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Saturday, November 17, 2012

Zombies and the Twinkie Defense

Back when I was a useful member of society, I had a real job. I don't refer to my 34 years in the Foreign Service, but to the work that paid my way through school. I was reminded of this while reading about the closing of Hostess Brands, makers, of course, of Hostess Cupcakes--my food of choice while in elementary school and college--Twinkies, and a slew of other classics from the days when we knew that sugar was healthy.

I held two off-campus jobs while an undergrad at UCLA. The first with a small struggling pillow, cushion, and quilt manufacturer barely hanging on in the face, even then, of California's over regulated business environment, high costs, cheap imports, and a relentless unionization drive by the then International Lady Garments Workers Union (ILGWU). I got hired initially to work in the warehouse loading and unloading trucks, and then, when my boss discovered that I spoke fluent Spanish, to serve as a translator between management and the firm's mostly Mexican and Central American employees. The company faced constant efforts by ILGWU to unionize the workforce. The main ILGWU organizer was a self-confessed "former" member of the Communist Party of the USA, a charming, very smart, Spanish-speaking Jewish New Yorker who had worked for years in Chile prior to Allende's overthrow. He would hang around outside the parking lot, talking to the workers as they came and left. Two company guards made sure he did not enter company premises. The ILGWU eventually got a ruling from the courts or the Labor Department that allowed him access to the parking lot where he talked to the employees during lunch and other breaks. In my 18 or so months there, we saw some fist fights and shoving matches; lots of colorful descriptions of various mothers' moral character and employment; vandalizing of cars and trucks; pro- and anti-union threatening phone calls; and the regular presence of cops and immigration agents. The situation grew increasingly tense.

One day representatives from the Department of Labor showed up to supervise a vote on whether to unionize the plant. Management told us that because of the flood of cheap imports it could not pay the wages the union demanded; if the vote went union, the factory would go dark. The ILGWU man said management sought to scare us, and to pay no heed. The vote, as expected, went overwhelmingly pro-union; only two votes cast (one of them mine) against unionizing. Two or three months later, the plant closed, and moved to Mexico--probably employing relatives of the workers who had voted to go with the union. The day management announced to us that the plant would close, the union rep showed up, blamed management and said the ILGWU would fight for us. Never heard from the union again.

Out of work, I found another job with Disneyland working the night shift from 11 pm to 7:30 am. The work was on the grim side: lots of crawling around in the dark, cleaning and fixing things, dealing with a highly anti-semitic American Indian foreman (yes, indeed), and once falling into the water while trying to scrub some green crud off a mechanical elephant in the jungle ride. Disneyland, at least then, had the ultimate in corrupt arrangements with the Teamsters Union which represented the workforce at "The Happiest Place on Earth." Disney would hire a number of college students at sub-union wages, in exchange, we got no union benefits, but STILL HAD TO PAY union dues. Talk about adding insult to injury. With the union dues, and deductions for Social Security, and state and federal income taxes, my check could barely cover my rent and gasoline. I ate a lot of Hostess Cupcakes for lunch and dinner . . . do I know how to segue or what?

Hostess Brands announced on November 16 that because it could not reach a deal with one of its unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), the company will close,
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Gregory F. Rayburn, chief executive officer. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.” 
In addition to dozens of baking and distribution facilities around the country, Hostess Brands will sell its popular brands, including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Ho’s®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Nature’s Pride ®, Merita®, Home Pride®, Butternut®, and Beefsteak®, among others. 
The wind down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.
This, of course, is a disaster for thousands of workers, executives, and investors, and for many communities. It goes back to a theme I have laid out before about the increasing economic illiteracy in the country, and the fact that so many prominent people are far removed from the real economy. To highlight that we only need to read the statement by AFL-CIO President Richard Trumka who blamed the closing on,
“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.”
Trumka, in effect, blames Mitt Romney for Hostess closing down. He ignores, of course, that the company had been in trouble for a couple of years and that venture capitalists, similar to Bain, had taken a chance and invested in it, and kept it running for those two years. Trumka, of course, will continue to draw his roughly $280,000/year salary

The BCTGM also made a statement,
“Our members decided they were not going to take any more abuse from a company they have given so much to for so many years. They decided that they were not going to agree to another round of outrageous wage and benefit cuts and give up their pension only to see yet another management team fail and Wall Street vulture capitalists and 'restructuring specialists' walk away with untold millions of dollars. 
“Throughout this long and difficult process, BCTGM members showed tremendous courage, solidarity and devotion to principle. They were well aware of the potential consequences of their actions but stood strong for dignity, justice and respect.”
Trumka's rant and the BCTGM statement brought back memories of the words I heard years ago from the ILGWU man in that California parking lot. A lot of empty blather that won't pay the rent. I hope that the members enjoy their "dignity, justice, and respect" and, of course, the benefits that the taxpayers will now have to pay them.

We are seeing the consequences of the Obama war on "the rich" and the turning over of the economy to the zombies bound and determined to ruin it. We are hearing, in effect, the new Twinkies defense.

Zombies and Twinkies: the epitaph of America.

18 comments:

  1. If Twinkies were indeed a staple of the downtrodden, at least these new downtrodden won't have them for comfort.

    ReplyDelete
  2. Hope you're enjoying the UCLA/USC game!

    There are some real ironies in this whole thing. First, as Althouse pointed out earlier, this is just another example of a parasite killing off its host(ess). Good one. And true. . .

    Second is that the venture capitalist (Gregory Rayburn) is a big Democrat funder.

    Third is, the union officials who kept egging the workers on will not lose their job -- they'll keep getting paid while the bakery workers (and worse yet, the delivery drivers, many of whom are independent contractors) will be on the street.

    This is a sad development all around, except for he union goons. And on top of the workers who were already having their hours cut back as a response to Obamacare, these 18,500 will now be more unproductive Americans on the dole. Sad.

    Looking forward to your thoughts on developments in the ME.

    ReplyDelete
    Replies
    1. "Looking forward to your thoughts on developments in the ME"

      Alas, not from Diplomad and while it's not the most current (paywall) maybe it'll suffice just on one facet. I can handle the military/armaments side of things - but I was never F/S strictly speaking.

      http://www.stratfor.com/analysis/irans-agenda-gaza-offensive

      Arkie

      Delete
  3. Brings to mind an acquaintance who owned a wall bed manufacturing factory in Vernon, CA, over 60 years ago. One Friday after work his employees fell for the union's siren song and voted to "organize". Somehow word got out and the plant was shuttered tightly (and permanently) Saturday and the owner left town for a place with no means of contact on Sunday. The property was sold for leveling as a parking lot to another manufacturer by midweek, and the 150 plus former employees given a lawyer's phone number for final settlement purposes. Which were pretty sparse. And again, the union organizers lost nothing

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  4. While the idea of a businessman standing up to union organizers by closing the business has a certain vindictive attraction, in the macro sense it spells disaster for free market capitalism and the wealth such a system bestows on our nation. When I hear liberals talk of "fairness" and "justice," I know they're talking of our destruction and I wince. I preached the attractiveness of free markets over and over in Africa and South America; now I shake my head in dismay when I see my own government aping the self-same destructive policies I was speaking out against on behalf of the USG.

    ReplyDelete
  5. I, to, worked at Disneyland between high school and ASU c. early 60s. I was shocked when I had to join the Teamsters for a summer job. I worked the parking lot. Our supervisor was also a union boss and word started around that he was taking money from the gate drawers. He would come around to relieve the gals working the parking lot gates instead of bringing in another employee like normally done. Some of the girls started complaining that they were getting their pay docked for having a short drawer. Or, he would offer to take your cash back for counting. Again, that wasn't normal procedure. I wouldn't let him take my drawer. Told him that I signed in for it and I would sign out for it. So, he took me off the gate and back on the tarmac. My aunt and uncle both worked there and a couple years later, they told me the super was arrested for embezzlement and sentenced to a few years in jail. Made my day. I see no good reason for any company to unionize. They aren't about the employees!

    ReplyDelete
  6. The really ironic part of all this is how the Baker's Union absolutely screwed the Hostess Brands Teamster's drivers. The Teamsters, knowing a job is better than no job, agreed to take the 8% cut in pay (think about that, if you're making $20/hr, it means a $1.60 cut) to keep the St. Louis, Cincinnatti and Seattle plants open. When the company closed those plants, 170 Teamsters lost their jobs. Permanently.

    But let's not forget that those members of the Baker's union were encouraged to strike by their union management, including the president of the union who still has his job that pays a tony $224,000/year. The Baker's union has 27 management jobs (president, secretary, etc) that pays over $150/K a year. Not to mention the $1,474,204.00 the union contributed to the Democrats.

    The reality is that unions demand better pay, and benefits, when a company is rolling with good times, but they are not willing to suffer the pain when bad times come, and bad times come as sure as the sun goes down in the west. All businesses have cycles, good and bad, and all we hear is what sacrifices the workers have suffered. Well now, there are 18,500 more sufferers than there was last Monday.

    I remember one contract with the CWA against Southwestern Bell that didn't work out too well (after being married to a SBC employee for decades). The union would not give, wanted more in benefits, more in pay, and the company told them to pound sand and to strike. So strike the CWA did. Only the members learned that there was no strike fund because the union has spent so much on contributing to the Democrats the previous election cycle and they were just sh!t outta luck. A month later, the union agreed to a four year contract that was worse than what the company originally offered, and they gained a small 5% increase in pay over four years, and a loss of benefits. And then what happened? In the right to work state where SWB was located, workers dropped out of the union like dying flies.

    Zane

    ReplyDelete
  7. Years ago, a performing arts company of young people in the SF Bay Area, that had musicians, singers, and dancers, wrestled with the local musicians union to no end. The members, aged 14 to 18, were never paid for performances and the group was non-profit.

    Anytime there was a performance within the city of San Francisco, the company (always struggling for funds) had to pay musicians from Local #6 just to sit there. This practice went on for several years, with the company coughing up money for an entire group of union musicians.

    Soon, even that wasn't enough for Local #6. The company was banned from playing anywhere in SF for any reason. This despite the fact that the group often represented the USA outside the country, if not the city of San Francisco. They could have their photo taken with the mayor or be described as "San Francisco based", but they couldn't play in their own city.

    When Bob Hope (who they sometimes performed with for charity events) offered to do a benefit to raise money for them, the show had to be in Oakland. Various political figures came, including Reagan (then governor), but everyone was powerless against the formidable Local #6.


    ReplyDelete
  8. My father was the last union contractor (construction) in his trade in this town. His father was a founding member of the bricklayers local here and his father in law was a founder of the ironworkers local here. After leaving the union (he was sargeant at arms) he started his own succesful company and ran it for 30 years. He was a negotiator on both sides of the table. I worked for him and at one time observed negotiations. Everything posted above is familiar and rings true. In the 50s unions here had about 60% of residential and 100% of commercial and institutional work. Their efforts since then have reduced that to 0% residential and 10% commercial and institutional. So successful they have been that several locals have gone bankrupt and merged with larger regional or national organizations. The stories I could tell.

    ReplyDelete
  9. For an interesting look at the hostess liquidation and the prominent role played by the teamsters and democratic private equity players here's a zero hedge article:

    http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles

    ReplyDelete
  10. Thanks Diplomad, now I'm going to have nightmares of zombie Twinkies shuffling through the Financial District murmuring, "Bains, Bains, give me more Bains".
    Whenever I read statements like Union boss Trumkas', I can only think, good grief, if irony were fatal the world would be a better place.

    ReplyDelete
  11. "the new Twinkies defense"

    Yes, it's Romney's fault. Where is Bush now; has Romney superceded him for the blame paint brush?

    FoxNews went into some of the problems with the company, and part of it was the inredibly difficult and complex delivery routes. Hostess delivery trucks "could not" deliver Wonder products and Wonder delivery trucks "could not" delivery any Hostess products, making for a crazy, unworkable and inefficient delivery system.

    How these things are not fought by more people who WORK within this system is incredulous; this is their lives, their jobs, their futures.

    But the facts are there. My better half, working for railroads during college summers, saw the railroads broken because of union demands, unions have crippled our auto industry, destroyed Southern Airlines, PanAm and so many others who escape me now because I'm upset about the Hostess absurdity.

    I'm sure my helpers here can enlighten us. What other companies have been destroyed because of the unions?

    To add insult to injury, during the GM "bailout", Obama lets the union have parts of the company and the share holders are left with an empty bag. Were not parts of that debacle against the laws of our nation?

    SandraC

    ReplyDelete
  12. Decades ago, I was involved with some negotiations with the BCT.

    The company had record exports, and the production workers were getting over $100,000 with overtime. (And this was decades ago.)

    At the start of negotiations, the BCT leader announced that his members had changed their lifestyle to match their new incomes, and could no longer survive on less than $100,000 base.

    At the time, there were over 12,000 union workers.
    As the US plants were no longer cost-effective, the company moved export production overseas and exports stopped.

    There are fewer than 2,000 union positions in that company today.

    ReplyDelete
  13. Just asking but, if the union inbvolved in the Hostess mess was so inclined - couldn't it (I suppose it's "allowed" under statute?) just buy the brand name and then take over operating the business?

    Now before anyone points out to me, "that's ludicrous" I admit to've asked some pretty stupid questions before. I'm single nowadays and forever more - but that wasn't always the case.

    Arkie

    ReplyDelete
    Replies
    1. Don't see why not if they have the cash. Unions, however, as a rule do not want to run companies as that will force them to make management decisions they want to avoid, e.g., lay-offs, firings, etc.

      Delete
  14. You were an undergrad at UCLA? We might well have been there at about the same time. (Graduated 1981, on the five-year plan.)

    ReplyDelete
  15. Id just point out the CEO was #7. He tripled his pay to 2.5 Million Dollars a year, after hiring a bankruptcy team. You all seem to want to whine and bitch about the Unions and AFL/CIO.. But tell me how in the world you can justify this CEOs pay increase during a Bankruptcy?

    You cannot! So don`t blame the Union. The Union Won! They made certain these CEO goons could not continue to profit off their labor at such an insane rate. Close it Down! Damned right!

    And further, The Military is totally SOCIALIST! The Author is living off a retirement provided by THE AMERICAN TAX PAYERS! Smoke that old fuckers!

    ReplyDelete
    Replies
    1. timmay!

      Our Host is retired from the Foreign Service, not the Military Service.

      Delete