruptcies, individuals should have seen this coming.

geekin_topekan 3 years, 2 months ago

Not to worry. Crops are rotting in the fields because so many "jobs" were being "taken from Americans" that certain states have lost huge sections of their farm labor force. Hostess workers can go there to recover those jobs. After all, they were taken away from decent hard working Americans in the first place.

Trumbull 3 years, 2 months ago

In the early 2000's, Interstate Brands began to pull out of the "store brand bread" business in an effort to sell mostly higher margin bread (ie Wonder Bread). They lost a lot of sales volume and shelf space as a result (companies willing to provide store brand received more shelf space). In my opinion the lower margin sales helped cover overhead.

The rise in fuel prices and the low carb fad also hurt them. There were union issues for sure, but they should not be taking all of the blame on this one for sure. Many variables caused this.

Jennifer Dropkin 3 years, 2 months ago

Wall Street Journal report, http://online.wsj.com/article/SB10001424052702304072004577323993512506050.html:

Salary Increases at Hostess (April 2012)

Brian Driscoll, CEO, around $750,000 to $2,550,000 Gary Wandschneider, EVP, $500,000 to $900,000 John Stewart, EVP, $400,000 to $700,000 David Loeser, EVP, $375,000 to $656,256 Kent Magill, EVP, $375,000 to $656,256 Richard Seban, EVP, $375,000 to $656,256 John Akeson, SVP, $300,000 to $480,000 Steven Birgfeld, SVP, $240,000 to $360,000 Martha Ross, SVP, $240,000 to $360,000 Rob Kissick, SVP, $182,000 to $273,008

somedude20 3 years, 2 months ago

No deep fat fried Twinkies......thought I felt an earthquake this morning, turns out it was just the fatties making a mad dash to the store to, um, eat them up!

This very well may be the even that triggers WWIII

MarcoPogo 3 years, 2 months ago

Don't worry, Twinkies aren't going anywhere. Somebody's gonna snatch that product up.

Briseis 3 years, 2 months ago

Obama needs to ban guns. Legalize marijuana and nationalize the Twinky. If there is any man that can nationalize the Twinky, it's Obama. If the food czar Michelle finds out, it could be hard for him to do. He is going to have to sneak behind her back to do it.

A new White House petition wants President Obama to nationalize the "Twinkie industry," saving the popular junk food from possible extinction.

http://www.politico.com/politico44/2012/11/petition-wants-obama-to-save-twinkies-149789.html

notorious_agenda 3 years, 2 months ago

It's a matter of fact that a Twinkie only lasts around 14 days before its expiration date. They never did last forever. That was a myth created by stupid. So yes, they never really lasted forever in the first place, and only someone with no creativity would use that to start an article in this day and age of information.

Liberty275 3 years, 2 months ago

I don't want a government ding dong, even if it's free.

JayCat_67 3 years, 2 months ago

Too late. Washington's been infested with them for years.

beatrice 3 years, 2 months ago

rockchalk, as you prove routinely, as long as Obama is in office there are more than enough ding dongs to go around.

just_another_bozo_on_this_bus 3 years, 2 months ago

They were damned if they did, damned if they didn't, and the fault for that lies at least 50% with the management of the company.

But thanks for your uninformed but highly judgmental, Schadenfreude-loaded contribution.

just_another_bozo_on_this_bus 3 years, 2 months ago

The workers at plants like this only have control over whether they show up for work or not. They made considerable concessions to keep the company going, and the company and the various Wall Street vultures that took it over didn't even try to uphold their end of the deal.

In other words, some vaunted "job creators" had the opportunity to just maintain some jobs, but couldn't do it. And you want to blame the workers because they didn't go find new jobs with new "job creators," and expect it to be somehow different.

tomatogrower 3 years, 2 months ago

They were probably going to be laid off anyway. Maybe they just got tired of waiting around and getting ripped off even more.

Kendall Simmons 3 years, 2 months ago

So...you don't think they should have felt like this was a ripoff when the CEO give himself a 240% raise (and the rest of the top 10 executives get raises of 50%-80%) while demanding that the workers take an 8% cut in their pay???

tomatogrower 3 years, 2 months ago

See links to articles below. The "private equity" vultures had already swooped down to cut the lowly workers pay and destroy their pension, then give all that money to the executives, their buddies, who then continued to be rewarded for making really stupid decisions and borrow even more money, so they could pocket even more money, then go bankrupt. It's the new business model. Get with the program.

chootspa 3 years, 2 months ago

They'd already agreed to pay cuts over the years, and the money wasn't reinvested into the company. Their pensions had been raided while management gave themselves fat pay raises, and they'd gone through multiple CEOs, none of whom had any hope of turning the company around, but all of whom will live very very comfortably for their short stint at failure. Yes, I'm sure they all should just have been happy they had a job at all.

tomatogrower 3 years, 2 months ago

And horrors of horrors, the workers protested. How dare they. Just because they weren't smart enough to get an MBA and run a business into the ground while making a huge profit. But then again, maybe they have morals, unlike 95% of the so called free market conservatives on this forum, who feel sorry for those poor executives. Pity the billionaire.

tomatogrower 3 years, 2 months ago

When I first heard Hostess was going to file bankruptcy, I thought I would buy a Twinkie, which I hadn't eaten in years. I could taste the chemicals, and wondered why I ever ate them. They didn't update their product to keep up with the times. Who's fault is that? The workers? The union? No --- MANAGEMENT. You know, those MBA's who know everything. Kind of like those GM executives who couldn't be bothered to take the same elevator with the riff raff. You know, the ones - they destroyed the company? The ones that the conservatives claimed that Obama was picking on them, because they flew in the their private jets to beg for money. The ones who he fired when we bailed out the company.

kansanbygrace 3 years, 2 months ago

Thanks, Insidestraight, I thought someone had missed their cue.

Insidestraight 3 years, 2 months ago

Funny how in America they are called "Twinkies" and they are a laughing-stock, emblematic of everything that's wrong with our obese country, and in France they are called "Madeleines" and are a beloved delicacy, even when sold out of vending machines on Metro platforms ... and that running gag about Twinkies lasting forever didn't help, either; they were actually allowed to stay on shelves only a fairly short time -- restocked within a week or so if they weren't sold. I never particularly liked Twinkies, but they weren't Satan spawn ...

chootspa 3 years, 2 months ago

Madeleines are a totally different thing.

ravenjayhawk 3 years, 2 months ago

All of us need to hope business owners make a lot of profit. Profit drives jobs. People who get entitlements need to stop and think who is paying for those entitlements. Obama is really a friend of the middle and lower class . ha ha. A lot of workers will be gone due to his vision. A vision of true socialism. Russia was right, we will destroy ourselves Who pays for museums, extra school improvements, extra hospital improvements, salvation army funds, etc. The money comes from donations, and who makes donations.. Successful workers.

Cait McKnelly 3 years, 2 months ago

Just to let you know who gets "entitlements", two thirds of "welfare" goes to corporations and only one third goes to social programs that help the poor and under employed. Of the actual PEOPLE that get these "entitlements", 63% of Walmart's employees qualify for and get some type of government assistance, either food stamps and/or Medicaid. They actually have paid staff whose sole job is to assist employees to apply for and receive government assistance. This enables the corporation to underpay their employees and deny them benefits and is thus, a form of "corporate welfare" in and of itself. You may be paying those "low low prices" every time you walk into a Walmart but you're making up for it by what you pay in taxes to support THEIR employees while they pocket the difference.
Wake up and smell the coffee.

Cait McKnelly 3 years, 2 months ago

Oh, I forgot to add that Walmart is the largest private employer in the US, employing 2,200,000 Americans. This means our taxes are supporting 1,386,000 of their employees.

Kendall Simmons 3 years, 2 months ago

No. Not "a lot of profit". Simply that they are profitable. After all, making a lot of profit doesn't automatically translate to additional jobs, no matter what you've been told. Additional need does...which means you should probably want more people to have more money in their pockets, not fewer.

average 3 years, 2 months ago

I loved management's promise that if they cut salaries 8% now, they'd raise them 3% next year.

Why even bother doing that?

"You're breaking your previous promises right now. Why are we supposed to believe this one?"

Cait McKnelly 3 years, 2 months ago

A companion piece to the link KansasConscience pointed to above.
http://www.sacbee.com/2012/11/13/4983174/hostess-continues-pattern-of-misinformation.html
Frankly, I object to the way the headline on the Journal-World article is worded, but since it's an AP Wire article, they didn't write it.

In_God_we_trust 3 years, 2 months ago

Your article sounds more like a true account of what happened to the workers. Usually there is not a union unless management has dealt in bad faith to employees at some point in time and abused them. When I hear that it was the fault of a union that brought a company down, upon closer inspection of the real story, it is usually bad management or greed up high.

Liberty275 3 years, 2 months ago

I'll miss wonder bread.

I feel sorry for some of the 18,000 hitting the dole queue. I hope they remember what the union got them while they stand in line. Maybe they will remember during the next election.

Now our Twinkies will come from China.

Hopefully union states will take note and enact right-to-work policies and laws. How many more jobs do unions need to cost America before we wise up? Too many.

just_another_bozo_on_this_bus 3 years, 2 months ago

"I feel sorry for some of the 18,000 hitting the dole queue."

No, you don't. Otherwise you wouldn't be putting all the blame for this on them, after having given considerable concessions over the last several years, but none for the vulture capitalists who failed to uphold agreements and are the ones who really pulled the plug.

I expect what you really want is a return to a Dickensian Gilded Age.

"Please, sir, may I have some more?" (followed by a back of the hand.)

Liberty275 3 years, 2 months ago

"No, you don't."

I feel bad for those that would have worked for what Hostess was willing to pay. Anyone on a picket line can cease to exist and I won't care.

"I expect what you really want is a return to a Dickensian Gilded Age."

I want my boss to deposit my commission into my bank account every other week. That was our agreement.

""Please, sir, may I have some more?" (followed by a back of the hand.)"

You think like a leech.

Also, I don't blame all the workers, I blame the ones that voted to strike and the union.

just_another_bozo_on_this_bus 3 years, 2 months ago

Like I said-- Dickensian all the way.

But it's interesting that you expect your boss to fulfill your agreements, but unions aren't allowed to do the same.

Liberty275 3 years, 2 months ago

All I expect of unions is for them to continue declining. They are doing so at an acceptable rate.

average 3 years, 2 months ago

"I want my boss to deposit my commission into my bank account every other week. That was our agreement."

So, what Hostess management was failing to do (make timely pension payments, etc).

just_another_bozo_on_this_bus 3 years, 2 months ago

It is a rather reactionary hypocrisy he carries, isn't it?

Liberty275 3 years, 2 months ago

If my boss didn't put money in my bank, without there being some clerical error, I'd find another job. As for pensions, they should have had 401k plans and not tied their retirement plan to a single company. Maybe that will be a mistake they won't make again.

average 3 years, 2 months ago

The pension fund wasn't run by the company. They just had to contribute to it (exactly as if it were a 401k). Hostess didn't.

So, yes, exactly like if your boss stopped paying into your 401k per contract.

And they walked off the job as a result.

The Lenexa and Emporia plants are, by the way, in a right to work state (as were many other plants). They could hire all the $9/hr-no-benefit employees they wanted to, union happiness be damned. They chose to close shop instead.

chootspa 3 years, 2 months ago

I hope we all remember what hedge funds and managerial incompetence got them, because the company has been in a death spiral for over a decade.

Liberty275 3 years, 2 months ago

"Liberty275, I have yet to see any true comprehension or example of sympathy from you."

You see what you want. That's your business.

"Labor unions arose no differently than any other product or service:"

So did the horse and buggy.

"Only you can answer that."

The concept of unions are an anathema to libertarianism. Grouping together to blackmail an employer is sleazy, but worse, undercuts the individual.

chootspa 3 years, 2 months ago

At this point, I think it's just trolling.

Eugehne Normandin 3 years, 2 months ago

Way too many comments about Twinkies How about gluten free Twinkies made by illegal immigrants with an app for good measure ?

lunacydetector 3 years, 2 months ago

obama can appoint a twinkie czar, the government can take over with taxpayer funds, the union people can have their jobs back, and the union can buy stock for 10 cents on the dollar while the general public will have to pay $1.00 for the same share....then in a year, when massive losses (to the taxpayers) are being released, the administration will claim its rescue was a success, they rescued good paying jobs, the twinkie will be tweaked by moochelle's successful school diet plan (less palatable food for more money) and the press will report the success as truth, without even a question.

lunacydetector 3 years, 2 months ago

wow Pabst......now that's a great tasting beer - can't have a party without it. does food stamps work for pabst?

my cards are on a twinkie czar, and a taxpayer rip off just like GM

Katara 3 years, 2 months ago

GM is creating 2000 jobs in the next 4 years just in Detroit alone.

just_another_bozo_on_this_bus 3 years, 2 months ago

Read the article-- Pabst is owned by a different vulture capitalist, and the only reason they're interested is because Hostess is getting ready to shut down factories and bust unions.

Armored_One 3 years, 2 months ago

Ya know, I read a bunch of comments on here basically lynching the executives for their pay raises. Yeah, would be nice to manage something like that myself, but it leaves a really big unanswered question.

Any idea on what the union was demanding as pay?

18K * 10/HR * 40 HR/WK = 7.2 MILL a week.

Somehow, I just don't think a union is going to be all yippie skippie over 10 bucks an hour. Yeah, individual pay to individual pay, the workers are making less than the executives, but as a massed whole, the union was trying to get blood out of a stone, at least by my math. Did I use the wrong math? It's the same math they are teaching my kids in school these days.

I just don't see how 2 mill a year is worse than 7.2 mill a week. Guess I'm just not getting something. Maybe it's just that whole using basic logic thing that is screwing me up on this one.

Liberty275 3 years, 2 months ago

Why don't you go CEO a large company for $20/hr?

just_another_bozo_on_this_bus 3 years, 2 months ago

You really have no idea how incestuous the world of corporate executives and BOD's are, do you? (and to answer your question, I'm not one of the cousins.)

chootspa 3 years, 2 months ago

Management wanted to cut the worker's pay by 30% and rob their pension funds. I think I'd have gone on strike if I were facing that drastic of a pay cut, too. Yeah, my resume would have been updated and in inboxes, too, but there's no way I'd have voted to have my pay cut in one third while management fattened up with a golden parachute funded by my pension plan.

Richard Heckler 3 years, 2 months ago

These companies seem to have plenty of money for CEO's and upper level management. In addition to funding for:

-- Shareholders -- high dollar medical insurance for upper level management -- political campaigns -- golden parachutes = what the hell for -- maybe corp jets -- maybe a corporate cabin or two in Aspen,Santa Fe or Sweden

All of the above represents extreme mismanagement of corporate revenue. This mentality also represents no respect for hard workers that make the millions or billions or trillions of dollars for the corporations.

What's wrong with paying a janitor a minimum of 17.50 an hour to clean up after others and to maintain a structure? It is hard and tedious work. $33,000 a year is not going to allow for a vacation cabin in Aspen,Colorado.

What's wrong with $22.50 an hour to someone to produce safe food products?

What's wrong with a wage that enables a person and/or family to sustain themselves plus save a little?

What's wrong with paying a public school teacher well after spending years in college and years thereafter "upgrading" themselves at their own expense? And too often providing class room supplies out of their own pockets.

I say most families in America and most certainly in Lawrence,Kansas need a minimum of about $60,000 a year to afford a car, a home, taxes and medical insurance. Yet still no vacation homes in Aspen or Sweden.

tomatogrower 3 years, 2 months ago

So you believe in rewarding raises to people who don't deserve it? Why didn't the executives take a pay cut?

just_another_bozo_on_this_bus 3 years, 2 months ago

In other words, executive salaries have nothing to do with the profitability of the company or the performance of the execs. Those salaries are based merely on the ability of the execs and the BOD to extract however much money they can before the whole thing collapses.

And fairness to the workers who actually make the products that fund these salaries?That's a silly notion that deserves no consideration whatsoever.

just_another_bozo_on_this_bus 3 years, 2 months ago

The exec salaries are most certainly a major part of the collapse-- not necessarily in direct dollar terms, but in leadership terms. You can't ask employees to take yet another major cut in pay and benefits (there were no salary or benefit increases on offer) while doubling and almost tripling the pay and benefit of those at the top.

Looks to me that theses execs decided a few months ago that they were going to pull the plug, and decided to suck out as much cash as possible, playing a charade of negotiating with the unions just to prolong those pumped up paychecks.

Trumbull 3 years, 2 months ago

Hostess attempted to change, but every change they implemented back-fired horribly because the people they brought in did not understand the business. These people had the pedigree, but not the field knowledge. It was ashame that the new managers' opinions were selected above people who had a lifetime of work in the company. Hostess acquired many companies in the 80's and 90's and had the capacity to mass produce bread and cake. Instead, they wanted to sell only selective higher margin brands. They voluntarily gave thses sales to competitors (who are profitable btw), and had difficulty covering overhead. It then became a downward spiral. But I do agree with you in part LarryNative.

Trumbull 3 years, 2 months ago

I mentioned this above and I will mention this again. It was the bread side of the business that put Interstate Brands under. When they stopped making store label bread (ie Kroger). they lost a lot of sales, and they lost a lot of shelf space to Sara Lee & Flowers who were williing to make store brand bread.

No longer able to make overhead, they closed plants and backed out of more markets. It was a downward spriral repeated over.

Sure, they had union problems, low carb fad, and rising duels costs.....but it was voluntarily pulling out of the cheap bread market that got them in trouble.

Katara 3 years, 2 months ago

Just poor decisions made by upper management basically.

Trumbull 3 years, 2 months ago

A lot of blame to go around. They could have continued to be profitable. In fact one year they had a profit, but failed to reach "investor expectations". This caused major changes and the product shift mentioned above. They strove to be a centralized company, and when they did this, they lost touch with local and regional grocery stores. Interstate actually functioned better as a de-centralized company....as contrary as this may sound in today's business environment.

Katara 3 years, 2 months ago

But none of those factors have anything to do with the unions or the workers. Those folks don't make those decisions. The upper management does.

tomatogrower 3 years, 2 months ago

Seriously, how often do any of you eat Twinkies anymore? Or wonder bread. There are far superior snack items and bread out there. The stupid executives thought the health craze was just a phase. They were counting on the nostalgia of us babyboomers to make them money. Guess what, nostalgia does not work. Most of us have much more sophisticated palates now. Even our children and grandchildren given a choice between an energy bar and a Twinkie, would probably go for the energy bar. The executives couldn't read the writing on the wall. I feel for the people who don't have a job, but the company was going under anyway, and they would have lost their jobs anyway. Hopefully, someone will buy the company, and yes, maybe produce a few Twinkies for the junkies, but then create a more updated product. You can't make money from something the consumers don't want.

just_another_bozo_on_this_bus 3 years, 2 months ago

I remember eating things like twinkies and ho-ho's and honeybuns washed down with a coke for "lunch" when I was in high school, and I was hardly unusual in that dietary choice. I can't say I didn't know better, but the fact is the supposed better choices available in the school lunch program weren't all that much better.

But there's nothing wrong with the occasional guilty pleasure, so the market for some of Hostess's iconic products probably won't ever go away. If the managers of Hostess had followed through with updating their product line, this liquidation of the whole company likely wouldn't be happening, even if some plants would need to be closed or sold off.

jafs 3 years, 2 months ago

jhf,

CEO's routinely get remarkable contracts that guarantee generous severance packages, regardless of performance.

If you do just a little math, you can see that even if they only work for a few years, making a couple of million/yr, run a company into the ground, and walk away with one year's severance pay, they can live quite comfortably for the rest of their lives without having to ever work again.

This is simply not true for many people at the bottom and middle of the economic scale.

What do you think the average/median salary is in the US? My wife was surprised to learn that it's $47K/$50K - she thought it was about twice that high. How many households make >$250K? She guessed less than 20%, the actual figure is about 2-3%.

You're right, of course, that risk and the possibility of reward are generally related. That's fine, but the CEO's I'm referring to aren't taking any sort of risk at all, while garnering lots of rewards.

Let's take that $2million/yr CEO, works for 3 years, gets fired and severance of one year's pay. That translates into $8 million overall. Let's take $2 million out for taxes (might be an overestimate), leaving $6 million. If he spends half of that, that translates into $500K/yr, or $40K/month - I can't imagine spending that much, and it would certainly generate a nice lifestyle. At the end of the 3 years, he's got $3 million left. Invested in a very conservative investment, like long term government bonds, he can probably get around 3%, generating $90K/yr, putting him well above average and median salaries for the nation.

If he wants to, he can simply retire and never have to work again.

I could manage it on significantly less, since I wouldn't spend $500K/yr, and be able to save much more of the paycheck than he does.

jhawkinsf 3 years, 2 months ago

The deal is this, a CEO, or LeBron James, or Justin Bieber all bring a unique set of skills to the table. They're going to get paid huge sums of money. Are they worth that amount of money? Not to me, but then I'm not the one signing the paycheck. They are indeed worth that amount if someone is willing to pay it. The teamster driver is worth what someone is willing to pay. A Hostess Twinkie is valued at what someone is willing to pay for it.

Did you go to the recent Justin Bieber concert in K.C.? I think I heard the Miami Heat and LeBron played an exhibition game there as well. I went to neither. But I suspect they were both paid what they were worth in the open marketplace. Is it really proper for you or me to say that they should have received less and the usher or T-shirt vendor should be given more? Frankly, it's not my place to say. So too with the CEO.

tomatogrower 3 years, 2 months ago

Justin Bieber is selling lots of music, t-shirts and concert tickets. While he doesn't impress me, he does impress teenage girls with disposable income. LeBron sells tickets. While I do think they make too much money for what they deserve, I don't understand your analogy. They have a skill set, and they have been successful in that skill set. Granted executives have their own skill set, but they are rewarded whether or not they are successful. LeBron James wins games. Justin Bieber makes teenage girls swoon. Twinkie executives destroy a company. I see a huge difference.

jafs 3 years, 2 months ago

See tomato's post - thanks for the assist.

When salaries are decoupled from performance or risk, it's a bad idea.

If you want to define "your place" so that you can't have legitimate opinions about these issues, that's ok, but I prefer not to do that. As a thinking and feeling human being, I have the right to look at the world, analyze it, and come to certain conclusions.

One of those is that the huge CEO/average salary ratios, combined with performance/risk free severance packages, are bad for most of us in this economy.

jhawkinsf 3 years, 2 months ago

Actually, LeBron's salary is guaranteed, whether he wins or not. Look at Matt Cassell, or any member of the Royals. If Justin Bieber has an off night, doesn't hit the right notes, he's still getting paid. And that CEO's set of skills, what are they? You're assuming that they are to run the company well. But they may include things like the ability to chop the company up and sell it off in pieces should it not be run well. That too may be his specific skill set. The possibility may be that he's being paid well for behaving exactly the way he was expected to behave. But since I'm not signing his paychecks, I don't know. But for the (my guess) 5 years LeBron played in Cleveland, he didn't win anything, yet made more money during his time there than I will make in my lifetime. His skill set wasn't winning, it was putting people in the stands, win or lose.

jafs 3 years, 2 months ago

It's possible.

But, even if he's not, and gets fired for poor performance, he gets the severance packages. That's my point - it's an absurd facet of today's executive compensation.

That's why I offered my scenario - it's quite possible, even if the guy is doing a crummy job and gets fired for it. All he'd have to do is not destroy the company immediately, and just eke out a few years.

Would you offer your employees that sort of deal?

Also, I read an interesting article in a business magazine (not a left wing source) that analyzed CEO performance - their conclusion was that a better CEO does less, and that the ones who try to do more generally hurt the company. So they get paid more for doing less - again, something you'd offer to your employees?

jhawkinsf 3 years, 2 months ago

Fair enough. But let me propose this scenario. Hostess went into bankruptcy some time ago. The drivers hauling their products still got their hourly wage, whether the company did well or not. The line workers were paid, whether the company did well or not. The janitor got paid, whether the company did well or not. Why shouldn't the CEO?

If your only response is that it's his decisions that drive the decision making which decides whether the company is doing well or not, then you must give him the freedom to decide, which might include slashing pay, busting the union, whatever. The more of those options you take away from him, the less of the decider he becomes and the more he becomes just like the line worker.

I might not hire a CEO with a contract that gives him a huge severance package. Then again, if I didn't, I just might not get the CEO that I want. As the owner of a company, I'd have to use my best judgement. Then again, I might not use union labor, as it will be more expensive. And I might not get quality workers. These are all decisions business owners have to make. I remember I once had an employee that did fantastic work 4 days per week and showed up either drunk, hung over or not at all the fifth day. When he was there, though, his work was far beyond anything anyone else did. What do you do? I put up with it for a while, then a while longer, then I fired him. Take away the decision making powers, as would happen with a protracted process involved with a union member, and I become less a CEO and more just another manager. At which time I just say pay me the agreed upon wage that I'm entitled to.

jafs 3 years, 2 months ago

Well, I'm not sure I agree.

Would you offer that deal to your employees? You didn't answer.

If the only things that CEO's can do do help a company succeed are to slash wages, and bust unions, then they're not worth that much money.

What makes them deserving of it anyway?

They get to decide a lot of other things, even if we don't accept their "right" to slash wages and bust unions, and many of those have a serious effect on a company's profitability or lack thereof.

All of the employees you mention, if they're doing their job, deserve their pay - that's the deal they get. If they're fired, they don't get lavish severance packages. I'm just proposing the same deal for CEO's - if they're doing a good job, they get paid. If they're not, and get fired, they don't get those severance packages.

I'm not sure where the money comes from in bankruptcy, by the way, to pay any employees.

As far as I know, unions don't oppose firing people for good cause, they oppose a lot of other ways and reasons that workers get the shaft. You might have to demonstrate to them that the worker in question isn't doing a satisfactory job, which doesn't seem unreasonable to me.

jhawkinsf 3 years, 2 months ago

There is another way of saying much of what you say. If a person leaves the company, either voluntarily or not, they are entitled to everything they are contractually entitled to. Would you agree with that? In the case of the CEO, that would be whatever severance package was agreed upon. Is that any different than an employee who is doing a poor job, receives poor evaluations, is put on probation (as pre agreed upon rules), gets another poor evaluation months down the road, etc., is fired, appeals (as per agreed upon rules), and on and on, all the while being allowed to work (poorly), getting paid his hourly wage?

You asked would I offer such a deal to my employees. I assume you mean a large severance package. The answer is that I would be forced to pay what the market says I need to pay. Let me give you an example. While in San Francisco, the city had it's own minimum wage, far above what the federal government mandated. I was forced to pay that, even to some who I felt didn't deserve that much. The quality of their work just wasn't worth it to me. But I needed their labor, so I paid that amount. It's just the way it works. There were times when the city raised that minimum. Sometimes, I bit the bullet and paid it. Sometimes I said the heck with it and let them go. But bottom line is you pay the going rate, to CEOs with severance packages as well as to employees, union or not. Then your business thrives or fails, based on those decisions.

Unions give lip service when they say they don't oppose firing bad employees. But that's all it is. Real world is another matter. The same is probably true when it's said that to attract quality CEOs, you need give them huge bonuses. That too is lip service. But it's a game management and the unions play. A sort of brinkmanship. Usually, they don't go over the cliff. This time they did. They deserve each other.

jafs 3 years, 2 months ago

Yes - my problem is with those sorts of contracts - I think they're a very bad idea.

I also think that employees should be held accountable for their quality of work at all levels. The obvious difference though is that a CEO's poor performance often has a very large effect on the company, whereas an individual at lower levels doesn't have that same effect.

That's why they shouldn't get guaranteed severance packages - there should be a significant connection between their performance and their compensation.

So, you never offered those to your employees, I take it. And, that's not "the market", it's government regulation, without which you would have paid less.

The "going rate" for CEO's isn't determined by the government, or by the "market", in my view. It's a product of CEO's from one company sitting on the boards of directors of other companies, and vice versa, voting each other large salaries and absurd contracts.

On another story about this issue, somebody posted some very helpful information about the actual changes that were made, and the cuts in wages and benefits that employees suffered, including raiding their contributions to the pension fund without their permission.

How many millions of dollars would you pay me to suggest that as a course of action?

jhawkinsf 3 years, 2 months ago

The going rate for a CEO isn't determined by the government. Right. Neither is the going rate for a union truck driver. Both are negotiated. And unless a gun was held to someone's head, I assume they were negotiated fairly. I have equally no problems with either. Or I have problems with both, equally.

When you get right down to it, jafs, what you're saying is that the CEOs compensation should be tied to the performance of the company. Then put that in the contract he signed, you know, the one that was fairly negotiated. Heck, I might suggest the union follow the same policy. Demand bonuses when the company does well and offer cuts when the company isn't, you know, in those contract talks that were freely negotiated. Link them. Link CEO bonuses to employee bonuses and link cuts in pay to CEOs to cuts in pay of line workers. The problem is, jafs, neither side does that. Neither side wants to do that. They both demand their guarantees while demanding accountability of the other. That's why I said it before and I'll say it agin, they deserve each other.

jafs 3 years, 2 months ago

Your assumption is incorrect. There's little "fairness" in the world of CEO contracts, in my view. Or in the ways that management has traditionally treated labor. That's why unions came into being.

The only way in which compensation at lower levels should be tied to performance of the company is if they have a large effect on it. A CEO is responsible for running the company - line workers aren't responsible for that.

I'm fine with tying everybody's compensation to their performance of their job.

If you really think that workers, who have traditionally been taken advantage of in numerous ways by management, are equal for wanting not to have that happen, as top management is for running companies into the ground and walking away with generous severance packages, I don't know what to say.

Underlying this discussion is the difficulty of determining "fair" compensation for labor of various kinds, it seems to me. As you've pointed out, some invest capital and risk, while others provide labor. The equation of trading labor for money is an inherently odd one to me - labor is essentially one's time and energy (one's life), and trading that for money is funny.

How much is an hour of your life worth? Is an hour of your life inherently worth more than an hour of somebody else's life?

jhawkinsf 3 years, 2 months ago

My car is worth what someone is willing to pay for it. My house is worth what someone is willing to pay for it. My labor is worth what someone is willing to pay for it. Should a contract be signed exchanging one for the other, then the contract should be honored. It doesn't matter if it's a CEO or a truck driver. The agreement should be honored. No one here was forced to agree to anything. The company could have decided not to hire the CEO. The union could have walked away from contract negotiations. Individuals could have sought employment elsewhere. No guns were held to anyone's head.

Honor all contracts or seek relief in the courts. That's the system we all have. All of us. What could be more "fair"?

jafs 3 years, 2 months ago

Yes, yes, and no.

A human being's life is a significantly different sort of entity than a car or house - equating the two is an inhumane and degrading thing to do.

Yes, but management also took employees' contributions to the pension fund, and didn't replace them - sounds like a breach of contract to me. And, pension obligations were also discharged in bankruptcy - a similar breach of contract. Meanwhile, of course, the CEO still got their nice severance package.

Your view ignores the many inequalities and injustices in our society - I wonder why you'd want to do that?

jhawkinsf 3 years, 2 months ago

Well, then, if I'm reading your comment correctly, I've found a significant difference in the way we view things, perhaps even the root of the problems. Trading my labor for money is certainly not inhumane or degrading, in my opinion. It's a fair exchange when the terms are agreed upon in advance and then honored.

If I read the comments of others correctly, the pension fund was looted with the permission of the courts. Makes me wonder if those who describe it as looted are engaging in a bit of hyperbole.

Injustices and inequities are two very different things. Injustices have legal remedies. Inequities are normal. Is it equitable that Paris Hilton was born with more money that I'll ever earn? Yes. Because the medicine to resolve that would be worse than the disease itself.

jafs 3 years, 2 months ago

Equating human beings with cars and houses is inhumane and degrading, as if human life has no inherent value, simply market value.

Trading labor for money is odd, but might be ok if the trade is beneficial enough - I wouldn't agree that all that's necessary for that is that terms are agreed upon and honored, though it's a start.

As far as I know, the courts didn't sanction the removal of employee contributions from the fund. It did sanction the discharging of pension obligations, which is routinely done in bankruptcy. The fact that the courts allow this sort of behavior doesn't make it any more right in my view than if they didn't.

Why on earth is it ok to you that the CEO who presided over the decline gets their money, including generous severance packages, while the employees lose their pensions? Those pensions were part of their agreement when they traded their labor, right? According to your own formula above, they should be honored.

No, it's not equitable or fair at all. The distribution of money in our society has little to nothing to do with fairness, merit, hard work, etc.

There are any number of responses to that fact, some of which might make things better, and others worse - you're overusing your medicine analogy.

Liberty275 3 years, 2 months ago

I can't imagine being offended by the things people buy with their own money. I'm not sure why you would be. Our wedding cost a few thousand dollars. My sister in law paid more than that for her dress.

tomatogrower 3 years, 2 months ago

You are right in reality, but with whom would I want to trust my money? The person who spends 4 million on a wasteful, offensive wedding or the person who pays 10 grand, even though they could afford the 4 million. The problem in our society that even poor people worship the almighty dollar. Money has become a product, not what you get when you produce something. Even poor people drool over rich people. Maybe human nature automatically creates societies tiered with different classes, and our economic system used to allow upward mobility, so the poor could dream of being rich someday, but I'll bet those Twinkie workers know that times have changed, and more and more workers are going to get angry about it. The attitude of the rich is becoming more and more "Let them eat cake." And most of them are not even smart enough to know who Marie Antionette was. Especially if they were a Walton grandchild who paid someone to do their school work so they could party.

Liberty275 3 years, 2 months ago

"The attitude of the rich is becoming more and more "Let them eat cake"

I'd rather eat cake than want the next man's steak. Maybe I'm just weird.

" The person who spends 4 million on a wasteful, offensive wedding or the person who pays 10 grand"

Isn't there another way to see that? Regardless of whether a 4 million dollar wedding is wasteful and/or offensive, that four million dollars went to caterers, tailors, limo drivers, a band, the local wine store, etc. The four million dollar wedding benefits a lot of people while the $10,000 version doesn't quite so much.

Is it more offensive to spend 4 million dollars or just sit on it and collect interest? I think we would all agree it benefits more working people if a man pays 4 million for his daughter's wedding than if he spends $10,000. It seems the spending isn't the real root of the problem, but that some people have money and other people are consumed with envy because they don't.

jafs 3 years, 2 months ago

I agree - it's better for money to circulate in the economy.

But, I don't agree with your last statement. The problem, as I see it, is that the distribution of money in our country has little to do with merit, hard work, etc.

jafs 3 years, 2 months ago

If I had it, I wouldn't spend it like that.

There are rich people who aren't extravagant - Warren Buffet comes to mind.

just_another_bozo_on_this_bus 3 years, 2 months ago

Here's an example of how the wealthy ensure that they can spend $4 million on weddings. It's called exploitation.

http://billmoyers.com/2012/11/14/janitors-in-the-queen-city/

George_Braziller 3 years, 2 months ago

"The point is, the more you make, the more you spend."

Not for everyone. Paid off my mortgage and then two years later got a promotion and a $5,000/year salary increase. Didn't change my spending habits. I just pretended it didn't exist and socked it away.

I'm a child of children of the Depression and saving for a rainy day was the mantra I grew up with. Just because you have it doesn't mean you have to spend it. I could pay cash for a brand new vehicle but I'm perfectly content driving my 1996 pickup.

beatrice 3 years, 2 months ago

Or, if it were a whole lot of money, you could sock it away in an off-shore account to avoid taxes. So much for the jobs creator myth.

This isn't intended as a swipe at you, George. I'm with you. I agree that we should live below our means and, in time, it pays off. I'm not worried about my own retirement because I know I've saved for it. I have a vehicle even older than your pickup, and it is a choice, because it drives just fine. Of course, if everyone did this, our economy would be in the tank from people not spending and driving the engine of our consumer driven capitalism.

George_Braziller 3 years, 2 months ago

Our economy is in the tank right now because people spent too many years living beyond their means and are now going through a spending hangover and don't have any discretional income to buy anything. They're just trying to keep up with the payments for what they've already spent.

UfoPilot 3 years, 2 months ago

Here's what Union bosses make.

Mary Kay Henry, President of the Service Employees International Union (SEIU), earned $290,334 in 2011;

Gerald McEntee, President of the American Federation of State, County and Municipal employees, AFL-CIO (AFSCME), earned $512,369;

James Hoffa, General President of the Teamsters, earned $372,489;

Dennis Van Roekel, President of the National Education Association (NEA), earned$460,060;

Joseph Hansen, President of the United Food and Commercial Workers International Union (UFCW), earned $361,124, and

Randi Weingarten, President of the American Federation of Teachers (AFT), earned$493,859.

tomatogrower 3 years, 2 months ago

They should have become CEO's instead. They could have made millions.

just_another_bozo_on_this_bus 3 years, 2 months ago

Those salaries are a pittance compared to the salaries of the execs of the corporations that these unions have to negotiate with.

And here's a little fact-- the union members can fire any of these folks if they choose to.

jhawkinsf 3 years, 2 months ago

Not only can the union members fire the leadership of the union, they can also walk away from poorly run businesses. They didn't do either of those things.

Were they just milking this failing company for everything they could, just as you suggest management did in a post above? Or did they simply not see that this was a poorly run company, despite the evidence?

If the first question is true, then they behaved in exactly the same manner as the people you condemn. If the second is true, then the unions failed their members miserably by not letting them know what was going on so they could plan for the inevitable collapse.

just_another_bozo_on_this_bus 3 years, 2 months ago

Seems like you lined up the straw men and knocked 'em down without any help from me at all. Not sure why you felt the need to script them in question form.

avarom 3 years, 2 months ago

Sounds like the Union leadership dug themselves a big hole for their people....What a bunch of Ding-Dongs!!

Sunny Parker 3 years, 2 months ago

Was afraid I would read a headline stating Obuma was going to bail this private business out with tax payer money!

beatrice 3 years, 2 months ago

Sunny, it is spelled "Obama," as in Re-elected President of the United States of America Barack Obama. One would think that with all the press about the election and his trouncing of Mitt Romney, you would have caught on.

msezdsit 3 years, 2 months ago

I always find it amusing when the usual suspects beat the drum of private business and capitalism and when private businesses and capitalism works and weeds out the weakest it isn't that capitalism just worked as they chime but rather it is the government that is the culprit because capitalism worked.

You usual suspects got yourself a fail proof rant.

gbulldog 3 years, 2 months ago

Hostess produced junk food that Queen Michelle is against. How dare the Democratic controlled Union want to continue producing something that is against her wishes.

msezdsit 3 years, 2 months ago

The business failed because it wasn't a viable business and was in the process of failing for years. It was just convenient for the idiots to blame it on the strike. The workers had endured numerous cuts in pay and benefits prior to the strike while the management team that was managing the company into failure was giving itself massive pay increases. I know this is to complicated for you. Capitalism worked. A bad business failed because it practiced bad business policies. Good management worth what they were paying them could have saved the business. But by all means continue on living in pretend world. Might I suggest adding dolls and play houses to enhance your pretend world.

avarom 3 years, 2 months ago

Upper management intentionally set up the Union, they offered nothing appealing that the workers would accept knowingly. The, the board and upper management lined their pockets with money, before the closing. They knew the Union wasn't going to acccept the companies proposal... who are you kidding. This was all an intentional plot to deceive the American Middle Class Worker and they all took the bait...Hook, Line and Sinker!! Why would you try to negotiate a failing business.....unless you have Monetary Gain...which Management did, only for themselves!! Upper Managment are a bunch of HO-HO-HO's!!!! Thank God for Karma...it fixes everything!!

avarom 3 years, 2 months ago

Guess who got the Stock Options?? HOSTSP (ticker for hostess) Very Sad 8-((

jhawkinsf 3 years, 2 months ago

I was just reading that the University of Tennessee football coach has been fired, effective immediately. He has been there for three years, the first time in school history they had three straight losing seasons. his contract, though, had a 5 million dollar guarantee should he be fired. Is that right? Of course it is, because both sides agreed to it in a written contract. K.U. is paying two former coaches as we speak.

Is it good public policy to have such situations. Well, I'm not an athletic director, so I'll defer to their judgement but because they all do it, I suspect it is good for the athletic department. So too with CEOs.

Now the part about pensions is somewhat troubling to me. I'm not a big fan of bankruptcy in general, not for companies and not for individuals. I think that if you've made a commitment, you should hold true to your word. Then again, I'm just not familiar enough about under what theory courts allow people and companies to get out from under their obligations. Generally, I'll defer to their judgement.

That said, let me tell a story from memory. Just prior to the auto industry bailout, the companies tried to get out from their pension obligations. They offered the unions billions of dollars if they would simply take it over. The unions declined. I thought of that and then I think of Social Security, the third rail of American politics. We spend a great deal of time wondering if/when it will fail. Basically, I wonder if pensions are a losing proposition, whether it's the company that handles it, the unions or the government. That may be why courts allow companies to get out from under what is a lose/lose situation. That's just a guess at what their thinking might be.

jafs 3 years, 2 months ago

It's only right in the sense that contracts should be honored. The contracts themselves are absurd.

Your deference is strangely complacent - everybody does it, so it's a good idea? It's not a good idea for all of the reasons I've already explained, and it's a great scam that people have been convinced it is.

Again, your deference is complacent, and doesn't reflect well on you - when those with money have such influence over politics and the system in general, assuming that the way it happens to be is good is a mistake, in my view.

None of that contradicts the fact that you stated contracts should be honored, and they're not when companies renege on their pensions.

If they didn't want to agree to that, they could have chosen not to, from your reasoning, right? But they did.

One factor is that the government takes on pension obligations when companies default on them, so the taxpayers rather than the employers are responsible for them - still ok with you? I believe that companies do pay into a fund, but I'm pretty sure that it doesn't cover the whole cost of pension obligations. Also, the way that the government calculated them is different from the way the company did, so people often get less than promised and planned.

I can't believe you brought up the auto companies - they're a striking example of the absurdities here. Let's make bad decisions, by not making cars people want to buy, then force concessions from the unions (which they agreed to, in fact), who had no part in those decisions, pay management an absurd amount, then fly to Washington in our private jets to ask for help from the government.

Why should the unions take over the responsibilities that management had agreed to? Workers fulfilled their end of the bargain, and had no part of the bad decisions that were made. I remember when the president of the college I was attending came to a meeting about something, and outlined the problems, then said if we had any ideas, he'd be glad to consider them.

Seemed like a good idea until I thought about it later - it was his job to solve that problem, not ours, and he was getting paid handsomely for that by us. Why on earth should we do his job for him?

jhawkinsf 3 years, 2 months ago

Deference, you say. Let me give you a sports analogy, though it has relevance to issues we discuss all the time here. I recall when the Kansas City A's left town. I remember the Kings coming and going. I was in Northern California when the Raiders went south and then returned. Heck, as a kid, I saw both the Dodgers and Giants leave New York. During that time, I've seen mayors struggle to get teams to stay and get others to relocate to their city. They all support the notion of having and keeping teams, even building them large stadiums at public expense. It's been Democratic mayors and Republican mayors. Mayors on the left and those on the right. Congresspeople have helped the cause, universally and from all both sides of the political isle. I have never seen any mayor tell a team to leave.

Deference. I don't know all in details of how much comes into a city vs. the costs to a city when a sports team is there. I don't need to see every detail. Yes, I see something like that and I defer judgement to people I assume have greater expertise. I defer to judges when it comes to interpreting the law. And when I see major companies routinely offering large packages to CEOs or I see K.U. offer both Bill Self and Turner Gill million dollar contracts, I defer to their judgements. Just because one works out well and another doesn't does not mean it's not the norm for that industry.

When I used the example of the auto industry, I was surprised you didn't see some obvious connections to this company. You said management made cars the people didn't want. True. They also signed contracts with unions that were unsustainable. But the union either knew or should have known they were unsustainable. Decades earlier, both management and unions entered into a pension plan that was doomed to failure. When it would fail was unknown. But what was known was that both those in management and the union heads at the time would be long gone when it happened.

This company has been failing for years. Management knew it and the union knew it. If the union was truly concerned with the pension fund, they could have demanded it be protected when they negotiated earlier. But as I said, pension plans are 800 pound gorillas that neither management nor the union wants deal with.

jafs 3 years, 2 months ago

Ok - I prefer to use my own judgment.

Many things that are the "norm" make little sense to me.

I just saw a 60 minutes report on college football last night - the vast majority of those programs, something like 80%, don't even break even, despite the ridiculous amounts of money that are spent by fans on games, merchandise, etc.

And yet those same folks are investing huge sums of money in the programs, to make them larger and more "competitive".

Makes no sense to me.

If management didn't feel they could live up to their end of the contracts, they shouldn't have signed them. It's blatantly wrong, in my view, to sign them and then take the labor that's given, but not provide the compensation. You even say that yourself, but don't seem to apply it consistently.

They did - the company simply reneged on the pensions.

If contracts should be honored, then they should be honored. It makes no sense to me to say that they should be honored if/when we're talking about lavish severance packages for fired CEO's, but not if/when we're talking about pensions for union employees.

Oh, by the way, I looked it up - the federal pension guarantee program is running deficits of about $25-$35 billion annually. That means that the money paid in by employers is nowhere near sufficient. Where do you think that money will come from?

No problem at all with the way companies are run on your end? Company jets to Washington to ask for bailouts? Etc.?

Are you one of the folks that thinks you'll be rich someday, and so you don't want to criticize the rich?

jhawkinsf 3 years, 2 months ago

You prefer to use your own judgement, fair enough. I do as well, sometimes. But within that, I know that I have certain expertise in some ares and not in others. I have experience in some fields of study and not in others. We all have opinions, and express them freely in this forum, sometimes too freely, given the anonymous nature of the forum itself. Speaking for myself, I express some very strong opinions when I feel I have the experience, expertise, wisdom necessary to express those opinions. My opinions become less strong, they have less conviction when I don't have the experience, expertise, wisdom.

Bankruptcy court is just such an arena where my wisdom is not high. Things that make little sense to me might have some very legitimate reason for being just as they are. There may be strong legal foundations based on the general good of society. Or not. But given the fact that I have little experience, little expertise, little wisdom, I am much more willing to defer to their judgement. In this case that we've been discussing, I assume a learned judge has looked at all the issues and rendered a legal decision based on sound judgement. If the company did this or that with the pension, ruled that some debts be paid while others perhaps not, pay structures for both company executives and line workers, all these things that a judge ruled upon, all done with information that all parties could present, I must defer to the judge's best judgement. All I'm left with is a weak opinion based on admittedly little evidence.

Now if I worked at Hostess, either driving a truck or running the assembly line, or I worked in the union, you damn well better believe I would be aware and I would present to the judge all relevant information. And, quite frankly, I am assuming that was done.

I've mentioned before about how I've gone from the bottom 25% to the top 25%. Does that make me rich or do I aspire to be rich? Not really. But my children will be much better off than I was. That is the reason I worked 80 hours per week, until the years became decades. I've probably reached the end of my upward trajectory as my work career winds down into retirement. So rich? No. But a sense of pride? Yes.

jafs 3 years, 2 months ago

A lot of assumptions there.

Either contracts should be honored, or they shouldn't.

The fact that moneyed interests have infiltrated politics, resulting in some very favorable laws for those interests, doesn't make it right, or ok, as far as I can tell. When the laws are structured that way, it doesn't matter how much information labor presents to a court.

Why are you so willing to criticize those on the lower end, but not those on the higher end?

You're not alone in this, of course. Many people seem to apply very different criteria for the two groups, feeling free to condemn poor people, but strangely hesitant to do the same for rich folks.

It's an odd mindset to me, seems a little bit reminiscent of military or fascist thinking - abuse those below you and fawn on those above you.

jhawkinsf 3 years, 2 months ago

Yes, contract should be honored. When disputes happen with contracts, who decides? Courts, judges. The problem is that neither you nor I know the exact terms of the contract so neither you nor I can speak with any level of certainty. So I defer to the judge.

From my point of view, it's you who are assuming that money interests have somehow perverted the judges decision making process. I'm assuming a dispassionate judge is making a dispassionate decision.

In the days after the election, I recall one poster (Cait, I think) observed that the anticipated calamity predicted involving Citizens United did not come to pass. You agreed with that observation. Now you're back with the assumption that money has perverted lawmakers and the judiciary. You may be right. I'm less convinced.

I'm going to take a guess at something, a guess based on nothing more than common sense. But it's my guess that because these types of pension plans are so difficult to abide by, I think it's possible that language is routinely put into these contracts that allows for exactly the type of behavior we've seen in this case. The thing is this, if this type of behavior were so reprehensible, then it wouldn't be allowed, over and over again by bankruptcy courts. In other words, both management and workers knew this was a possibility. If this arrangement were so reprehensible, so onerous, so one sided, it shouldn't have been allowed to stand. But both sides did allow it to stand.

jafs 3 years, 2 months ago

No, there's no lack of clarity here, unless you want to fog it up for some reason.

Pensions were a part of the contracts that workers signed, and companies routinely renege on those pensions, even after the workers have supplied the labor - it's a clear breach of contract.

You don't understand - I'm not saying judges are influenced by money (although they might be), I'm saying that legislators are, and that bankruptcy laws favor business rather than labor.

Again, you assume a lot.

I think you're wrong in your guess, and that bankruptcy laws/regulations allow companies to renege on their agreements in a variety of ways. What on earth are you talking about - both sides allowing things to stand? Labor has no way to ensure that management makes good on their promises, if the laws allow reneging on those.

It's true that I was pleased, and surprised, that the new infusion of money wasn't as successful as I might have thought at winning elections. That's a very different kind of monetary influence and corruption than what I'm talking about. If you really don't think that politicians are routinely beholden to large contributors, and routinely get jobs in industries they were supposed to be regulating, etc. then I have to conclude you're just not very well informed.

jhawkinsf 3 years, 2 months ago

I think your second paragraph holds the key. "Companies routinely renege on those pensions ... " I agree with you. Then why in the world would a union enter into such an agreement? Why not set it up is such a way that the company cannot touch it. Set it up where bankruptcy courts can't touch it. Put it under the control of the union. Or, in lieu of a pension, simply demand higher wages. The union could then demand higher dues which they could then use for a pension fund. Or individuals can set up their own 401Ks.

Why? I don't know the answer, but I can guess. But before I do, we have to assume that if you came to the understanding that companies routinely renege, that the unions are smart enough to see that as well. Yet they enter into the agreements anyway. Why? My guess is this. It's not a real agreement. With a wink and a nod, the company makes promises they know they can break with impunity. The unions know this as well. But having the pension promise in hand (wink, wink, nod, nod), they can go back to their members and say, 'see what a great deal we've negotiated for you. Now pay your dues and don't look this gift horse in the mouth'.

It's either that or the company are a bunch or thieves AND the union are a bunch of idiots. I believe the former, wink, wink, nod, nod.

jafs 3 years, 2 months ago

Well, of course you'd conclude that, since you like to assign blame evenly.

I wonder how you think that labor could possibly negotiate with management in such a way as to get them to provide untouchable pension plans.

It's hard enough to get them to provide anything at all these days.

Given that there's at least some sort of government protection, ie. they'll get something in the end, my guess is that labor feels that's better than nothing. I'd agree, but it's not enough, and the taxpayers are picking up the slack.

I conclude that there's a serious lack of integrity in corporate America, and that workers are vulnerable to that.

jhawkinsf 3 years, 2 months ago

I gave the answer, have the union handle the pension plan.

Of course, if I'm correct, then management wouldn't offer such a plan. And without that in hand, workers could rightly conclude that the union isn't doing much for them other than taking dues.

Even if it's just speculation, I'd be interested if you'd answer the question I posed. Given that companies frequently renege on these pension plans, and given that the unions certainly know this, why would they enter into such agreements?

jafs 3 years, 2 months ago

If the union has to manage the pension plan, then it's not a benefit provided by management. The whole point of a defined benefit pension is that the employer does that work, and provides the benefit. And, your own post suggests that management would never offer that plan. So what's your point?

I answered it - did you not read my post? The reason is because the pensions are federally guaranteed, and even though the government will provide fewer benefits if/when companies renege, it's better than nothing.

Did you see the part about how the government pension insurance fund is running deficits of $25-$35 billion? If you look it up, you'll also find that they don't cover many of the items that have been promised to workers as well.

So, as I said, it's better than nothing, but not good enough to ensure actual compliance with contracts - workers are getting their labor taken without just compensation. And, taxpayers will be on the hook for a lot of that money, I suspect.

We have, again, the private sector entering into contracts that it breaks, turning to the government and the taxpayers for help, while workers who've provided their labor (ie. fulfilled their end of the contracts) get a bit shafted.

But, somehow, I'm sure this is all ok with you - although I am increasingly unable to really understand how you manage that view.

I guess "Nothing's perfect".

jafs 3 years, 2 months ago

jhf.

Just for grins, I did a little calculation.

Assume that both employer and employee contribute $300/month to a pension fund, and further assume that it's invested so that it gets an average of 5%/yr (a rather conservative estimate) for 30 years.

At the end of that time, the money invested can generate about $25K/yr without touching the principal.

So, a defined benefit pension plan that offered that would be perfectly sustainable.

Of course it can't happen if employers fail to contribute, raid the fund for other things, invest with Bernie Madoff, etc.

jafs 3 years, 2 months ago

Some more math.

Assume the CEO makes $2 million/yr. $500K of that would provide employer contributions for about 140 employees to the pension fund.

So, the CEO makes $1.5 mil, and 140 employees now get a defined benefit pension plan.

They must have worked in the past - remember the '50's?

jhawkinsf 3 years, 2 months ago

Maybe you didn't understand my suggestion when I said the union could manage the pension plan. What I was suggesting was that when negotiating the plan, the company would simply give a set amount to the union to be set up in a pension plan. Say an employee earns $5/day towards the benefit, the company gives that money to the union. The union then decides whether to put it in a Schwab Mutual Fund, or in a 401K, or loan the money to the mafia at 20% interest. Whatever. It takes all the money out of reach of the company and puts it in the hands of the union, who hopefully will represent the best interests of their members.

If the company balks at this proposal, which I suspect they will, then the union and it's members know it wasn't a real offer. Simple, right. But my point stands. The offer wasn't real. But unless the unions are complete idiots, they knew it wasn't real either. The company looks good for having made this wonderful proposal and the union looks good for having negotiated this wonderful deal. They're both lying out their collective arses, but it sure looks good on paper. Sure, the workers are going to get screwed, but that'll happen some time in the future and besides, they can both blame the other. The company steals the pension fund and the union steals the worker's trust and their monthly dues when they misrepresented that they had negotiated a good deal.

BTW - You mentioning government guarantees of programs such as this reminds me of a person I knew in California. He was a member of the building trades, a union carpenter. Because that region had a fairly well define rainy season each year, no outside work was planned and little inside. The companies essentially shut down for several weeks each year. During that time, the union members filed for and collected unemployment. Every year, what amounts to essentially a paid vacation, paid for by unemployment. The thing is this, that's not what unemployment is supposed to be. Not for a well defined vacation every year. The companies and the unions knew about this, and with a wink and a nod, just let it go. Imagine if say teachers did that, collected unemployment every summer. It defeats the purpose. Well, that sounds very much like what you described, a government bailout of a looted pension. Yes, you and I the taxpayer are left on the hook. And maybe that's why the company felt it could make a BS offer and that's why the union could look the other way when it knew it was BS.

jafs 3 years, 2 months ago

You continue to miss the point, so I won't keep repeating it. Given government guarantees of pension funds, it's better than nothing, or 401K plans wherein the employees take the risks.

And, as I said, making the employees or unions manage the pension plan is obviously adding a lot of headache for them, and if/when management is supposed to do that, it's not satisfying. It's also clearly not a union's job to manage those funds, it's their job to negotiate with management. Also, as you yourself suggested, a company is very unlikely to offer that to the unions, probably because they tend not to make the promised contributions, or leave the money there, etc.

I guess that the unions prefer to have a pension that's guaranteed somewhat by the government, rather than having to manage the fund/investments/bookkeeping/etc.

Personally, I don't blame them for that. I do blame corporations and management for making promises they don't keep, and turning over the obligations to the government.

And, for always seeming to have money to pay the top execs, while not for those at the bottom and middle.

So, what's your suggestion? Is this a problem, or just "the way things are"? Should the government stop insuring pension plans, or stop companies from being able to renege on those obligations in bankruptcy? Etc.

jhawkinsf 3 years, 2 months ago

Again, I have to make certain assumptions. First, I do believe that a contract signed should be honored. Why bankruptcy courts don't do that it makes me wonder if those contracts are really valid contracts or just promises that were broken. There is a difference. I do know that some contracts that are against public policy might not be enforceable, such as one involving a minor. So there might be some public policy argument that I'm not aware of. I just don't know why a court would let someone out of such a contract. But given that they do, we all know that they do, why leave it up to them? Take it out of the courts' hands. Set it up somewhere else. Or risk that a court will allow such behavior. But if you take such a risk, you deserve some of the blame.

Unless you're both looking at the government for that bailout. Then shame on both of them.

Let me give you an example. A company hires a person to do a job. After a couple of weeks of training, it becomes obvious the person can't do the job. Should they still be paid for that training time? Or suppose that after two weeks of training, that person gets a job offer that they would rather have. Should they still pay that person for the two weeks? My answer is yes. The company takes that sort of risk all the time. it's part of the deal. Well, so is allowing someone to manage a pension plan when you know they have the ability to loot that plan. If you take the risk, then you can't complain when you get burned.

jafs 3 years, 2 months ago

A contract is just an exchange of promises. Oral contracts are legally binding as well as written ones. Also, as you mention, it's quite beyond credibility to imagine that a union wouldn't get it in writing from management.

If you believe that contracts should be honored, then you should conclude that if employees have provided the labor and lived up to their end, that management should live up to theirs as well.

I completely disagree with your blaming both sides equally here. It's management who is breaching the contract, not labor. That puts much more blame on them, in my book.

If the agreement was for paid training, then of course they should be paid for the time.

Your reasoning seems awfully convoluted to me. People can always breach contracts, there are no ironclad guarantees. That doesn't mean that when people enter into them, and live up to their end, they should be blamed when the other guy breaches the contract.

It's like the example I gave earlier about my college president - it's his job to solve those problems, and that's what he gets paid for, not ours. Likewise, it's management's responsibility to live up to their end of the bargain. If they don't want to do that, they shouldn't sign contracts involving pension plans.

Again, a problem? Or no problem? Any ideas, other than forcing unions to take over management of pension plans (which should be the responsibility of management, in my view), assuming they could get management to just give them all of that money, which is extremely unlikely.

jhawkinsf 3 years, 2 months ago

I have a conflict. As I said, I believe contracts signed should be honored. But I also believe in the judicial process and believe we should all abide by their rulings. So if a court voids the terms of a valid contract, I'm left with this conflict. Maybe I can't resolve the conflict, but I can mitigate it, especially if I know a conflict is imminent. I mitigate it by trying my best to avoid the conflict. In this case, either don't enter into a contract that a court might void, or structure the contract in such a way as to avoid the conflict.

Your school president, is it part of his job to get input from others, to seek out their advice, to get insight into how others view the decisions he will ultimately make? Or is it his job to make a decision and screw you if you like it or not, agree with it or not?

Suppose I parked my car somewhere and a person standing nearby says to me, "if you lock your car door, I will leave it alone. But if you leave it unlocked, I will enter the car and steal your radio". I guess I could decide to take a risk or not. Sure, if he steals the radio, he's done the thing that is wrong, even if I chose to leave the car unlocked. But suppose I loan my car to a friend and he confronts that same person. Shouldn't that friend have an abundance of caution and not take the risk? Shouldn't he lock the door, even if I might not? Shouldn't the union, in an abundance of caution, have safeguarded the interests of their members, as they were paid to do?

jafs 3 years, 2 months ago

Sure. But unions don't have unlimited choices - they're virtually gone in this country as it is. So, the choice is between the pension plan, of the type offered, or no pension plan. You've said yourself it's extremely unlikely that management would agree to give all of the pension money to the unions.

They could of course reject the contracts, and then they're left trying to find jobs, which are also scarce.

It's his job to do his job - it might include getting input from others, and it might not. In this particular case, he wasn't seeking input as part of the beginning or middle of the process, to be followed by intelligent action. He was defending his lack of action, and throwing the problem back at us to solve.

How would they do that exactly? From my standpoint, knowing what I know about pensions and government insurance, I think they made the best choice available for their members.

Still, not a problem? No ideas for a solution if it is?

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