From Main Street blog:
Hostess Brands is one of the most recognizable food companies in America, having manufactured Wonder Bread and Twinkies for decades. But now the company has announced they are liquidating, and company is unfairly blaming their workers, many of them members of BCTGM and the Teamsters.
The fact is that the responsibility lies with Hostess’ management and the vulture Wall Street private equity firm behind them, and yet the workers are the ones who will suffer the consequences of this shutdown.
Here are some facts about the Hostess situation:
- Hostess is in bankruptcy for the second time since 2009.
- For the past 8 years, Hostess has been owned by Wall Street investors: so-called “restructuring experts,” managers from other non-baking food companies, and now a “liquidation specialist.”
- The Wall Street investors that own Hostess have no interest in the company succeeding – very similar to the situation of Bain Capital and KB Toys in 2000.
- Hostess has had six CEO’s in 8 years, none of whom had any experience in the bread or cake baking industry. This, not any action by the unionized workers, led to their failure.
- Hostess workers made numerous concessions, including this year when the company stopped making contributions to their pensions. They went on strike because management offered a contract cutting wages and benefits by 27-32 percent.
- Despite their troubles, Hostess’ CEO got a 300 percent raise, from $750,000 to $2,250,000. Other top executives have also gotten raises worth hundreds of thousands of dollars.
- Earlier this week when workers at 20 plants went on strike, Hostess management claimed they would close plants in response. In fact, they already had plans to close at least nine plants as part of a company-wide reorganization. The Mayor of St. Louis said of the closings “I was told months ago…”
AFL-CIO President Richard Trumka made this statement in response to the latest news from Hostess:
What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price. These workers, who consistently make great products Americans love and have offered multiple concessions, want their company to succeed. They have bravely taken a stand against the corporate race-to-the-bottom. And now they and their communities are suffering the tragedy of a needless layoff. This is wrong. It has to stop. It’s wrecking America.
A total of 18,500 jobs could be lost in the process of this liquidation. The CEO and executives who gave themselves raises, not to mention the Wall Street investors, will emerge just fine. The workers, many of them members of BCTGM and the Teamsters, will suffer the most financially.
Even though we defeated Mitt Romney in his bid for the presidency, his style of economics that he pioneered with Bain Capital still exists, and is playing out in front of our eyes with Hostess.