Hostess Bakeries, makers of the iconic Twinkies is going bankrupt. - 18,500 jobs lost
(Reuters) - A standoff between Hostess Brands Inc. and thousands of its bakery workers was heading for a showdown Thursday as both sides declared they would not bend and were set to accept the demise of the historic maker of Twinkies and Wonder Bread.
The bankrupt company is on its last legs, according to management, and will ask a bankruptcy court on Friday for permission to liquidate unless* workers at Hostess plants across the country return to work by 5 p.m. EST (2200 GMT) on Thursday. (*author's bolding)
http://www.reuters.com/article/2012/11/ … QE20121115
Hostess claims their weak financial position precluded them from surviving a Union strike - so they are just shutting down and selling off the company assets.
Union claims company failure is due to management mis-management
Who's right? A Union win? A big corporation getting what it deserves... or playing dirty?
Is a smaller paycheck better than no paycheck - on principle?
Chicago Tribune: http://www.chicagotribune.com/business/ … 5964.story
CBS News: http://www.cbsnews.com/8301-505143_162- … liquidate/
My question is - Where is the twinkie bale-out. The american tax payer (via Washington) baled out the mega banks and baled out the auto companies. Where is the twinkie bale out. It's 18,000 jobs. Who is to pick and chose the winners and losers
They can blame anyone the want. They went broke, because their product line never changed with the times. I loved them when I was young but as an adult they made me gag and when you read the ingredients you know why they have a shelf life of 10,000 years.
Its sad, because people lost their jobs and lively hood, but the blame lies on the management of the company.
BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.
Imagine how far two million dollars could have went towards negotiations with the baker's union.
The twinkees won't be going anywhere but those 16,000 workers are going to the unemployment line, while the CEO goes home to his mansion in the hills.
About $110 per employee if the CEO took no compensation at all. That wasn't the issue.
You missed or bypassed the point Jaxson. The problem is that those executives took those raises knowing they were going into bankruptcy and did nothing but mismanage the company into oblivion. The workers weren't seeking pay raises, they were trying to avoid pay cuts. They weren't seeking new benefits, they were asking to be reimbursed for the benefits they had already earned. Do you think those executives earned those pay increases? Did they increase the profitability of the brands they managed, increase any product awareness, did they do anything to decrease the cost/unit other than take away pay and benefits (most successful production companies have devised a 5S program for this). How can a bankruptcy court allow such increases in executive pay when the company was over a $billion in debt to suppliers?
Listen very carefully. If I purchase a failing company with $170 million of my own money, I have every right to pay my new CEO $1.5 million a year. It has no effective bearing on the success of the company, other than the fact that you generally have to shell out a lot of money to get really good management.
And as I posted in the other thread, there were very few things they could actually do to turn the company around, because of the unions.
Listen very carefully. You don't get to pay huge bonuses and salaries to your management of a failing company and go through US Bankruptcy court and shaft your suppliers and US Taxpayers, and it doesn't matter what you posted in another thread, there were many things management could have done to turn things around. The first thing they could have done was hire a CEO that actually had experience in the baking goods industry. 6 CEO's in 8 years and not one of them had the experience. They were all restructuring and liquidation specialists with no intentions of turning things around. They were not "really good management."
The first thing they could have done, if not for the unions, would be to consolidate their 80 different health plans, 40 different pension plans, and their transportation/delivery operations.
But, unions. Can't make the changes needed to restructure a business if unions won't let you. You can't blame management when the unions are the ones destroying the company.
Jaxson, you can't make changes to the business if you don't have experience in the industry. Management had no intentions on restructuring, or more precisely going through with a planned restructure. The plan all along was to sell off, dismantle, and liquidate as quietly as possible. Certainly their right to do so, but don't blame it on the unions. The unions made considerable accommodations over the last few years to ensure a healthy return, but after going into a second bankruptcy, losing their pension contributions and other benefits, reluctantly accepting pay cuts and working hours... it was obvious that management was no longer on the side of the employees.
I'm not saying all unions do good, or that they don't do as much damage to the economy as mismanagement. In this case, the union was right to strike and they just showed the rest of corporate America that it doesn't matter how big you are or how strong your brand is, if you have union employees, you make things work or you go out of business. I've never been in a production union but I have been in the electrical union, a carpenter's union, and a machinist union. They were great for wages, health, and safety (from a worker's perspective) and terrible for productivity (from an employer's perspective.)
1 - 372 unique collective bargaining agreements restricts a company greatly in what they can do. For example, they weren't allowed to load bread products and cake products on the same truck. The driver wasn't allowed to load/unload/assist. A separate person in many locations was needed to simply move the products from the truck to the shelves. Effectively you have 5 people doing a job that two or three could.
2 - You don't need experience in an industry to be a good manager. Not in the slightest. Six Sigma principles can be applied in any industry, and lead to higher efficiency. Any specifics to an industry can be learned from consultants.
3 - I would love to see you prove what the original plan was. Source please.
4 - The UNION wasn't on the side of the employees. 12,000 were working with the company. 6,000 ruined that. They were the minority, and they ruined it for everyone.
for that many unique collective bargaining agreement was the doings of the company rather then the labor unions. Union membership know that splintered contracts equal a splintered union.
Management at Hostess knows divide and conquer all to well. And liquidate to make more money for the fat cats.
1. Yes, it restricts a company from taking advantage of its employees. It ensures safety for the employee as well as the general public. It helps control the chain of supply and diminishes the need for additional audit.
2. Total bullcrap... No industry experience means you have no industry relationships that ensure success. When you bring in experts in restructuring and liquidation, all you do is cause your suppliers to tighten ship and make greater demands, such as immediate payment instead of deferred payments. It greatly reduces the company trust and causes unneeded stress and apprehension among the employees. This company was controlled by an 8 member board of directors consisting of investment firms and hedge fund managers. Do you honestly think they were more concerned with product development over asset value?
3. I don't need to prove anything to you... search for your own source... What is your experience here? Ever work with 5S or Six Sigma? I have and it only slightly increases quality and productivity when management and rank and file are playing from the same playbook. Or is this just something you read on the computer?
4. UNIONS aren't on the side of employees they are on the side of their members. Some unions have working relationships as a necessity but the interests of one doesn't encompass the needs of another. Again, you make assumptions without having any real life experience. Oh, and you have your numbers reversed, 6700 Teamsters voted to narrowly accept the new contract, the bakers union and the other 2 unions would not come to terms. A greedy board of directors and unqualified managers ruined it for everyone not the UNIONS.
1 - You do know that millions and millions and millions of people are able to find jobs and not be taken advantage of by employers, right? Unions restrict the FREEDOM and RIGHT OF OWNERSHIP of a business. Convenient that you won't address the facts. 372 collective bargaining agreements. 80! different health plans. 40! different pension plans. Wasted human resources. ALL BECAUSE OF THE UNIONS. 100% BECAUSE OF UNION BARGAINING.
2 - Sorry, you're wrong. Turnaround firms should't be able to succeed, according to you. They were interested in making the company succeed. That is the goal. Product development, name-brand recognition, marketing, etc... are all STEPS to achieve the GOAL.
3 - Here's the thing. If there was no plan like you said, I can't find it. You made the claim, so the burden of proof is on you. Back up your claim.
4 - Yes, I have worked with Six Sigma. It's really nothing that I didn't already know from previous management experience. Depending on the company, results will vary. For instance, you can get better margins if you have 3 people do a job, compared to 5. Just one of the things you won't address.
5 - By employees, I simply mean everyone working at Hostess. Union members are part of the employee-group. And you are right, they weren't on that side. Also, YOU are the one with the facts wrong. Only the Baker's union wouldn't agree, everyone else did. It was the minority who destroyed those jobs.
As I've said, unions take away the rights of the people who rightfully own a company.
Unions engage in behavior that would be illegal in any other form.
1. You must be the most naive person on the planet if you think large employers do not take advantage of their employees. The company we are discussing was a publicly traded company with millions of shares of common stock. No owners rights were restricted, but unions did protect the rights of workers.
Yea... lots of bargaining agreements... that tends to happen when there are lots of mergers and operating in many states. Yea... lots of health plans and pension plans... tends to happen when there are restrictions on interstate commerce and people in Illinois can't buy health insurance from companies in Indiana (Obamacare solves this problem). Hope you understood this without the use of all caps... doubt it though since you seem to have a one track agenda.
2. There were no turnaround firms... only control of a company by several different investment firms. Firms that operate in the same manner as Bain Capital... (they were not involved but wanted to use something you could relate to)
3. Knowing the info in the above, it doesn't take a rocket surgeon to understand the intent. Further, I have no burden to prove anything to you especially since you haven't provided a single source to back your claims.
4. I'm pretty sure I did address your assumption. And you are completely WRONG, as usual. There are more benefits to the company for having 5 workers that 3 could do. Truckers in most industries have a no touch freight policy, some exceptions are in local delivery such as at convenience stores. Larger stores with larger product requirements have other policies in place to ensure driver safety as well as dock and warehouse worker safety. Or do you think it is wiser for a driver to make a 12 hour delivery and then empty his own truck, and then reload?
"As I've said, unions take away the rights of the people who rightfully own a company."
Unions ensure the rights of workers, including the rights of workers that hold a stake in the company through profit sharing programs and employee stock programs. They ensure that employers that have entered into collective bargaining agreements play by the rules they agreed to and for the term they agreed to. Your statement makes me believe that you have never worked with a company that has had to deal with unions. No problem, it's just another testament that your limited knowledge comes from what you have read and not from any real life experience. It makes any argument you have on this issue suspect.
livingwithrichard, let's get one thing straight before we move on.
You made the claim that the plan all along was to liquidate the company. That is a positive claim, which means the burden of proof is on you to prove your claim. I can't disprove your claim by finding proof, if the proof doesn't exist.
So, if they said 'Yeah, we're going to run the company into the ground and sell it', then you can substantiate your claim.
If they didn't, I have no proof to present. That's the whole concept of burden of proof.
So please, provide proof, or you have to concede that point. If you're not willing to do either of those, then you aren't willing to have an honest discussion, and I won't waste any more time with you.
Haha... first off, I never stated that the company took an 'official' stand on liquidation. What I did state was the gist of a conversation I had with a friend and former middle management executive that worked for the company on multiple poker nights.. Obviously, I cannot prove the content or context of those conversations. Substantiation of those conversations is perceived by the actions of those that controlled the company (investment firms and hedge fund managers)
Second, I never asked you to disprove any of my comments... I have tried to keep this discussion on topic as it relates to Hostess and not about Unions in general.
Third, the only thing I will concede is getting agitated in my responses to your comments, and I'll assume you were as well. I tend to get that way when I see the all caps, it's like someone is yelling at me, and I don't take well to getting yelled at. What I will not concede is that the demise of this company is solely on the shoulders of the unions... they played their part but it was management that had a responsibility to shareholders, not the unions. Management failed miserably especially since coming out of bankruptcy in 2009.
I wish I could give this a thoughtful response, but I would be remiss if I did not lament the disappearance of the twinkie .
To quote from the article below:
http://americablog.com/2012/11/hostess- … alary.html
"Hostess Twinkies’ former CEO tripled his salary earlier this year to $2.55 million while the company knew it was heading towards bankruptcy, according to a statement by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. And a number of top executives reportedly saw massive pay raises, some nearly doubling their salary. And now the new CEO is blaming the unions for the company’s demise."
Currently, the owners are selling rights to Twinkie to Mexico.
Did the demands of the Union for a livable wage bankrupt the company? I doubt it. Bad management, CEO greed, an over subscribed market, and a junk product did that.
If Hostess is able they should move to a right to work state!
Hostess has been bordering on liquidation for years, the union accepted workforce wide pay cuts, twice. I think maybe it is time to just accept it has been mismanaged into the ground.
I bet the managers are still getting great pay even as they demand the laborers go below the poverty level.
Don't understand that union demands cause the problems do you? No reason to respond.
You think a union that accepted pay cuts, twice is demanding? They probably think their workers will do better from a controlled bankruptcy than a sudden one. Having gone through that process as an employee (a.k.a. unsecured creditor) I would tend to agree.
More homeless people on the streets while Corporate America pads their pockets. There is something wrong with this picture! There should be a reality show called "Homeless in America" and have a corporate Ahole live for a week on the street.
Oh, by the way, I have a homemade Twinkie recipe if anyone wants it.
"Corporate America pads their pockets"
What do you refer here to? The corporation that is not longer in existence? The managers/executives of that corporation that are now unemployed? The actual owners (stockholders) that have lost their investment in the company? The workers depending on a dead corporation for their livlihood?
Which one is padding their pockets from a nonexistent corporation?
Perhaps she was referring to the CEO and other top executives of Hostess who took huge pay increases (70% to 300%) just before entering US Bankruptcy... they certainly did "pad" their pockets or was the bankruptcy a surprise to them?
I have a friend that was in mid-management at one of their plants here near Chicago. We played poker once a month with other friends. He started job hunting a year ago when they were going into bankruptcy for the second time, after just coming out of one because he was led to believe that the company was going to sell off their more popular brands, close most of their plants, and bring their top guys to one location... his plant. His team at his plant was trying to acquire Wonder Bread and split from Hostess but that fell through.
This isn't a Corporate America alone issue. This is an issue that relates to corporations worldwide, private and public. Most successful companies know that their most important asset is their rank and file employees and that there is a delicate balance that once upset is hard to ignore. The scorpion and the tortoise fable comes to mind.
Honestly, the loss of Hostess is not that huge of a deal. It certainly sux to get the shaft during the holiday season but on the bigger picture, the market opens up to those that are enterprising enough to grab it. I know that McKee Foods Corporation is quite happy right now... they make the Little Debbies brand of snack foods that were in direct competition with Hostess brands. Too bad they don't trade on the market because they would have made billions recently.
The owners and managers will do okay... after all, the CEO was earning $900,000 up until last year. Surely he put some away and invested some...
I am talking about the corporate execs that sit in high backed leather chairs and give themselves pay increases yearly along with bonuses just before bankruptcy is filed. You don't think this happens?! It happens all of the time.
Unfortuantely, you watch, more and more companies will either be going bankrupt or selling out causing employment rates to rise even more due to the tax increases and the hellcare bill that is on the agenda. Companies don't even match 401k's anymore.
Right to work states allow an employer to fire or hire anyone they want. You can be fired for picking your nose while a cousin can be hired because they are family members or friends. All states should be equal on the hiring and firing.
I've lived most of my life in a right to work state and understand what it means.
I prefer it that way - I would much rather choose the employer I want to work for without paying another level of politicians and fat cats for the privilege of working. If I have a problem with the employer I don't need those same fat cats telling me I musn't work, or can only earn what they say I can; I let my feet do the voting. It's happened more than once and I've found that I appreciate the ability to make my own choices.
Totally agree here. I have a love/hate relationship with unions. I'll never be a member of another one, but the ones I was a member of helped me get the electrical training, carpenter training, and machinist training I needed. Funny thing is, I was in these unions while living in Southern Mississippi (Biloxi) and South Carolina (Charleston), and never here in Chicago. My dad was a postal carrier for 20 years and then also as a City of Chicago employee, a member of the City workers union which helped him twice that I know of; once when he had quadruple bypass heart surgery, he was given time and job security, and once when he was compensated for a discrepancy in pay as a planning and development Project Manager.
When my greedy company owners in SC started playing games that involved my livelihood, I decided to move back here to Chicago and start my own business in a completely new industry to me. It was the best decision I had ever made, since leaving the Army. I will never work for anyone that has control of my livelihood. Even if my business completely dries up, I have enough experience in other fields to start fresh. Heck, give me a pad of paper and a pen and I'll irk out a living no matter where I live.
I've lived all over this country, west coast, east coast, gulf coast, and many places in between. Everywhere I have been there has been huge differences of opinions on unions, which is very understandable. IMO they're not necessary in many places where there is a smaller population, but in places like Chicago and other cities that have high cost of living expenses, they seem to be very necessary.
I've never been helped one iota by a union; the most they ever did for me was to put me on strike, then give me a raise that made up during the remainder of the year for the money I'd lost. Very valuable. The same union fired me for driving a piece of broken down and repaired equipment off of a busy freeway onto the shoulder (or at least tried; the company promptly hired be back). Should have waited for several hours to get a union "operator" out to the job to move it 50 feet, hoping there was no accident in the meantime.
I DID work under one boss that needed union control. His concept of getting work done was to work the salaried people (me) 70 hours per week doing the labor that hourly workers should have been doing. Just low enough hours that he could still claim I fell under the salaried guidelines and not pay overtime for it, saving the money that should have gone to the hourly people. I left for greener pastures and 9 of the 10 hourly workers told me they were coming right behind me. Union or not, that's the power the employee always has over the employer; to leave, forcing them to get less qualified help. Of course, it only works if you are actually qualified and willing to work.
Sounds like business as usual to me - union greed and unwillingness to actually compete in a free marketplace has driven another company under.
Nothing new about that - they've been doing it for years. Why do you think Detroit had to be bailed out?
I'd be sympathetic if management were also on minimum wage without benefits to try and get through the lean times. But I am willing to give odds that they aren't.
You know, Psych, not ALL mangers/owners are evil villains wanting to oppress their employees. A few years ago, as I recall, the CEO of the biggest employer around me (Micron Technologies) went two years with zero salary. Ever hear of an employee doing that for the good of the company?
You would give odds, would you? Based on what? You've examined their balance sheets, their costs and profits? Or just because all managers are evil and rich?
Don't be such a corporate lackey, Wilderness, most of the villians in these kind of cases are the management and CEO. Agreeing to take an 8% cut in salary is quite a concession, when other wise demand for the product is, according to the company, quite strong. If I were Donald Trump or the equivalent and was in charge of course I could afford to not pay myself, if it will serve as a false encouragement to those that have have car payments or home mortagages to contend with. It reminded me of the time when Ronald Reagan denied federal workers raises in 1984 and used himself as an example when he included himself as President in the arrangement. I guess we were all going to be inspired and motivated. You don't want to play the role of Dick Dastardly or Simon Legree in this story because it ain't sellin.
Wow! An 8% cut!
Two years ago, at the worst of the recession, I took a 27% pay cut and began to deal with being laid off half the time in addition to the cut. The small business is still in operation, recovering now, and doing better. I don't believe the owner has taken a dime from the company during that period, living off savings and his wife's salary while trying to hold the company together and pay the employees whatever he could.
Don't talk to me about taking an inconsequential cut and trumpeting that it means those employees are heroes about it while the rest of the country is without jobs and the company goes bankrupt because it can't compete.
"... while operating under Chapter 11, top executives gave themselves 80-percent raises in 2011."
http://seattletimes.com/html/soundecono … stess.html
Tell me again how it is all the union's fault.
As the story says "it was reported". It is highly unlikely there were any raises let alone a 80 % pay raise for executives. They would have to be approved by a bankruptcy judge and there is not a judge in the land that would approve that move.
No, I submit Hostess demise is a culmination of problems, union pay, mis management, out of control costs due to factors beyond there control.
In large business operations like Hostess that operate on small business profit margins due to so much competition, any movement in expenses are crippling. To many keeps them operating at a loss till they reach the point of no return. I bet the union concessions would not change anything, they still would go bankrupt.
It was reported because it was a public action in the shareholder report. It happened.
In many cases businesses get the unions they deserve.
"n the latest Chapter 11, the company was saddled with nearly $1 billion in debt. In addition, it was reported that while operating under Chapter 11, top executives gave themselves 80-percent raises in 2011.
That was from your article. Their is no mention of a shareholder report. Again, in order to give themselves those raises, a bankruptcy judge would have to approve it.
I suspected the usual winds would blow - in the usual directions - when I posted this.
And I was not mistaken. Of course it is the evil rich, (management/investors), an Damn right! it's the evil unions.
There are a lot of information resources out there - enough for each to find the club of their choice. So i'm not bothering with links - find your own.
But, from my perspective, (and an hour of two of researching available online info), It appears that both sides are right. But who is more right is the gist of this mill.
My conclusion... Union concessions may have helped the company stay afloat, while it attacked the other big problems, (slumping sales/increased commodity prices/practically unsustainable debt service burden), but without chpt. 11 assistance, (correctly structured this time), with the debt issue - it would probably still go under.
Consensus of the reasons cited:
1. Unsustainable debt service burden in a declining sales market
2. Unsustainable legacy labor costs burden in a declining sales market
*Note: the company was saddles with both of these costs
when it emerged from bankruptcy in 2009 - a highly unusual
bankruptcy precedent - according to industry analysts
3. Non-competitive labor costs (as in higher than its primary competitors had to pay)
For the evil rich, (management/investors), folks - yes, it appears there were some less-than-pr-friendly "golden parachute" management arrangements in late 2011 - sleazy buggers!
and yes, the company management was not up to the turn-around task (apparently) Chuckleheaded nimwads!
But no, the ugly capitalist vultures will not be making millions from the carcass. It appears that in its current configuration - most of the investors will lose money, or at best break even.
For the evil union folks - there were two unions involved. One agreed to the concessions, and one did not. (the one that agreed criticized the one that did not) - so there. even a union says it was the union's fault. - nasty buggers killed another good ol' US company!
And yes, the extravagant union labor costs, (benefits/pensions/p/hr rate) did make the company's production costs higher than its competitors - thus placing Hostess at a competitive disadvantage. (a la GM)
So everyone gets to righteously point a finger. Did too! Did Not! It's your fault! No it's yours!
But, to a simple average Joe like me, seeing that in this case it does not seem to be a matter of "BIG CORP raping the little guy for a profit- none of the above answers what I would expect most folks with mortgages and car payments should consider first....
Isn't a smaller paycheck better than no paycheck?
If the company will probably fail if we don't take a cut, as in no more paychecks big or small, why not take the cut and see?
So after presenting such a balanced and super-intelligent evaluation of the standings - I'll toss my hat in the ring....
The unions played a huge part in the downfall of this company by forcing the company to try to operate with non-competitive labor costs - let's all say "GM" again.
And deciding to lose the whole dollar, instead of eight cents of it - dumb!
Sure looks the the union cut off its nose to spite its face.
While there is no doubt that the union strike led to the downfall, I will not agree that it was because of an 8% cut in pay. That is ridiculous. The new contract was requiring a 27 - 32 percent cut in wages and benefits to workers that have made huge concessions since the first bankruptcy in 2004.
Mismanagement got Hostess in the mess they are in. This company has been sold at least 3 times during the 80‘s and each time they racked up huge debts (over a billion $$$) while at the same time they shedded some profitable assets during each merger. They twice filed for bankruptcy, once in 2004 and again in 2011.
They have had 6 different CEO’s in 8 years, none of which had any experience in the baking industry... they were Wall Street, so called restructuirng experts and liquidation specialists... haha..
The other than management workers had already made huge concessions through these last few years with pay cuts as well as this year alone the company stopped making contributions to their pensions. The final straw that led to the worker strike was the management contract that included a further cut in wages and benefits by 27 - 32 percent. ( http://www.washingtonpost.com/blogs/she … s_politics )
Pay cuts in times like these while the CEO took a pay raise from $750,000 to $2.25Mil... Really? That’s a 300 percent raise... this is unjustifiable considering their most recent bankruptcy filing included the closing of 9 of their 20 plants.
This smells just like Bain style Wall Street vulture capitalism where investors and management make the money while the rank and file worker that made the company what it is, gets the shaft.
The workers made concession while their leadership enjoyed the rewards... Yea that’s the America I’m proud of...
We may have seen the last of Hostess, the company, but I’m certain we haven’t seen the last of its more popular brands. Twinkies and Wonder Bread will be sold off to other companies. I just hope those other companies don’t also inherit the management teams that ran the brand into the ground.
"I just hope those other companies don’t also inherit the management teams that ran the brand into the ground."
Or, it we can hope, the unions that demanded such onerous wages that it drove the company under.
And what onerous wages would those be? The average starting pay for a production worker at Hostess (Chicago area) was $10 an hour... after 20 years the top pay was only $20 an hour. Or are you talking about the average truck driver pay of $22 an hour, the distribution worker of $12 per hour, or the outlet store worker of $8.75 an hour. Get serious... the top management were making 6 figures and look how well they did over the last decade... did they increase sales? brand awareness? brand profitability? No, they sold off profitable assets (liquidated) increased debt by over a billion$$$, stopped paying into worker pension plans but increased their own. Rank and file workers did not cause this. Obamacare did not cause this. Mismanagement caused this. vulture capitalism caused this.
I was a machinist for many years and worked in a production facility in South Carolina...non union... which produced parts for Caterpillar and Cummings engines. In 07' the economy started to become sluggish and international engine sales projections fell causing an immediate reaction by my company to halt our pension contribution plans and increase our workers share of health care contributions, restructure our vacation by eliminating days that we earned through time and halted all overtime. The average worker lost about $50 to $60 a week. A private internal memo got floated around that demanded all scheduled pay increases from the 25% profit sharing pool to cease though bonuses to be paid to the management team would continue. This led to an immediate reaction by the workforce, not collaborative but mostly psychological, that slowed down production and also decreased the attention to quality. This then caused an immediate increase in the cost/per unit of production and the quality issue raised serious questions of our future with our clients. Layoffs started a few weeks later... and I moved back to Chicago to start my own business.
The point is, union or non union, if a company does not take care of the rank and file worker then the worker will not take care of the company.
Mostly valid points Richard. As I said - there are plenty of clubs and batons for everyone. re. position-validating information.
but, I stick by the 8% discussion because I think the parameters of the discussion were immediate actions - by either party, and 8% was the actual drop in take-home money.
It also appears there are indications that the rejected contract involved some down-the-road give-backs to the union losses, both wage and benefits). I didn't follow that line because that wasn't my point in the conversation.
As for the long-term prospects for the company's survival -- the union costs issue was only a part. But regarding the immediate time frame - it still appears the union strike said: No check is better than a smaller check.
Again, it appears to be an irrational choice. And one that draws a very negative impression of unions.
Most companies fail because their execution is bad or there is not enough demand for their product or service. If a demand for Twinkies remains, someone will find a way to fill it and make money.
"I have every right to pay my new CEO $1.5 million a year. It has no effective bearing on the success of the company, other than the fact that you generally have to shell out a lot of money to get really good management."
There is this little thing called character, something that used to be valued in business. Yes, you're entitled to pay your new CEO whatever you want while simultaneously asking your rank and file workers to take yet another cut in pay and benefits. Think that will work for you? Maybe, for awhile, because people want to keep their jobs. However, over the long term, it creates an atmosphere of distrust and disdain, which ultimately results in failure.
Keep praising the current cutthroat business model and excusing such lack of character. You're merely slowing the inevitable failure of the culture of greed with your defense of such tactics.
OMG, Six Sigma. Really? That is so....yesterday
http://money.cnn.com/2006/07/10/magazin … /index.htm
Yeah, if you expect Six Sigma(just a fancy name for identifying and fixing problems) to innovate for you and solely fix your company, you will find it lacking.
If you use it for what it is designed for(which really takes very little hours or resources, people just go overboard), then it can have a huge impact.
Has anyone seen the completed listings for Hostess products on eBay. I can't believe someone would pay hundreds of dollars for a box of Twinkies!
You wanna blame 10 years of decline on the unions? If it makes you feel better, go right ahead.
http://www.bizjournals.com/kansascity/n … l?page=all
From Kansas City Business Journal
January 11, 2012
The company now known as Hostess Brands Inc. has a long history with Kansas City, its former headquarters site. Despite moving its base to the Dallas area a few years ago, the company hasn’t cut local ties.
On Wednesday, the company filed for Chapter 11 bankruptcy protection — a process locals observed firsthand from 2004 through 2009, when what was then known as Interstate Bakeries Corp. scrambled to rise out of a prior Chapter 11 filing.
Below is a timeline describing the company’s past decade and linking you to our archived coverage.
(Here’s an archive story describing the genesis of the company’s first Chapter 11 filing.)
2002: IBC reports a 14 percent increase in profits to $69.8 million, with sales increasing 2 percent to about $3.5 billion.
2003: IBC closes plants and cuts jobs during the year, reporting lower earnings of $27.45 million (including one-time charges) and $3.5 billion in sales, down less than 1 percent.
2004: A low-carb diet craze slims the bottom lines of IBC and others. Meanwhile, the Securities and Exchange Commission starts an informal inquiry of IBC after the company retained a law firm to investigate how it sets workers’ compensation and other reserves. Then, the company takes a $40 million pretax charge for workers’ comp reserves and delays filing its annual report with the SEC. Closings and job cuts continue; IBC files for Chapter 11 bankruptcy protection in September, and Chairman and CEO James Elsesser resigns.
At the time, IBC has 32,600 employees, including about 600 in the Kansas City area.
Sales decline 1.7 percent to $3.46 billion, yielding a net loss of $25.7 million.
2005: The SEC’s investigation into IBC turns formal. Facility closings/sales and layoffs grow, affecting thousands of jobs, and the company launches a whole wheat version of Wonder Bread. For the fiscal year, the company loses $379.3 million on revenue of $3.4 billion.
2006: IBC spends about $10 million on an ad campaign to promote its whole-grain products.
The company makes more job cuts but begins to catch up on past-due SEC reports.
It also offers to settle the SEC investigation and decreases its annual loss to $128.3 million, even as revenue dips to $3.06 billion.
2007: IBC grapples with its unions, threatening liquidation if they don’t approve changes that include exiting certain areas and laying off hundreds. Eventually, agreements are reached.
Also, largely unwelcome buyout offers emerge.
2008: Efforts continue to get IBC out of bankruptcy. In October, a bankruptcy judge approves a nearly $600 million exit financing plan for IBC.
2009: IBC emerges from four and a half years of Chapter 11 bankruptcy in February. It has to adjust financing commitments late in the game to do so. Players include an affiliate of private equity firm Ripplewood Holdings LLC, which offers capital in exchange for shares and notes; General Electric Capital Corp. and GE Capital Markets Inc., which offer a credit line; and Silver Point Finance LLC and Monarch Master Funding Ltd., which offer a term loan-secured credit facility.
Later in February, the company says it will move its corporate headquarters to Dallas, taking about 20 employees out of the Kansas City area. IBC has roughly 22,000 employees, with about 200 local full-time corporate employees, plus about 400 at area facilities.
Some closings and layoffs continue; in November, the company changes its name to Hostess Brands.
2010: A federal judge in Kansas City dismisses a $56 million lawsuit tied to IBC’s bankruptcy.
2011: Hostess records $2.5 billion in revenue.
2012: Hostess Brands files for Chapter 11 bankruptcy protection. It has about 19,000 employees, including about 100 corporate employees in the Kansas City area, plus some at a Lenexa bakery. It reports assets worth $1 billion and liabilities of $1.4 billion.
So a judge in NY just ordered Hostess management to go back to the table with the Baker's Union for mediation. Mediation is to begin tomorrow, on Tuesday. Maybe now they can all put on their big boy pants and come to an agreement. I don't think its going to happen but it gives some hope to those that may have been on the fence with the offered contract.
by Michele Travis 5 years ago
Did you know Twinkies are coming back on July 15th?When they took Twinkies off the market, was that just a way to control people who were on strike? They took jobs away, people sold Twinkies on sites like Ebay, even wrote hubs about them. Now Twinkies are back. What is more...
by JaxsonRaine 5 years ago
Yet another set of rights being restored to Americans. Today, at least, is a good day for rights.http://www.huffingtonpost.com/2012/12/1 … 78021.html
by Sarra Garrett 5 years ago
To all those who think Corporate America is just the most wonderful thing......Hostess is paying $1.8 million in bonuses to their corporate Aholes just to keep them there until the company closes. In the meantime, 18,000 people have lost their jobs and are NOT getting their retirement money...
by JaxsonRaine 5 years ago
1 - The CEO had a salary of $1.5 million, with up to $2 million in long-term bonus compensation. Over a 5 year period, if he got all $2 million, plus $1.5 million a year, that would equate to $9.5 million. Yes, it's a lot of money, but this is why CEO salaries generally aren't the problem: If he...
by rhamson 3 years ago
The CEO of Gravity, a credit card processing service, cuts his personal pay from a million dollars a year to give the minimum wage earners in his company $70,000 a year. The workers describe the raise as freedom, family starting and house buying ability. Could this be something to spark the economy...
by karl 5 years ago
Stockton US bankrupt, a sign of the times or just bad management?As a UK national I am interested to see how the riches nation on earth will deal with this situation. the city I live in is $5 Billion in debt and in almost the same circumstances as Stockton, the powers that be in my city (Birmingham...
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