The Stand

Blame failed Bain-style management at Hostess

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UPDATE (Nov. 16) — Also at AFL-CIO Now — Trumka: Bain-style tactics by Hostess are ‘wrecking America’ — AFL-CIO President Richard Trumka:

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.


The following statement by Frank Hurt, International President of the Bakery, Confectionery, Tobacco Workers and Grain Millers, was distributed Thursday, Nov. 15 in response to Hostess management’s announcement that it would begin liquidation should union members not end the strike and return immediately to production facilities.

(The company later announced it will proceed with liquidation. In the photo above, Hostess workers remain outside with other striking workers at the Hostess bakery in South Peoria as the 4 p.m. deadline to go back to work passes Thursday.)


(Nov. 15) — The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share. The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company’s most valuable asset — its workers.

They sought to force the workers, who had already taken significant wage and benefit cuts, to absorb even greater cuts including the loss of their pension contributions. I have said consistently throughout this process that the BCTGM is a highly democratic organization and that our Hostess members themselves would determine their future. By an overwhelming majority, 92 percent,
these workers rejected the company’s outrageous proposal, fully aware of the potential consequences.

Our members know that the plans all along of the Wall Street investors currently in control of this company did not include the operation of Hostess Brands any longer than it takes to sell the company in whole — or in part — in a way that will maximize the profits of these vulture capitalists regardless of the impact on the workforce.

The wholesale bread and cake baking business is unique. The most successful and profitable wholesale baking companies share common attributes, most notably being executive leadership with extensive background in the business and a skilled and dedicated workforce. Hostess Brands and its predecessor companies have had the latter for decades.

Unfortunately however, for the past eight years management of the company has been in the hands of Wall Street investors, “restructuring experts,” third‐tier managers from other non‐baking food companies and currently a “liquidation specialist.” Six CEO’s in eight years, none of whom with any bread and cake baking industry experience, was the prescription for failure.

Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and their Union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers.

I am sure that our members would be agreeable to return to work as soon as the company rescinds the implementation of the horrendous wage and benefit reductions, including pension, and the restoration of the cuts that have already taken place.

BACKGROUND

A total of 24 Hostess production facilities are on strike or honoring the strike with picket lines established by striking Hostess workers at other BCTGM‐represented facilities. Additionally, BCTGM members at one transport facility also are on strike. Company claims that union members are crossing picket lines and maintaining production at striking plants are vastly untrue.

Over the past 15 months, Hostess workers have seen the company unilaterally end contractually obligated payments to their pension plan. These workers, many of whom have worked at Hostess and its predecessor companies for decades, struck in response to the company’s unilateral imposition of an unacceptable contract that was rejected by 92 percent of the union’s Hostess members in September.

While the company was demanding major concessions from union workers (wage and benefit cuts amounting to 27‐ 32% overall), the top ten executives of the company rewarded themselves with compensation increases, with one executive receiving a 300 percent increase.

The BCTGM represents more than 80,000 workers in the baking, food processing, grain milling and tobacco industries in the United States and Canada. For more information, visit www.bctgm.org.

Short URL: http://www.thestand.org/?p=18732

Posted by on Nov 16 2012. Filed under NATIONAL. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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