No more Twinkies - Hostess out of business

[GenuineRisk]

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:

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.

http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

[GenuineRisk]

This is from a balloon-juice post about the auto industry in 2008, but it applies here, too, other than I don't think Mitt has weighed in on the fate of Twinkies, probably because he doesn't eat junk food:

THE TRAGEDY OF THE AMERICAN AUTOMOBILE INDUSTRY:A Play in Three Acts
Dramatis Personae
BIG THREE, a manufacturer of automobiles
UAW, Big Three’s employee
MITT ROMNEY, an idiot

ACT ONE
BIG THREE: I have plans to build automobiles, but I need labor to do so!

UAW: I will labor for you if you will pay me $40 per hour.

BIG THREE: I will not pay you $40 per hour.

UAW: But I need to save for my inevitible retirement, and any health concerns that may arise.

BIG THREE: I will pay you $30 per hour, plus a generous pension of guaranteed payments and health care upon your retirement.

UAW: Then I agree to work for you!

ACT TWO
UAW: I am building cars for you, as I have promised to do!

BIG THREE: I am designing terrible cars that few people want to buy! Also, rather than save for UAW’s inevitible retirement when I will have to pay him the generous pension of guaranteed payments and health care that I promised, I am spending that money under the dubious assumption that my future revenues will be sufficient to meet those obligations.

ACT THREE
UAW: I have fulfilled my end of the deal by building the automobiles that you have asked me to build.

BIG THREE: Oh no! I am undone! My automobiles are no longer competitive due to my years of poor planning and poor judgment!

MITT ROMNEY: This is all UAW’s fault!

[bigrun]

Originally Posted by GenuineRisk

This is from a balloon-juice post about the auto industry in 2008, but it applies here, too, other than I don't think Mitt has weighed in on the fate of Twinkies, probably because he doesn't eat junk food:

THE TRAGEDY OF THE AMERICAN AUTOMOBILE INDUSTRY:A Play in Three Acts
Dramatis Personae
BIG THREE, a manufacturer of automobiles
UAW, Big Three’s employee
MITT ROMNEY, an idiot

ACT ONE
BIG THREE: I have plans to build automobiles, but I need labor to do so!

UAW: I will labor for you if you will pay me $40 per hour.

BIG THREE: I will not pay you $40 per hour.

UAW: But I need to save for my inevitible retirement, and any health concerns that may arise.

BIG THREE: I will pay you $30 per hour, plus a generous pension of guaranteed payments and health care upon your retirement.

UAW: Then I agree to work for you!

ACT TWO
UAW: I am building cars for you, as I have promised to do!

BIG THREE: I am designing terrible cars that few people want to buy! Also, rather than save for UAW’s inevitible retirement when I will have to pay him the generous pension of guaranteed payments and health care that I promised, I am spending that money under the dubious assumption that my future revenues will be sufficient to meet those obligations.

ACT THREE
UAW: I have fulfilled my end of the deal by building the automobiles that you have asked me to build.

BIG THREE: Oh no! I am undone! My automobiles are no longer competitive due to my years of poor planning and poor judgment!

MITT ROMNEY: This is all UAW’s fault!

Poor Mitt...the 47% whacked him...at least he has a nice retirement package..

[jms62]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

I am just shocked

[bigrun]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

Nice farewell package for the top boys...Did all the employees get a 'mustering out' package... Yeah, they told them to bend over..

[Cannon Shell]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

Actually the failure of business is rarely blamed on greedy unions as most businesses dont employ union workers. But so often those that do are led into bankruptcy by union leaders which choose to hold a hardline even if it means that the actual union members are going to wind up in worse shape.

A good example is when the Meadowlands deal was being negotiated the union which the tellers were members of was hell bent on maintaining the status quo. Under the NJSEA labor costs were causing much of the losses due to the fact that as attendance waned and the use of modern technology (self betting machines) the necessity of the tellers was hugely diminished. Yet because the NJSEA consistently caved in to unions, a large number of overpaid, unnecessary tellers were on the books. There were some days where there were more tellers working than simulcast patrons. When Gural came in to try to buy the Meadowlands and more or less save the track (and the union jobs by proxy) they refused to budge even a little. Eventually the union had to circumvent its own rules and cede power away from its negotiating committee and membership to an executive board to prevent the entire racetrack deal from falling apart. What it came down to there was the tellers union had to be willing to accept a deal where 75% of its membership stayed employed at 80% of their salaries because the alternative was 100% of their membership was going to get 0 percent.

When a small group of mostly unnecessary employees can undermine a project that employs and impacts thousands of people you often see the true colors of union leaders. Often the membership isnt to blame as they are just normal people trying to make a living. But the political nature and take no prisoners attitude of the heads of these unions and their unwillingness to actually try to compromise in order to make the best of a bad situation can not be overstated.

[jms62]

Originally Posted by Cannon Shell

Actually the failure of business is rarely blamed on greedy unions as most businesses dont employ union workers. But so often those that do are led into bankruptcy by union leaders which choose to hold a hardline even if it means that the actual union members are going to wind up in worse shape.

A good example is when the Meadowlands deal was being negotiated the union which the tellers were members of was hell bent on maintaining the status quo. Under the NJSEA labor costs were causing much of the losses due to the fact that as attendance waned and the use of modern technology (self betting machines) the necessity of the tellers was hugely diminished. Yet because the NJSEA consistently caved in to unions, a large number of overpaid, unnecessary tellers were on the books. There were some days where there were more tellers working than simulcast patrons. When Gural came in to try to buy the Meadowlands and more or less save the track (and the union jobs by proxy) they refused to budge even a little. Eventually the union had to circumvent its own rules and cede power away from its negotiating committee and membership to an executive board to prevent the entire racetrack deal from falling apart. What it came down to there was the tellers union had to be willing to accept a deal where 75% of its membership stayed employed at 80% of their salaries because the alternative was 100% of their membership was going to get 0 percent.

When a small group of mostly unnecessary employees can undermine a project that employs and impacts thousands of people you often see the true colors of union leaders. Often the membership isnt to blame as they are just normal people trying to make a living. But the political nature and take no prisoners attitude of the heads of these unions and their unwillingness to actually try to compromise in order to make the best of a bad situation can not be overstated.

Well stated

[Rupert Pupkin]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

I don't condone the behavior of either side in most of these cases. CEOs should not be making huge amounts of money when their company is doing lousy. By the same token, union workers should not expect to be getting raises and having huge pensions when their company is losing money.

I have done some work for a hedge fund for about 14 years. When things are going well, they have been generous to me. A few years back they were doing very well and they gave me a nice pay raise. But after about a year things went south and they told me that they could no longer afford to pay me the higher wage. They said they would have to go back to paying me what they were paying me before I got the raise. I didn't complain in the least bit. I totally understood the situation. The company was really struggling and they could no longer afford to pay me the higher wage. I had no problem with that.

I don't understand why people complain in those types of situations. When things are bad, everyone should have to bite the bullet.

[GenuineRisk]

Originally Posted by Rupert Pupkin

I don't condone the behavior of either side in most of these cases. CEOs should not be making huge amounts of money when their company is doing lousy. By the same token, union workers should not expect to be getting raises and having huge pensions when their company is losing money.

I have done some work for a hedge fund for about 14 years. When things are going well, they have been generous to me. A few years back they were doing very well and they gave me a nice pay raise. But after about a year things went south and they told me that they could no longer afford to pay me the higher wage. They said they would have to go back to paying me what they were paying me before I got the raise. I didn't complain in the least bit. I totally understood the situation. The company was really struggling and they could no longer afford to pay me the higher wage. I had no problem with that.

I don't understand why people complain in those types of situations. When things are bad, everyone should have to bite the bullet.

Rupert, it's not an equivalent situation. I'm assuming you were working without a contract, or that, in the event you were, the raise was not something promised in your contract; it was an extra goodie they gave you. I'm also assuming the heads of the company didn't give themselves a raise at the same time as they returned your salary to where it was a year previous (I don't know if you receive benefits from them, if so, I am also assuming they didn't cut those benefits. If I am incorrect, please correct me, and I apologize for incorrect assumptions). Compare with this from an actual Hostess employee:

I am a Hostess employee. Hostess stopped our pension contributions a yr & a half ago. Then they gave the top execs pay raises of 30-80%. They offered new contracts: no pension payments (no retirement plan at all for union employees, but company management still gets contributions to their retirement plans) for another 2 & 1/2 yrs, and then a 75% reduction in pension when they do start paying into it again; we have to pay an ADDITIONAL $200/ mo for health insurance; They took away our last cost of living raise; they gave us an 8% wage cut on top of that; they are outsourcing all of the office work to Manilla; they are closing 12 plants. THIS WAS ALL PART OF THE CONTRACT THAT WENT INTO EFFECT LAST MONTH!!

So, it wasn't a case of overpaid employees refusing to take a hit; it was a case of rank-and-file employees finally saying "Enough" after years of having their contracted compensation taken away and taken away by execs who continued to give themselves raises and compensation.

http://blogs.wsj.com/corporate-intel.../tab/comments/

Fact is, union members have taken cuts and done givebacks in many, many industries, and in return, the CEOs continue to give themselves rewards, and then complain that these very middle-class contracts cost too much money. Contracts that they agreed to years before, and now are unwilling to honor. And yet, somehow the companies can afford numerous six- and seven-figure CEO salaries.

There are several accounts at that link from Hostess employees. Well worth the read, to get an idea of what they've been going through the past several years.

[Rupert Pupkin]

Originally Posted by GenuineRisk

Rupert, it's not an equivalent situation. I'm assuming you were working without a contract, or that, in the event you were, the raise was not something promised in your contract; it was an extra goodie they gave you. I'm also assuming the heads of the company didn't give themselves a raise at the same time as they returned your salary to where it was a year previous (I don't know if you receive benefits from them, if so, I am also assuming they didn't cut those benefits. If I am incorrect, please correct me, and I apologize for incorrect assumptions). Compare with this from an actual Hostess employee:



So, it wasn't a case of overpaid employees refusing to take a hit; it was a case of rank-and-file employees finally saying "Enough" after years of having their contracted compensation taken away and taken away by execs who continued to give themselves raises and compensation.

http://blogs.wsj.com/corporate-intel.../tab/comments/

Fact is, union members have taken cuts and done givebacks in many, many industries, and in return, the CEOs continue to give themselves rewards, and then complain that these very middle-class contracts cost too much money. Contracts that they agreed to years before, and now are unwilling to honor. And yet, somehow the companies can afford numerous six- and seven-figure CEO salaries.

There are several accounts at that link from Hostess employees. Well worth the read, to get an idea of what they've been going through the past several years.

You are correct. I was working with no contract.

I agree with you that CEOs should not be getting pay raises when employees are getting pay cuts.