The real question should be

[sortaisle]

Thanks for telling me what happened. I'll tell you what really happened, though: Hostess erased most of its debt in bankruptcy but needed to take on new debt intended for conversion into operating capital. Hostess should never have emerged from bankruptcy without addressing its incredibly high labor costs, but its Democratic "venture capitalist" felt strongly that sales would rise. He was dead wrong, and the decline in sales accelerated. When your revenues continue to fall every year, you need to cut expenses - not add to them.

Again...that points to a bad management problem. The unions had already given up concessions before and yet they still continued to operate at the same capacity? Give me a break. They knew they were on their way out. That's why the executives in 2010 gave themselves an 80% percent raise.

 

[Bagels]

Again...that points to a bad management problem. The unions had already given up concessions before and yet they still continued to operate at the same capacity? Give me a break. They knew they were on their way out. That's why the executives in 2010 gave themselves an 80% percent raise.

The concessions Hostess received were minimal. Its labor costs were significantly higher than its competition, and Hostess should've sought to reduce this gap, even if it meant getting the court's permission to toss its CBA out. Instead, its Democratic investor wanted to maintain a positive relationship with the unions and sold the idea that Hostess's sales were going to take off. Instead, their decline accelerated.

I don't like the idea of retention pay / bonuses, but many will argue they're necessary to attract & retain talent strong enough to get the company into the black.

 

[barnyard]

I don't like the idea of retention pay / bonuses, but many will argue they're necessary to attract & retain talent strong enough to get the company into the black.

Management did not bring the company back into the black, yet they still asked for pretty large bonuses. The whole idea of a bonus is to reward for a job well done. It would appear that Hostess executives are rewarding themselves for liquidating the company.

 

[Bagels]

Management did not bring the company back into the black, yet they still asked for pretty large bonuses. The whole idea of a bonus is to reward for a job well done. It would appear that Hostess executives are rewarding themselves for liquidating the company.

All bankrupt companies offer retention pay/bonuses to management. You or I may not agree with the practice, but these companies will argue it's necessary to attract or retain top-talent; few rational people would be willing to join the executive management team of a bankrupt company unless there was an incentive. Regardless, Hostess's uncompetitive cost structure - not executive pay - lead the company into bankruptcy. There's a reason why packaged Little Debbie snack cakes frequently sell for $1, whereas near-equivalent Hostess snack cakes rarely dropped below $3. Heck, a box of 10 Twinkies retailed for nearly $5, whereas a box of Mrs. Freshley's Twinkies knockoffs sells for $1 at Dollar Tree -- and taste pretty much the same.

 

[brownmonster]

I miss Hostess products. Not.

 

[Ms.PacMan]

The concessions Hostess received were minimal. Its labor costs were significantly higher than its competition, and Hostess should've sought to reduce this gap, even if it meant getting the court's permission to toss its CBA out. Instead, its Democratic investor wanted to maintain a positive relationship with the unions and sold the idea that Hostess's sales were going to take off. Instead, their decline accelerated.

I don't like the idea of retention pay / bonuses, but many will argue they're necessary to attract & retain talent strong enough to get the company into the black.

Quit being so dense.

I believe Ripplewood, the "Democratic investor", was actually approached by the Teamsters after the first bankruptcy to become an investor. UPS was also one of the unsecured creditors.

This is an excellent article.

 

[Bagels]

Quit being so dense.

I believe Ripplewood, the "Democratic investor", was actually approached by the Teamsters after the first bankruptcy to become an investor. UPS was also one of the unsecured creditors.

This is an excellent article.

How am I being dense? The article affirms, not refutes, what I wrote.

 

[Ms.PacMan]

How am I being dense? The article affirms, not refutes, what I wrote.

Now whose being editorial? You are picking and choosing what you want to read. Unions members had already conceded to pay cuts 3 yrs earlier in the first bankruptcy and were then asked again to prevent a second bankruptcy. The high pay and bonuses for the "talented" execs did not produce a turnaround - only ballooning debt and a dramatic decrease in sales.

In the end the Teamsters did concede to a second round of concessions but the baker's union did not. This was after the execs saw fit to give themselves an increase in pay later decreased to $1.

 

[Bagels]

Now whose being editorial? You are picking and choosing what you want to read. Unions members had already conceded to pay cuts 3 yrs earlier in the first bankruptcy and were then asked again to prevent a second bankruptcy. The high pay and bonuses for the "talented" execs did not produce a turnaround - only ballooning debt and a dramatic decrease in sales.

In the end the Teamsters did concede to a second round of concessions but the baker's union did not. This was after the execs saw fit to give themselves an increase in pay later decreased to $1.

How am I doing that? According to the article YOU linked to:

"...Hostess's two root problems -- a highly leveraged capital structure that had little margin of safety, and high labor costs. Neither problem was adequately addressed in the first bankruptcy, and neither existed to the same degree in major competitors... And Hostess still had ludicrous work rules: The Teamsters had separate drivers for deliveries of such goodies as Yankee Doodles and Nature's Pride Nutty Oat."

Hostess emerged from bankruptcy persisting it needed only a limited amount of capital to work with while waiting on operational inefficiencies and increases in sales. It's pretty clear that whoever authored the article felt that Hostess needed to address its labor costs further during its first bankruptcy, although the article is written in a back-handed manner (presumably to make it appear more neutral).

 

[barnyard]

This is an excellent article.

This should be required reading for anyone that believes the UPS pension is going to improve after the next contract. It also points to the need for unions to get away from defined benefit and go with a defined contribution.

 

[Ms.PacMan]

How am I doing that?

You were blaming all the problems on labor costs in your original posts and trying to justify the outrageous bonuses.

Appears nothing seems neutral to your anti-union bias and you are welcome to have my job for $12/hr. if that day ever comes. Aren't you the same person who felt underappreciated as a helper?

 

[Dracula]

This should be required reading for anyone that believes the UPS pension is going to improve after the next contract. It also points to the need for unions to get away from defined benefit and go with a defined contribution.

Defined contribution? How much money is UPS contributing to your 401K? Every contract we enter into from now on, UPS will cry that it is TOO MUCH. It won't matter how much money this company makes, they will always cry poverty.

Hostess was losing money. UPS has never lost money. Stock prices have gone down, the economy has soured, but this company has never been in the red.

And who gives a crap whether or not Hostess's CEO is a Democrat or a Republican? A turd is a turd is a turd.

 

[barnyard]

Defined contribution? How much money is UPS contributing to your 401K? Every contract we enter into from now on, UPS will cry that it is TOO MUCH. It won't matter how much money this company makes, they will always cry poverty.

Has nothing to do with how much they contribute, more to do with MEPP. Even in cases where UPS bought out of the MEPP (Central states), eventually, that pension will be in trouble. Defined benefit pensions have a history of not meeting it's obligations, I have not read or heard about any changes in pension management that would lead me to believe that UPS taking over a pension will be any different.

Look at the legacy airlines or even the automakers. The very 1st thing they looked to get rid of was pension obligations. Eventually, UPS will be in the same boat.

 

[Bagels]

You were blaming all the problems on labor costs in your original posts and trying to justify the outrageous bonuses.

Appears nothing seems neutral to your anti-union bias and you are welcome to have my job for $12/hr. if that day ever comes. Aren't you the same person who felt underappreciated as a helper?

-- I am pro-union. We are discussing why Hostess liquidated. Hostess liquidated because its cost structure made it incapable of competing in a market that will continue to decline. Managerial bonuses, which I have already indicated that I do not agree with, are peanuts and did not represent the problem. I dislike the competition's tactics (e.g. utilizing an independent contractor delivery model) and consider production worker's compensation ($17/hour, full health & pension benefits) to be fair in a perfect world. However, the world is not perfect, and I would recognize that should Hostess liquidate, I'd be competing for minimum-wage, no-benefit jobs, and therefore be open for discussion. The rejected offer, BTW, reduced wages to a maximum of $12/hour (varied based upon profitability), retained full heath benefits (but increased the premiums -- and what employees would've paid is still below-average) and moved their pension to a single-employer plan. This is STILL better than what employees of the competition receive -- and ions better than what they'll now get working at Walmart (Always Low Wages).

-- The article you linked to clearly blames the union as the root of the company's woes. It's written in a backhanded-style, but it's fairly clear.

-- No, I did not complain about feeling unappreciated as a helper.

 

[Ms.PacMan]

-- I am pro-union.....However, the world is not perfect, and I would recognize that should Hostess liquidate, I'd be competing for minimum-wage, no-benefit jobs, and therefore be open for discussion. The rejected offer, BTW, reduced wages to a maximum of $12/hour (varied based upon profitability), retained full heath benefits (but increased the premiums -- and what employees would've paid is still below-average) and moved their pension to a single-employer plan. This is STILL better than what employees of the competition receive -- and ions better than what they'll now get working at Walmart (Always Low Wages).

Accepting that it's a race to the bottom for wages is not a pro-union stance. Unions may die but it will not be because of accepting the inevitability of minimum wage for all workers. At least it's better than Walmart is not union ideaology. BTW the Teamsters did ultimately agree to the cuts covering 10,000 employess. It was the baker's union who held fast for the remaining 8500 employees.

Hostess had no money to buy it's way out of a MEPP.

 

[Bagels]

Accepting that it's a race to the bottom for wages is not a pro-union stance. Unions may die but it will not be because of accepting the inevitability of minimum wage for all workers. At least it's better than Walmart is not union ideaology. BTW the Teamsters did ultimately agree to the cuts covering 10,000 employess. It was the baker's union who held fast for the remaining 8500 employees.

Hostess had no money to buy it's way out of a MEPP.

The monetary figures I was referring to were for the baker's union (and FWIW, the Teamsters just barely agreed to the cuts).

So what did the workers win? Are the employees of Hostess's competitors waking up and demanding better pay & benefits? Are the Hostess employees being tagged as labor heros? No, they're primarily middle aged or older workers now starting over in life competing for minimum-wage, no benefit jobs (as most lack any marketable skill). What's the union going to do for them now?

 

[Megansman]

The heart of the matter... Unions are a monopoly. UPS is forced to shop for it's labor in a market with only one supplier. That supplier is solely interested in profit for their own organization -- through dues, increased membership, control of the pension, etc. If the Teamsters can force Hostess to hire loaders to load twinkies and only twinkies into the twinkie truck while next to him is a guy loading bread and only bread into the bread truck, driven by the bread guy and the twinkie guy respectively, going to the same stores at the same time... well so be it, that's more jobs and more paying members.

Think about it another way... as bad as my beloved Lions are this year, think about how much worse they'd be if Rodney Peete was still quarterbacking for them, with Herman Moore running pass routes, not because they're the best, but they have seniority and have paid dues into the Players Union longer than Calvin Johnson and Matt Stafford.

Funny how the union ALWAYS says "The company is making plenty of money" right up until they don't and go bankrupt. I'm a Lions fan (Tigers and Pistons too) because I grew up in Michigan and watched business after business, either leave or go belly up after they stopped making "plenty of money."

 

[UpstateNYUPSer(Ret)]

UPS is forced to shop for it's labor in a market with only one supplier.

Very few new employees have their Union card prior to being hired. In my district we have to join the union within 30 days of date of hire.

 

[Bubblehead]

The heart of the matter... Unions are a monopoly. UPS is forced to shop for it's labor in a market with only one supplier. That supplier is solely interested in profit for their own organization -- through dues, increased membership, control of the pension, etc. If the Teamsters can force Hostess to hire loaders to load twinkies and only twinkies into the twinkie truck while next to him is a guy loading bread and only bread into the bread truck, driven by the bread guy and the twinkie guy respectively, going to the same stores at the same time... well so be it, that's more jobs and more paying members.

Think about it another way... as bad as my beloved Lions are this year, think about how much worse they'd be if Rodney Peete was still quarterbacking for them, with Herman Moore running pass routes, not because they're the best, but they have seniority and have paid dues into the Players Union longer than Calvin Johnson and Matt Stafford.

Funny how the union ALWAYS says "The company is making plenty of money" right up until they don't and go bankrupt. I'm a Lions fan (Tigers and Pistons too) because I grew up in Michigan and watched business after business, either leave or go belly up after they stopped making "plenty of money."

What a stupid set of analogies.

So in your world all blue collar workers should be cast aside like pro athletes when they reach their upper thirties or forties, having not made a lifetimes worth of money? Do you think Rodney Peete or Herman Moore applied for unemployment when they left football?

What happened to Hostess was not a result of union greed, rather corporate greed and mismanagement in the face of changing market conditions. I never read in one article about Teamsters delivering specific to a product for Hostess. If that were the case I suspect it was due to each product being produced in a different bakery. If what you alleged is the case, once again, what managerial idiot negotiated that contract?

We all know that when a company is no longer profitable, they cannot support a work force, union or otherwise.

Funny how companies like Hostess make plenty of money, till they fail to manage, rape their workers pension funds, then file bankruptcy.
Not sure what kind of right to work goon you are, but I'm not buying any of it.

 

[Brownslave688]

What a stupid set of analogies.

So in your world all blue collar workers should be cast aside like pro athletes when they reach their upper thirties or forties, having not made a lifetimes worth of money? Do you think Rodney Peete or Herman Moore applied for unemployment when they left football?

I typed this in my head earlier today and forgot to actually do it. Let's compare $20 an hour jobs to million plus jobs. Lets compare workers who get a full pension after 10 years? Maybe 8? To ones who work 30+ for a full pension.