Unions Killed the Twinkie

[Conan71]

I think you make the point well Conan. They got outmanaged in a difficult business environment. No matter how low and simple their labor costs could be cut they aren't going to be able to compete with a more recent start up that doesn't have the same model. To blame labor as the reason for their failure as Gas did is just scapegoating.

Labor costs incurred in previous environments (pensions) that were necessary at that time, became a weight they couldn't bear.  But they don't operate in a vacuum. Other companies, GM for instance, also have those heavy weights and have adapted.  Some grocers faced this and simply sold their business or closed it down and reopened with new management, resigned old employees (thus eliminating higher labor costs) or found other ways to streamline. Some even paid off others to assume their previous obligations.

This is like payback for past sins. Keep in mind why many companies like McKee (whose Little Debbies are simply awful) are not unionized. They are well managed enough that a union has little reason to get any traction. That means respect for employees, competitive wages and fair treatment.  Or they operate in a state, like OK, that make it difficult to do so.

GM didn't adapt, they bankrupted, got government loans, shafted the shareholders and vendors, and let go of a lot of union jobs.  Ford is a great example of "adaptation" not GM or Chrysler.  I do believe in the process that GM did shed a lot of that pension liability, though I may be slightly off on that singular point.

How well a company is managed has very little bearing on whether or not a company can be unionized or whether or not a union can gain traction.  A company can simply keep a union out even if they pay slave wages.  The company I used to work for had a rather large maintenance contract with the McKee plant over in Gentry, Arkansas.  I'm not particularly aware that the wages were anything spectacular for line workers.  The work is rather monotonous and is largely un-skilled.  

They do get every Saturday off though since the McKees are Seventh Day Adventists.

In my industry, it used to be heavily unionized.  Now manufacturers have gotten more savvy and are moving jobs from heavily unionized states like Wisconsin or Pennsylvania to states like North Carolina, Georgia, or Tennessee where they can have all the non-union labor they want.  The one company which has posted the largest gains in market share has done so by bringing in loads of guest workers from Costa Rica to their facility in Georgia.  I've been told there's a trailer park located conveniently down the road where the employees are welcome to get a place at a decent rent.  The company also buys steel by the train load when prices are lowest.  You can pay a Costa Rican $12 an hour, share rent on a $500 a month trailer and he's living high on the hog compared to the employment picture back home.  You can also sell a product at 10% to 15% less than your competitors still located in the north and be very profitable.

Seeing that many companies are simply setting up shop in China would tend to prove that transportation costs are not their major cost-center problem considering they must now ship goods 6500 miles back to Long Beach and then transport them from there unless they go through the canal up to a Gulf port or to the east coast.  They get cheap labor and much fewer environmental and labor regs.

[guido911]

More whiny b!tching stuff from unions.

[AquaMan]

GM didn't adapt, they bankrupted, got government loans, shafted the shareholders and vendors, and let go of a lot of union jobs.  Ford is a great example of "adaptation" not GM or Chrysler.  I do believe in the process that GM did shed a lot of that pension liability, though I may be slightly off on that singular point.

How well a company is managed has very little bearing on whether or not a company can be unionized or whether or not a union can gain traction.  A company can simply keep a union out even if they pay slave wages.  The company I used to work for had a rather large maintenance contract with the McKee plant over in Gentry, Arkansas.  I'm not particularly aware that the wages were anything spectacular for line workers.  The work is rather monotonous and is largely un-skilled.  

They do get every Saturday off though since the McKees are Seventh Day Adventists.

In my industry, it used to be heavily unionized.  Now manufacturers have gotten more savvy and are moving jobs from heavily unionized states like Wisconsin or Pennsylvania to states like North Carolina, Georgia, or Tennessee where they can have all the non-union labor they want.  The one company which has posted the largest gains in market share has done so by bringing in loads of guest workers from Costa Rica to their facility in Georgia.  I've been told there's a trailer park located conveniently down the road where the employees are welcome to get a place at a decent rent.  The company also buys steel by the train load when prices are lowest.  You can pay a Costa Rican $12 an hour, share rent on a $500 a month trailer and he's living high on the hog compared to the employment picture back home.  You can also sell a product at 10% to 15% less than your competitors still located in the north and be very profitable.

Seeing that many companies are simply setting up shop in China would tend to prove that transportation costs are not their major cost-center problem considering they must now ship goods 6500 miles back to Long Beach and then transport them from there unless they go through the canal up to a Gulf port or to the east coast.  They get cheap labor and much fewer environmental and labor regs.

You just described adaptation by GM. The details are always different, the players change, but the process is mandatory.

As far as how and why unions form and prosper, we'll never agree. Is Arkansas a right to work state? If so that explains a lot. Nonetheless, unions aren't just about wages. You simply have no power to go up against a large employer on any issue without representation. You rely on their grace, integrity and goodwill. That vacillates wildly. For example my current employer tried to waffle out on promised salary increases after a probation period. They changed the details. Insisted we had misunderstood the rules. A savvy fellow employee checked with our (weak) union who directed him to the paragraph in our contract that spelled it out in detail. Turns out many employees had been underpaid for months. Apologies all around and checks were cut. They had no interest in answering employee complaints until that contract was consulted.

What's happening in your industry is gruesome. Is that what it takes to be a viable company in that industry? If cheap labor, fewer labor and environmental regs are what it takes to survive then we are headed to third world status. 

[Teatownclown]

for Aman....agree with your posts. 

Just more of that "it's the Union's fault" bs. Have you ever noticed what the German union worker gets?

Not a mention here of how much the owners and upper management scarfed up for their own benefit along the way. We should know what types of benefits they received far beyond their base salary's. I bet they gave clients huge amounts of twinkies gifts, trips, money, and discounts. They probably get new jobs running other baker manufacturing down the tubes.

Did some private equity group have anything to do with this along the way?

[heironymouspasparagus]

They might have been able to make a case about expenses and unions and all the other pure crap they are spewing if they hadn't done exactly this same thing back in 2004.  This is their business model.  Go bankrupt every 7 years and blame unions.

But then if they didn't blame the unions, they would have to accept responsibility for raping the company and leaving it to die.

[Conan71]

You just described adaptation by GM. The details are always different, the players change, but the process is mandatory.

As far as how and why unions form and prosper, we'll never agree. Is Arkansas a right to work state? If so that explains a lot. Nonetheless, unions aren't just about wages. You simply have no power to go up against a large employer on any issue without representation. You rely on their grace, integrity and goodwill. That vacillates wildly. For example my current employer tried to waffle out on promised salary increases after a probation period. They changed the details. Insisted we had misunderstood the rules. A savvy fellow employee checked with our (weak) union who directed him to the paragraph in our contract that spelled it out in detail. Turns out many employees had been underpaid for months. Apologies all around and checks were cut. They had no interest in answering employee complaints until that contract was consulted.

What's happening in your industry is gruesome. Is that what it takes to be a viable company in that industry? If cheap labor, fewer labor and environmental regs are what it takes to survive then we are headed to third world status.  

It's either the union's fault for wanting higher wages and costlier benefits in addition to costly environmental and safety regs (which can be a good thing) which necessarily raises the cost to produce goods in tandem with rising fuel, transportation, and raw material costs, or it's tightass industrial and consumer type customers who demand less expensive products.  Union labor is simply one added cost.

That's a debate which can rage ad infinitum.  Chicken v. egg.

When customers want less expensive products, either you can figure out a way to do that by finding cheaper labor, less costly manufacturing regs, lower raw material costs, or lower fuel.  Or simply let your foreign competition over-run you when your government has sold out it's own work force via a myriad of "free-trade" agreements.   I really think we should tariff the smile out of goods coming from predatory manufacturing environments like China and India.

[Conan71]

They might have been able to make a case about expenses and unions and all the other pure crap they are spewing if they hadn't done exactly this same thing back in 2004.  This is their business model.  Go bankrupt every 7 years and blame unions.

But then if they didn't blame the unions, they would have to accept responsibility for raping the company and leaving it to die.

You really need to read up on the corporate history of Interstate Brands/Hostess before making inane claims like that.

[Townsend]

So we're sure it's not a major crash of the twinky market?

Does anyone buy twinkies or strawberry quick anymore?

[Conan71]

So we're sure it's not a major crash of the twinky market?

Does anyone buy twinkies or strawberry quick anymore?

Oh hell no.

[swake]

Oh hell no.

You killed the twinkie!

Seriously though, the company is dying because it's products are from another era, are no longer desired and the company failed to change. You might as well be talking about Kodak or Sears. It's not unions.

[Townsend]

Last time I've seen anything about them.

[heironymouspasparagus]

You really need to read up on the corporate history of Interstate Brands/Hostess before making inane claims like that.

Oh, yeah, I forgot the lousy management that had no clue how to respond to market forces.
Of course, having a computer leasing company as boss could certainly help in ways we can only begin to imagine...wait, what?

Can you spell "givebacks"?  Like when they cashed in the pension program to pay for bad decisions.

But then it still all comes down to white bread.  And the fact that their management just didn't understand the shift to whole wheat.  Now they are trying to get you to believe that somehow refined white flour in Wonder Bread (only wonder is to wonder where the food value is) is the same as whole wheat.  And we see how that is working for them.  From number 1 to number 4.


And here is a cute little fluff piece that is mildly interesting.  I thought it was interesting how with the advent of white bread, one of the consequences of removing all nutrition from the flour was the increase in certain nutrition related diseases, so they did start to "enrich" the stuff with vitamin additives to fight the incidence of beriberi and pellagra.  Yes, I realize the Wonder by itself may not have been the only cause - there was "refinement" happening across the board to the food supply.

http://en.wikipedia.org/wiki/Wonder_Bread

[Townsend]

Tulsa Hostess Workers Join Nationwide Strike

http://www.newson6.com/story/20075806/tulsa-hostess-workers-join-nationwide-strike

TULSA, Oklahoma - Tulsa workers are joining thousands of other Hostess employees across the nation in a strike this evening.
Their union represents more than 6,000 employees around the country.

Last week, they rejected a proposed contract by 92 percent that they say would mean pay and benefit cuts.

Hostess says if they don't come to an agreement soon, they'll lay off most of its 18,000 employees and shut down the company.

[Hoss]

Tulsa Hostess Workers Join Nationwide Strike

http://www.newson6.com/story/20075806/tulsa-hostess-workers-join-nationwide-strike

Saw them out front of the Wonder Bread factory on 11th on my way in this morning.  Was going to ask but don't need to now.  Signs essentially say "Say NO to pay cuts".  Appeared to be about thirty people.

[heironymouspasparagus]

Expensive labor. . .bad.  Inexpensive cash flow. . .good.

Variation on the theme....

To Progressives, low wages are the problem...to Murdochians, low wages are the solution.  (See "expensive labor" above.)