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  • Morning Bell: Can Hostess Save the Twinkies from the Union?

    Taking down the Twinkie. Clogging Wal-Mart parking lots on Black Friday. Messing with a major airport on the day before Thanksgiving.

    If unions are trying to be more popular with the American people, they’re doing it wrong.

    Americans have gone crazy over the possible loss of Twinkies, Ho Ho’s, Ding Dongs, and Hostess CupCakes after the company said it was shutting down because its bakers’ union opted to walk off the job for a strike. People are already asking exorbitant prices on eBay for boxes of the packaged treats.

    Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) have agreed to enter mediation with a bankruptcy judge, who said there are “serious questions as to the logic behind the decision to strike.” More than 18,000 jobs are at stake.

    A Washington Post blogger says that “The AFL-CIO plans to try to turn this into a ‘teachable moment’ and a ‘national discussion.’” Union membership has been declining in the private sector, and the groups are desperate to reverse that trend. But shutting down one of America’s beloved brands certainly isn’t going to win lots of friends.

    Obviously, poor management helped get Hostess to this point, and contested payouts for managers are causing controversy. Megan McArdle explains that paying incentives to managers to stay on during a rough bankruptcy transition isn’t unusual—it’s hard to convince people to stay and steer a sinking ship. Unfortunately, sometimes that means senior leaders could try to take advantage of this situation to get more money for themselves on the way down.

    But McArdle reports that the current management “opened the books to the unions, paid senior management virtually nothing, and tried to cut deals that would save the company and salvage something of the grossly underfunded multi-employer pension plans of which they were a part.” The new managers did everything unions typically ask for in such situations.

    It was enough to satisfy the Teamsters, who also represent employees involved in distributing the products. They came to a deal with the company to continue work.

    Yet the bakers walked out. Their union didn’t file any objections to the bankruptcy plan when the judge proposed it in August. Instead, the union’s leaders called for a strike. The strike was authorized with a voice vote—a public vote in the union halls—and the union leadership refused the Teamsters’ request for a secret ballot vote on returning to work.

    Why would the union do this? James Sherk, Heritage’s senior policy analyst in labor economics, says:

    Either the union leadership was (a) utterly incompetent, or (b) was willing to sacrifice its members’ jobs at Hostess in order to send a message to other firms that it would play hardball and they should not ask for concessions. Either way, it was not looking out for its members at Hostess.

    Hostess is just the latest in the upward trend of labor strikes. After falling for decades, the number of strikes in the U.S. is climbing. In 2009, there were five major work stoppages (involving 1,000 or more employees). In 2011, there were 19.

    Even when workers don’t walk off the job, unions are looking to cause chaos. A union-backed group is planning to stage protests at Wal-Mart stores on Black Friday. And unionized workers with the Service Employees International Union (SEIU) are planning a protest at Los Angeles International Airport tomorrow—one of the busiest travel days of the year.

    The aviation company in that case says the majority of its workers voted last year to leave the union. “Our employees are now earning more per hour than under SEIU and are happy to be free of them,” said Joe Conlon, Aviation Safeguards’ regional vice president.

    Many Hostess employees probably wish they had the same opportunity to vote. However, they never got that choice. Once they’re in, unions remain certified indefinitely; they do not have to stand for re-election. Instead, new workers must accept the union’s representation as a condition of employment. Just 7 percent of private-sector union members voted to belong to their union.

    The only way to get rid of a union is by filing for decertification—an extremely difficult legal process. Had Hostess workers gotten to vote, they might have opted for a more reasonable representative who would actually look out for them. This is why union representation should be voluntary—or, at the very least, unions should have to regularly stand for re-election.

    Unfortunately, the Obama Administration is moving in the opposite direction. His National Labor Relations Board (NLRB) recently changed the rules so that unions can cherry-pick who gets to vote in union elections. This will allow unions to disenfranchise those workers who don’t want to take the risk of strikes bankrupting their company, too.

    When the President returned to Washington after the election, one of his first meetings was with union leaders. After spending heavily in the election, the unions are keen to use the political process to boost their ranks. Their membership may be dropping, but union power in Washington is growing.

    Quick Hits:

    • “The top leader of Hamas dared Israel on Monday to launch a ground invasion of Gaza and dismissed diplomatic efforts to broker a cease-fire in the six-day-old conflict,” reports The New York Times.
    • Secretary of State Hillary Clinton is traveling to the Middle East to meet with leaders.
    • President Obama’s campaign organization isn’t going away—it’s trying to reinvent itself as an advocacy group.
    • Sequestration—the automatic budget cuts that will devastate defense and cut other programs—is scheduled to hit in January. Heritage has come up with solutions that would avoid gutting defense and would not raise taxes.
    • Should federal workers get a raise? Heritage’s Jason Richwine joins us at noon ET today for a Google+ Hangout. Leave a question, then watch the video chat on The Foundry.
    Posted in Economics [slideshow_deploy]

    39 Responses to Morning Bell: Can Hostess Save the Twinkies from the Union?

    1. glynnda says:

      You know, I hoped before that Hostess would shut down, but now that I've read the details of what unions are trying to do, I hope even more that Hostess shuts down. It's time to put the fairness back in the workplace. We have already seen through Government Motors that unions cannot run a business……let's let them try the baking industry now……I don't mind watching them design their own demise…..

      • BlueShadowII says:

        Careful what you wish for, glynnda. That's our money Government Motors is flushing down the drain. Do you really want Obama and Co. to give Hostess to the bakers' union the way they stole GM from its rightful owners and gave it to the UAW?

    2. Mike Harlow says:

      And you didn't mention the NHLPA, which is embroiled in a union contract dispute. Many fans are very upset. Far too many blame Bettman and/or the owners, but its the players' union that is the culprit in my mind.

      • Grip says:

        I don't think you could possibly be more ignorant or wrong. It's a lockout. Players are under contract and reported for work. Ownership locked them out. Players are accepting of the deal the owners signed with them only a few years ago, but those are the greedy 'tards who want to renegotiate more. Three work stoppages under Betteman. Owners spend 5 years out bidding each other on talent, then ask players to take cuts to reset the board. I love hockey… And know this one isn't on the players.

    3. Ray Hinkle says:

      I am convinced that it does not matter to over half of the voting electorate. Unions won and they are going to increase their influence and control in the world. I think most people are weary of this kind of pseudo protests. They are just trying to create some notice and the national media will pick it up and then accuse Wal-mart or whoever of being the evil bad company. This is a common tactic of the socialist society. Wal-mart should have the freedom to choose whether they give benefits or not to their employees. After all, Employees are free to seek work elsewhere. Are they not? And the owners of Hostess should not give in to mediation as ordered by the court. This is a typical judicial response. Bankruptcy is the only way that this can be fixed, now.

    4. Darrell Russell says:

      I find it a bit ironic that the union gave Hostess an ultimatum. Go bankrupt if you want but we are not coming off our demands.
      Hostess went to bankruptcy court and know the unions are saying we can bargain. I say it is far too late.
      The people who lost their jobs are the people who are the losers. The union officials still have their jobs.

    5. Andy says:

      This is a teachable moment alright and conservatives need to keep it in the forefront of the media as an example of how unions are the real job killers. Unions destroy productivity, artificially inflate wages and thereby send jobs to Mexico and China. Unions help the select few at the expense of the bulk of the workforce.

      • nam_vet6869 says:

        In 1980 My brother was plant superintendent for Club Products. They were Union and the employees were well paid, had quality healthcare, and other benefits. When an opening came about the HR hired people to fill the positions and the starting pay was $10 an hour. My Granddaughter's fiance went to work for a local manufacturing plant and he started at $10 an hour, 32 years and the starting pay is still the same. He also works for a temp service so he does not get holiday pay, three days for Thanksgiving and a week at Christmas, he has no healthcare or any other benefits. Arkansas is a Right to Work State with 7.5% unemployment. No employee dares to strike, even if they do not work for a temp service. Good year opened a plant in Oklahoma in the late 70's and payed $15 to $25 an hour to start, great insurance and benefits that were far beyond any other company in the city. For the last ten years they have been using more and more temporary employees so the do not have to pay all the benefits and they pay them $8 to $12 an hour. They started out high because they did not want the Union in the plant, a Union Plant in Texas had a contract that did not provided as well for them except that temps had to be paid Union Scale and could not work but 90 days. So, some Unions are bad, some employers are bad. I remember my brother always worked in manufacturing, raised four kids and lived a great middle class life. Now a plant employee can qualify for food stamps if married and two children. Hostess has been fighting in Bankruptcy for several years, but the management has gotten raises, the line workers took a cut of 8% and paid twice as much for their insurance, did the Management take equal cuts and increase their insurance cost, or did they get a big bonus like so many other companies have done? Just food for thought. Walmart has few employees that work 40 hours a week, 26 is the norm unless you complain then you do good to get 15 for a while. They start at $8 an hour and you test to get promoted where you make $9 an hour. I think you are wrong about the people being fed up with Unions, I think they are fed up with employers making way larger salaries and getting bonuses while the line worker is paid a bare minimum wage to survive on.

    6. Undergraduate says:

      Well. BIg Bird's job is safe for another two years, at least. But actual human beings? Not so much.

    7. Ramona Nicholsen says:

      I think it is a sorry commentary on our society, that we are so upset over Twinkies. So many do not raise a voice against our Judeo-Christian values being eroded on every side.

    8. Undergraduate says:

      Another point. Let's say that Hostess is liquidated, and that the Chinese, for example, acquire ownership, open a new plant in China, employ Chinese making Hostess products, and export them to, among other places, The United States. Who will get the credit (blame) for outsourcing all those jobs overseas?

    9. Alan Mally says:

      I think the dirty little secret not being talked about is the additional burden of Obama care had a lot to do with Hostess wanting to reduce the expenses. In a New York Post article it states that Obama care will place an additional cost of $1.79 per hour on each employee. Run the numbers and you find that the government will be taking an additional $71.60 per week per employee. Hostess has 18,000 employees and that is a whopping $1,288,800.00 per week. Hostess is looking for a way to pay for it and the greedy union (Democrats) simply do not care because it is not about healthcare but rather power. So Hostess has no choice but close it's doors.

      A Google search reveals Hostess employees made and average salary of $45-50k per year; 8% of 45k is about $1.73 per hour; coincidence with the number in the NYP? So we can thank the Democrats for this one too.

      Elections do have consequences!

      Read the NYP article: http://www.nypost.com/p/news/opinion/opedcolumnis

    10. Frank says:

      Once upon a time, unions might have been needed to stop worker abuse from business owners. But now the shoe is on the other foot. We no longer need unions (there are lots of regulations in place to prevent worker abuse) & unions are now bullying business owners (& the taxpayers in the case of government worker unions). Every state should pass a "Right to Work" law that allows people to work without being forced into joining a union and without being forced to pay union dues. If unions were really needed by the workers nowadays, workers would decide on their own to join unions & pay union dues. Only politicians that get big union contributions for re-election campaigns now want to keep unions around.

      • nam_vet6869 says:

        With real unemployment above 10%, would you walk a picket line or would you go on in and work and pray they did not see you talk to someone on the line. Workers are being screwed by a lot of companies, not all, and companies are being screwed by Unions, but not all either. Unions have a vested interest in a company being profitable, they don't close the business, but to get that loyalty a company must be willing to pay a wage that allows a person to feed his family and have a little for luxuries like new underwear. When a company having financial problems and is willing to cut EVERYONE'S pay equally and not give Bonuses to management then most Union workers are willing to work with the company to save it. Unions do not kill companies, poor Management does.

    11. Andrew says:

      The unions have been a problem, but there is another: consumers. They have more snack options (and clearly go for them, judging by our national obesity rate).

      Everybody is up in arms about the loss of Twinkies. But seriously, when was the last time you bought one for yourself? This is a crisis of nostalgia for an America long since passed. Like Life magazine, the "rabbit ears" for television, and Atari 2600 — Twinkies should go to the Smithsonian.

      • glynnda says:

        Andrew-somebody's buying them…….they are closing down 33 plants. I think the point here is not whether Twinkies should be produced and consumed (since we do still live in a free market nation) ….well for the time being…..but whether unions get to run business. I don't think they want the responsibility of running a business, they just want the profits…… sound like a bunch of socialists to me….

    12. When possible I always try to buy non-union goods (if I know) because of how the unions undermine our democracy and the American Way. When unions strike for poor reasons and the company shuts down I get a perverse joy.This is one of the many reasons why.

      In August 2008 right after Obama secured the nomination I had a chance encounter with the president of the IBEW, this was our conversation

      Union First, Country Second – My visit with a union leader http://the-daryl.blogspot.com/2008/10/labor-union

      • ShariaFighter says:

        Every time someone buys a union made product, they're supporting a union job and that employee is paying dues to the union which will take the money and support democrats and liberal issues. If you DO NOT buy union products, then lack of demand means fewer employees which means less money for the union. Soooo, a side benefit of not buying union products is it weakens the unions and their ability to support democrats.

    13. Dr. Pete Kleff says:

      The baker's union has always been nuts. In 1971 it unsuccessfully tried to organize new car salesmen in Dayton, Ohio.

    14. Juan Martinez says:

      I agree that unions are very often counterproductive, and sometimes harm the interests of their members. But what alternative exists for low-skilled american workers who seek a living wage? It's impossible to support a family on $12 an hour with no benefits. Let's be serious, what alternatives are there for american workers?

      • Alexandria says:

        Who says that they have to support a family on that wage? Why are unskilled workers starting families if they can't support them? How about they start as unskilled workers before they are married, get some skills for a few years and get more pay as a result and then start a family?

      • Work for it says:

        i support a family of 4 on $8 an hour with no benefits & help out a family of 5 as well

    15. Conrad says:

      "Obviously, poor management helped get Hostess to this point,"—WHAT!

      Hostess's Union=372 collective-bargaining agreements =80 different health and benefit plans, 40 pension plans and mandated a $31M Wage and Benefits in 2012.

      How could anyone manage this company, virtually being strangled to death by the Union?

    16. Mike Mangum says:

      Just another case of a union collectively bargaining the jobs away…

    17. Ben C. says:

      In the very blue State of Michigan voters turned down three constitutional amendments to give unions "constituional powers" to negotiate contracts. Michigan taxpayers dodged a bullet. So, there is a slight flicker of light at the enf of the tunnel.

    18. Blair Franconia, NH says:

      The unions are run by Mafiosi.

    19. mike swann says:

      unions started with the mafia, so what dows that tell you?

    20. mike swann2 says:

      unions began with the mafia, so what does that tell you?

    21. Jim says:

      Speak English! You're not in Mexico, & neither are we!!

    22. Ivotebased onTV says:

      This will never change until people wake up. I am so glad Obama got reelected, hopefully his poor leadership and wasteful spending will wake up the foolish, who are too lazy to actually pay attention to the issues and instead vote BASED ON TV COMMERCIALS. They deserve every evil act Obama will perpetrate on them. Lies, mismanagement , fiscal irresponsibility BUT oh you got your "obama phone", you do know there is no service in HELL

    23. Carol says:

      Isn't it always about money and government? It's too bad that it had to come to this. And it isn't only about the Twinkies. What about the Funnybones? I sure hope that they can work it out. I'll miss the cupcakes, devil dogs, crumb cakes and the best one: Funnybones!

    24. Steve OB says:

      Poor and biased reporting, skewing the facts. Hostess management planned to close most of its plants LONG before the strike was initiated. Management gave itself double and triple pay raises yet are trying to severely cut line workers wages and benefits. To bad we are ALL headed down the same path of self-destruction as everyone wants to find fault and point fingers rather than to find common ground and find solutions that will benefit ALL parties involved. Free market society means prices and wages the market can handle, fair price and fair profit; NOT free to get as as much as possible at the expense of others for your own gain

    25. 1goodbob says:

      People trying to save an American icon. The main reason for the union problems was glossed over, to protect the present Admin. as usual. OBAMACARE costs. You Voted for him ( It )

    26. If I were running Hostess I would pull my operations to the right to work states and tell the unions to go get screwed.

    27. If I were running Hostess I would pull my operations to the right to work states and tell the unions to go get screwed.

    28. Jan says:

      I certainly hope so. The unions need to be stopped as much or more than Obama/Davis.

    29. I think it is clear that while a partion of the union membership truly wants to work and provide a good product to the public, others just prefer having the upper hand over any company management and to have the ability to crush anything short term neutral or negative to the unions against the long term interests.

      I wonder of any of the union membership realize that they have aligned themselves with the goals of Osama bin Laden to bringing this country down, one industry at a time. Boeing, GM, Airlines, Hostess, California, the United States Government.

      Perhaps the cupcakes in a package are four portions in the eyes of the White House anti-fat guru in chief and just wants it gone.

    30. pcj says:

      This is off-topic, but very important. I wondered why the Republicans didn't speak up or fight back when the blatant election fraud starting up. I found the answer – they signed off their rights to the Dems in 1982!
      http://www.wnd.com/2012/11/gop-legally-barred-fro… This explains why Allen West finally conceded, he would get no help from the Republicans, even with the outrageous fraud in his district. 175,000 registered voters turned in 244,000 votes? That's enough to drive me to an overdose of Twinkies and wine….

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