Black People : Tiny union obliterates 18,500 jobs

Discussion in 'Black People Open Forum' started by Knowledge Seed, Nov 16, 2012.

  1. Knowledge Seed

    Knowledge Seed Well-Known Member MEMBER

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    While Twinkies have a reputation for an unlimited shelf life, the company that makes the junk food may not.

    Hostess Brands, the bankrupt maker of cream-filled pastries like Twinkies and Ho Hos, said on Friday that it planned to wind down its operations. The decision comes a week after one of the company’s biggest unions went on strike to protest a labor contract.

    Friday’s move could spell the end of Hostess, a company that has endured wars, countless diet fads and even an earlier Chapter 11 filing. But the liquidation may not mean the end of its signature product, the Twinkie, with its cake exterior and cream filling. The confection — originally banana flavored, rather than the vanilla of today — could find new life under a different owner, if the company auctions off its brands and assets.

    In the short term, Twinkies may be in short supply. The last batches rolled off Hostess production lines early Friday morning, according to Tom Becker, a company spokesman, and no new products will be made for the time being.

    Hostess Brands has evolved through a series of acquisitions. Formerly known as Interstate Bakeries, the company picked up ownership of Twinkies, Wonder Bread and other fixtures of Americana through its 1995 deal for Continental Baking.

    As the national appetite for the junk food waned, the company fell on hard times. In 2004, it was forced to file for bankruptcy, in the face of high labor and commodity expenses.

    The company emerged in 2009 as Hostess Brands, named after its most prominent division. With America’s new health conscious attitude, the company, with its new private equity backer Ripplewood Holdings, sought to reshape itself to changing times, introducing new products like 100-calorie Twinkie Bites.

    Despite the strategy shift, the company struggled under the weight of its debt load and rising labor costs. In 2010, Hostess tried to find a buyer, hiring Goldman Sachs and JPMorgan Chase to explore a possible sale. But the potential suitors like Hershey, Pepperidge Farm and private equity companies took a pass.

    Since then, the company’s financial picture has only deteriorated. While the company notched revenue of $2.5 billion in fiscal 2011, it posted a net loss of $341 million.
    With profits eroding, the company filed again for Chapter 11 in January, just three years after emerging from the previous restructuring. The company originally hoped to reorganize its finances, principally by cutting labor costs. It won the agreement of some of its unions, including the Teamsters.

    But those plans have been stymied by the recent labor dispute. The work stoppage by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union affected nearly two-thirds of Hostess’s factories across the country. The company first responded by closing three factories, and then gave union members until 5 p.m. on Thursday to return to work.

    “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory F. Rayburn, Hostess’s chief executive, said in a statement.

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  2. jamesfrmphilly

    jamesfrmphilly going above and beyond PREMIUM MEMBER

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    "revenue of $2.5 billion in fiscal 2011"
     
  3. jamesfrmphilly

    jamesfrmphilly going above and beyond PREMIUM MEMBER

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    i just heard on the TV that the managers will be paid bonus of 25 to 75% of their base salary
     
  4. skuderjaymes

    skuderjaymes Contextualizer Synthesizer MEMBER

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    well.. the market will fill their slot.. and those jobs will reappear in one form or another.. but never again in the form that contributed to their demise. That said, I'm not sure we can conclude that their demise was purely a function of the unions. I think we have to look at the management of the company itself and the overall marketplace for clues.. and also at the overall economy. It stands to reason that snack foods are going to be skipped more and more as people fall into poverty. Also as people become more informed and move toward healthier lifestyles these kinds of companies, if they don't adapt to the changing market, are just going to go under.
     
  5. skuderjaymes

    skuderjaymes Contextualizer Synthesizer MEMBER

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    that's the game.. then blame their demise on the employees who were simply asking for a larger piece of the pie.
     
  6. Knowledge Seed

    Knowledge Seed Well-Known Member MEMBER

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    Of course management played a part in the demise of the company. No one is denying that. However, the company would still be fully operational had the bakers unions agreed to the concessions.
     
  7. skuderjaymes

    skuderjaymes Contextualizer Synthesizer MEMBER

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    I think when you become for or against something in general, it clouds your perception.
    It's more work, but we have to be willing to break open each thing and analyze it's contents. Just because they had a Union and the Union was asking for more, doesn't mean that the Union is the reason they closed their doors.
     
  8. skuderjaymes

    skuderjaymes Contextualizer Synthesizer MEMBER

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    And you are sure of that because they said so.. right?

    Listen, if this company with this much revenue folded because of a labor contract, then this company failed because of Management. Labor is one of the elements that fall under the umbrella of things to be "managed".. isn't it? There are very many ways to deal with Labor problems less drastic then shutting down.. including relocating.. selling the company.. etc. All of that said though.. The problem I have with the single-Union concept is that the leadership is decision is pretty-much just a popularity contest.. and though popular among the workers, the leadership may not have a full grasp of the economics of Business.. Workers trend to look at companies as bottomless wells.. and that plays into their disposition toward the company. I don't think it benefits any company to have it's workers pitted against it as the basis of their unity with each other. That whole model has to change.

    What the workers should be doing, instead of antagonizing the employer, is setting aside moneys to buy their way into industry. Those union dues (and then some) should be going toward creating a cooperative companies where the workers are the share holders and can all share in the profits and wealth created when that company goes public. But taking an antagonistic disposition toward the company you work for just spells eventual doom for the whole enterprise. I'm not aware of any industry where that has worked over the long haul.
     
  9. Clyde C Coger Jr

    Clyde C Coger Jr going above and beyond PREMIUM MEMBER

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  10. Clyde C Coger Jr

    Clyde C Coger Jr going above and beyond PREMIUM MEMBER

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    Enough said...


     
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