Make No Mistake About It, The Union Killed Hostess

November 23, 2012

Whatever else happens between Hostess and the union beyond this point, let’s be clear that it was the union (and more specifically the absurd work rules and compensation packages the union foisted upon Hostess) that brought the company to this point.

As Thomas Sowell notes, the union killed the goose that laid the golden eggs.

Many people think of labor unions as organizations to benefit workers, and think of employers who are opposed to unions as just people who don’t want to pay their employees more money. But some employers have made it a point to pay their employees more than the union wages, just to keep them from joining a union.

Why would they do that, if it is just a question of not wanting to pay union wages? The Twinkies bankruptcy is a classic example of costs created by labor unions that are not confined to paychecks.

The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks. Moreover, truck drivers were not allowed to load either of these products into their trucks. And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa.

All of this was obviously intended to create more jobs for the unions’ members. But the needless additional costs that these make-work rules created ended up driving the company into bankruptcy, which can cost 18,500 jobs. The union is killing the goose that laid the golden egg.

Unions are, and should be, a part of our labor markets. Workers have every right to form their associations and negotiate contracts through those associations for their labor. The problem is that, under American law, businesses are all but locked into a suicide pact with the unions. Whereas in every other sort of contractual transaction, if one part or the other is dissatisfied they can walk away at the end of the contract. But not so with labor. Under American law, employees can get rid of a union through a petition and vote process regulated by the National Labor Relations Board. But if an employer no longer wants to sign contracts with a union their only choice is to lock the union out indefinitely, something that is subject to the scrutiny of the NLRB and potentially the courts. And even if the lockout withstands that scrutiny, it never really ends.

The reason why companies like Hostess allow themselves to be entrapped in such absurd labor contracts is because often, in the short term, those contracts are less hassle than being rid of the union itself.

That needs to end. Employers must have the same right to walk away from a union as employees have.


Hostess Plans to Liquidate After Mediation Fails

November 20, 2012

 

Hostess Brands Inc. said Tuesday night that mediation talks with its bakers union failed and the company will proceed with plans to close down and sell its assets.

Read more at online.wsj.com …


UNION STRIKE KILLS THE TWINKIE: Hostess going out of business; nearly 18,000 to be laid off

November 16, 2012

Say goodbye to your Twinkies. Pulled the plug.

Texas-based Hostess Brands, Inc. has decided to go out of business and liquidate its assets after failing to win back striking workers.

The company posted a statement on a website set up specifically for people following the strike.

“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.”

About one-third of the company’s workers are union members who are unhappy about the company’s cutbacks during its bankruptcy reorganization.

Read more:

Say hello to Obama’s Chavez economy.


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