Twinkies – and 18000 jobs – fall victim to union-management dispute; Update: Teamsters throw bakers union under the bus?

posted at 10:31 am on November 16, 2012 by Ed Morrissey

Hooked on Ho-Hos?  Find Ding-Dongs delectable?  Were Twinkies an indelible (if particularly edible) part of your childhood?  Be prepared to consign them all and many other junk-food delicacies to nostalgia.  Hostess, which has made these sugary staples for years, announced this morning that they will liquidate their business and end production after failing to negotiate new labor contracts with several unions.  Along with these confections, 18,000 jobs will also disappear:

“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.

But problems with several unions — including the Bakery, Confectionery, and Tobacco workers and the Grain Millers International Union — have prevented the company from moving forward. Hostess said it will seek bankruptcy court permission to sell all of its assets. The company said bakery production has already shut down.

Without much more data than this, it’s impossible to say whether the unions or the company has been unreasonable in this dispute, or whether it might be a blend of both, as is usually the case. Sugary snacks like the kind Hostess produces have fallen out of political favor, certainly, but I doubt that sales have dropped dramatically. They have been a ubiquitous presence in supermarkets, convenience stores, and kid’s lunch bags since before I was a child, and in moderation don’t do any harm to anyone who is otherwise healthy.

Those aren’t the only places where Hostess-brand snacks have impacted the culture, either. Twinkies have especially captured the cultural imagination, and in one notable case, the legal imagination.  When Dan White stood trial for the 1978 murders of Harvey Milk and George Moscone in San Francisco, his attorneys tried to argue that White had a diminished capacity to form an intent to murder, thanks to depression that became intensified by consumption of large amounts of sugary snacks.  The media dubbed this the “Twinkie Defense,” and it proved successful, as White only got a seven-year sentence.  California eliminated its diminished-capacity defense shortly afterward.

On a more fun note, we’ll always have this scene from Ghostbusters:

That used to be a big Twinkie.  Perhaps all sides can take one last deep breath and try working together to save 18,000 jobs rather than see an American institution disappear, along with a lot of livelihoods.

Update: I updated the headline to highlight the jobs as well as the Twinkies.  Also, the jobs lost were nationwide, not in Texas, so I deleted that reference.

Update II: Like I said, I haven’t paid much attention to this fight, so I don’t have a lot of insight into whether labor or management has been more unreasonable.  However, the Teamsters’ web site seems to lay the blame on the Bakery, Confectionary, Tobacco and Grain Millers International Union (BCTGM) for refusing to go along with the Teamsters to accept the last offer from Hostess:

In fact, when Hostess attempted to throw out its collective bargaining agreement with the Teamsters in court, the Teamsters fought back and won, ensuring that Hostess could not unilaterally make changes to working conditions during the several months’ long legal process that recently ended. Teamster Hostess members were allowed to decide their fate by voting on the final offer conducted by a secret mail ballot.  More than two-thirds of Hostess Teamsters members voted with 53 percent voting to approve the final offer.

The BCTGM chose a different path, as is their prerogative, to not substantively look for a solution or engage in the process. BCTGM members were told there were better solutions than the final offer, although Judge Drain stated in his decision in bankruptcy court that no such solutions exist. Without complete information, BCTGM members voted by voice votes in union halls. The BCTGM reported that over 90 percent rejected the final offer and three of its units ratified the final offer.

On Friday, Nov. 9, the BCTGM began to strike at some Hostess production facilities without notice to the Teamsters despite assurances they would not proceed with job actions without contacting the Teamsters Union. This unannounced action put Teamster members in the difficult position of facing picket lines without knowing their right to honor such a line without being disciplined.

As is our longstanding tradition, Teamster members by and large are honoring Bakery Worker picket lines when encountered and complying with their contractual obligations when not encountering picket lines. The BCTGM leaders are putting Teamster members in a horrible position – asking them to support a strike that will put them out of a job when they haven’t even asked all their members to go on strike.

That strike is now on the verge of forcing the company to liquidate – it is difficult for Teamster members to believe that is what the BCTGM Hostess members ultimately wanted to accomplish when they went out on strike. We may never know unless the BCTGM members, based on the facts they know today, get to determine their fate in a secret ballot vote. Teamster members would understand that the will of the BCTGM Hostess membership was truly heard if that was the case.

That’s a pretty remarkable statement from the Teamsters.

Update (MKH): Just a little background. There’s a lot going on, here, though the bakers union strike was certainly the last straw for Hostess. The company has been in bankruptcy twice in the last decade, and as Allahpundit notes, the culture of organics and calorie-counting was working against them.

But the bakers union deserved to get thrown under the bus by the Teamsters because it looks like they threw the Teamsters under the bus, first. The Teamsters and the bakers worked together to come to a deal with Hostess in September. The bakers were quiet during negotiations, and apparently pulled a surprise move when they rejected the deal.

Hostess, which also owns Ding Dongs, Ho Hos, Wonder Bread and other celebrated baked goods, has been in Chapter 11 since January, its second such filing in a decade. The key parties have been two major hedge funds and two big unions, and they’ve been fighting over wages and pensions. Hostess contends givebacks are needed for the company to emerge from bankruptcy. The unions respond they’ve given up enough. Last month, Hostess made what it said was its “last, best offer.” CEO Greg Rayburn told Fortune that union rejection would result in the company immediately filing to liquidate—and putting thousands of employees out of work. Union members were faced with a Hobson’s choice: accept drastic concession or lose their jobs.

Late last Friday the largest unions—the Teamsters—announced that by a narrow vote, 53.6% to 46.4%, its Hostess rank-and-file had approved the new collective bargaining agreement. (Out of 7,900 Teamsters voting at the company, slightly more than half cast votes). Rayburn and Teamsters leadership both offered up measured words about the “difficult” decision.

But shortly thereafter, word came that the 7,000 employees of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union had rejected Hostess’ proposal. (No details of the vote were announced, though some press reports suggested there were only voice votes at locals rather than a written mail tally.) Though the leader of the bakers’ union in recent weeks had excoriated the proposal, the rejection was nonetheless curious. That’s because the bakers’ union had been quiescent for months in bankruptcy court, letting the Teamsters engage Hostess management and the hedge funds over the company’s demands to restructure by scuttling existing labor agreements.

This is what the deal looked like. It sounds like the Teamsters really did make sacrifices, and many of them were crossing the bakers’ picket line to keep the company functioning:

The proposed new labor deal consists of an immediate 8% wage cut and work rules more favorable to the company. Employer contributions for health insurance would decrease 17%. Hostess contributions to multi-employer pension plans would cease until 2015, at which point the current required level of funding would plummet from $100 million to $25 million. According to Rayburn, the proposal has been endorsed by Hostess’s key secured lenders, which are led by hedge funds Silver Point Capital and Monarch Alternative Capital. One estimate put cost savings for Hostess in the neighborhood of $200 million.

For their part, the unions would receive two seats on a restructured nine-member board of directors and 25% of equity. That would make the unions part of Hostess’ capital structure for the first time.

Maybe they can still come to some deal. I’m guessing after the company’s previous threats to shut down, the bakers might have thought they were bluffing. The deal the Teamsters took was painful, but it’s because the company was truly in dire straits. The roughly 6,000 bakers are really handing a raw deal to 12,000 of their colleagues. And, barring that, the brand is still worth money. It won’t immediately help those who will lose their jobs in this dispute, but Twinkies may be back owned by someone new, their labor obligations vacated, and likely in a right-to-work state.

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Went to the Hostess outlet today (bread is much cheaper). The place looked like USSR bakery – huge line for bread (and Twinkies).

So when do we nationalize Hostess? Where’s James Taggart?!

batter on November 16, 2012 at 7:39 PM

The Unions ate each other.

itsspideyman on November 16, 2012 at 7:53 PM

The Unions ate each other.

itsspideyman on November 16, 2012 at 7:53 PM

Yep. It was inevitable.

As the moochers in society run out of other peoples money, they will cannibalize each other.

It is going to be a grand spectacle, watching union workers fight over the crumbs that will be left in their pension funds.

We are crossing that threshold.

MichaelGabriel on November 16, 2012 at 8:03 PM

Out in the field all day punching holes. After reading the back story I was already laughing. Three quotes in is a nice sugar buzz.

DanMan on November 16, 2012 at 8:28 PM

Shorter Teamsters:

Its a bitch when greedy union members make you lose your job

BobMbx on November 16, 2012 at 9:18 PM

Management ultimately runs the company. They may do a good job, a bad job, or a mediocre job, but it is their job. That’s what they get paid to do. If the union wants a say in who manages the company they better buy a controlling interest in the company stock, put their money at risk, then install the management they want. I doubt they would end up happy with being owners — i.e. having a stake in the continued operation of the company — where before they were only concerned about their pay and benefits.

I recall that some companies where that occurred resulted in eye-opening experiences for employee-owners where what they thought should happen was not what their management wanted or needed to happen. Management needs to look at the company as a whole while unions needs to look after their members. The difference in attitude can be quite enormous.

Russ808 on November 16, 2012 at 10:12 PM

As a child, I LOVED the powdered Donettes. My oldest daughter actually asked me tonight what a Twinkie was. I guess that means I’ve done a pretty good job. Unions suck. Some good people down at our local outlet are without a job.

TXMomof3 on November 16, 2012 at 10:20 PM

I thought it was just common sense that if a union is really concerned about protecting its members’ jobs, they should not even threaten a strike while their employer is in receivership. What happened is that the bakers union called Interstate’s bluff, which wasn’t really a bluff. It was a warning. No doubt in my mind that the bakers union hosed its own membership — the clearest proof of that being that a few crossed the picket line to try to go back to work. To little too late.

gryphon202 on November 16, 2012 at 10:38 PM

Without much more data than this, it’s impossible to say whether the unions or the company has been unreasonable in this dispute, or whether it might be a blend of both, as is usually the case.

As you said, it was both.

Now this is the union response to the news. They first point out that the company was set to close undisclosed locations before they shut the doors. A silly thing to get upset about since this is typical of a company that’s trying to restructure. However they also point out that the company increased the pay of the CEO and other executives by a huge amount after they declared bankruptcy. Definitely a shady move.

So both were at fault.

Benaiah on November 16, 2012 at 11:47 PM

Benaiah on November 16, 2012 at 11:47 PM

Oh dear weeper, your concern is noted. empathetic tears were shed comrade.

tom daschle concerned on November 17, 2012 at 12:00 AM

CEO was on either CNBC or Bloomberg West this morning, I forget which, and it was informative. One may look for that interview to hear him speak.

John Kettlewell on November 17, 2012 at 12:42 AM

The parasites have devoured their host-ess

Dollayo on November 17, 2012 at 3:28 AM

Just wait until those Walmart workers go walk out on Black friday…. a story I do not think that has been covered here yet.

watertown on November 17, 2012 at 5:29 AM

Also, I’m ignorant on the laws and policies of unions and companies, so I don’t understand why companies don’t just fire everyone and hire new people when employees in unions go on strike? What laws/mechanisms prevent them from doing so? I ask because strikes seem to be the main way Unions hold companies hostage. . .

cmsciulli on November 16, 2012 at 2:45 PM

In most cases it is a breech of contract if you go on strike during your contract. We have that clause in our contract which more or less states that if you go on strike your voluntarily giving up your employment. Now what happens when the contract is up and your in negotiations is fair game. You can go on strike but be ready for replacements to come in ect ect.

Also, here in WI, unless it changed, if your on strike for 1 year the union is busted then. The place of work is no longer a closed shop. Our union would still be on strike for the last 10 years before they came back within 15 days of that deadline :P

Take it from me people, talking to the higher ups in unions is like talking to a wall.

Mood is changing at my place though. We do not mind union, I think its because most of us understand that you need to work with the company your working for, sadly our plant reps for the unions dont know what negotiating means, and this is why over a dozen places within 40 miles of us all make at least 3 dollars a hour MORE starting than what our top pay is. These places do pretty much same are of production and a few are very similar of ours, and pay much better. Then you look at turnover of our place vs others…you know where you need to know 10 people that worked there over ours, where 90% do not make it past 5 years.

Enough babbling from me cept for one more thing… these people out of work are going to have a hard time finding a job not only because the econ stinks, but when HR is looking at your former employment… they see that you worked there… your moving down to the bottom of the pile. This is another issue we got to deal with first hand here…talk about shooting yourself in the foot.

watertown on November 17, 2012 at 5:47 AM

Sounds to me, from reading here that the UNIONS put themselves out of work because they tried to force the company to pay money they didn’t have. That does not work. SO, now these fools are unemployed. Thats not too bright. Oh wait, it’s a union….

TX-96 on November 17, 2012 at 6:21 AM

Very sorry for the people who lost thier jobs especially in this economy as previously stated.I would be curious to know what the total loss was to the unions. Once againg the unions are still in business and it’s again the actual worker bees who suffered.

fistbump on November 17, 2012 at 9:14 AM

In the seventies: Hungry? Eat Your Import!

Now: Hungry? Eat Your Union Card!

hawkdriver on November 17, 2012 at 9:46 AM

Hotair says nothing.

Dave Rywall on November 16, 2012 at 4:44 PM

While you are pointing out the ridiculous salaries of executives, do you want to spend a minute on the U.S. Postal Service and Freddie Mac/Sallie Mae? Both of those entities are repeatedly bailed out by the tax payers, what say you. Oh, and I’m still waiting for my dividends from GM, now that Obama has turned them into a flourishing concern.

Cindy Munford on November 17, 2012 at 9:56 AM

So both were at fault.

Benaiah on November 16, 2012 at 11:47 PM

Not quite, Butch.

First of all, Interestate Bakeries, the parent company of Hostess Brands, was in receivership and had a $130,000,000 investment from a “Bain-like private equity firm.” That money was used, among other things, to restore executive salaries that had been cut under the terms of Interstate’s bankruptch. All on the up-and-up, perfectly legal, and nothing at all unusual about it.

Secondly, upon receiving this investment from the “Bain-like private equity firm,” the plants that were going to close represented the least possible pain to the total workforce. My understanding of it was, had the strike not occurred in the manner and at the time it did, they could have saved at least 15,000 jobs. Now 18,500 folks are S.O.L.

Thirdly, that $130,000,000 is now a bum investment. The bakers union, on hearing that executive salaries were restored (to pre-receivership levels), wanted more. And understandably so. But they weren’t about to get it, and they should have known better. Someone would have had to pour billions into Interstate’s pension fund in order to make good on the promises made. Who’s going to do that? The federales?

Indeed, I think the unions shoulder most of the blame here. They had a Hobson’s choice, and they thought they were calling a bluff when it was no bluff at all.

gryphon202 on November 17, 2012 at 10:01 AM

Why can’t our Twinkies be made in China and please Obama?

He will have more on welfare and more supporters

All is great

Obamatrix on November 17, 2012 at 10:01 AM

Sounds to me, from reading here that the UNIONS put themselves out of work because they tried to force the company to pay money they didn’t have.

TX-96 on November 17, 2012 at 6:21 AM


I wonder if we’ll see the Teamsters picketing outside the offices of the bakers union for…you know, unfair labor action and all that.

BobMbx on November 17, 2012 at 10:28 AM

We may never know unless the BCTGM members, based on the facts they know today, get to determine their fate in a secret ballot vote. Teamster members would understand that the will of the BCTGM Hostess membership was truly heard if that was the case.

To have this emanate from one of the staunchest pushers of the “card check” scheme is irony to the nth degree.

I feel sorry for the regular Joe and Jane Sixpack out there who just wanted to go and do their job.

Effing union greed has backfired once again.

hillbillyjim on November 17, 2012 at 12:48 PM

By Twinkies, by Suzi-Q, by Ring Dings,by Funny Bone, I’ll miss the Zingers too, very sad.

wubu on November 17, 2012 at 1:59 PM

Unions are the spawn of communism, and the tool of gangsters.

JackM on November 19, 2012 at 9:07 AM

“BCTGM” sounds like one of those gender identification things…..

GWB on November 19, 2012 at 9:31 AM

Wonder Bread is toast

seven on November 19, 2012 at 10:20 AM

Great line from Second City Cop:

(Twinkies) that are designed to survive nuclear holocaust can’t survive four more years of Obama.

Daisy_WI on November 19, 2012 at 10:32 AM

Another example of Obowma shipping jobs overseas….or to Mexico.

dthorny on November 19, 2012 at 11:50 AM

Come to Canada, we have a sensible conservative leader, and we still produce Twinkies:

Twinkie and Wonder Bread lovers in the U.S. can still head north of the border to stock up on the baked goods even with the bankruptcy of Hostess Brands Inc.
Saputo Inc. (SAP), Canada’s largest dairy processor, has the trademark and brand rights to Hostess CupCakes and Hostess Twinkies in the country and manufactures the products themselves, said Sandy Vassiadis, a spokeswoman for the company.
“It’s totally separate,” she said, in an interview from Saputo’s headquarters near Montreal. “We own the rights in Canada so what’s happening in the U.S. doesn’t affect us.”

Johnny 100 Pesos on November 21, 2012 at 10:51 AM