Hostess Brands Says It Fails to Reach Labor Deal in Mediation

[torchbearer]

http://dealbook.nytimes.com/2012/11...ys-it-fails-to-reach-labor-deal-in-mediation/

Hostess Brands announced on Tuesday night that despite the help of a mediator, it had failed to reach a new labor agreement with the bakery workers union – and union officials said the company had indicated it would proceed with plans to liquidate.
“It’s over,” said David Durkee, secretary-treasurer of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union.
Hostess, an 82-year-old company, said that it would have no further comment until a hearing scheduled for 11 a.m. Wednesday before Judge Robert D. Drain of the Federal Bankruptcy Court for the Southern District of New York. At a hearing on Monday, Judge Drain, eager to save the 18,500 jobs at Hostess, pressed the two sides to meet with a mediator, hoping the long-feuding company and union could narrow their differences.

Tuesday’s announcement came four days after Hostess – producer of such famed brands as Twinkies and Wonder Bread — announced that it would wind down its operations, a move precipitated by a bakery workers’ strike that began on Nov. 9 at two-thirds of the company’s 33 bakeries.
Ever since Hostess filed for bankruptcy last January, it has insisted that its labor costs were unsustainable and that it needed to cut its wage, health and pension costs to continue operating. But the bakery workers’ union balked, asserting that Hostess was badly mismanaged and that the company would likely face liquidation again in a year or two even if the union were to agree to a new round of cost-cutting concessions.

 

[Zippyjuan]

They weren't going to reach an agreement. They had already decided to liquidate and only met because the judge ordered it. For there to have been an agreement to be reached, both need to have wanted to reach one.

 

[torchbearer]

They weren't going to reach an agreement. They had already decided to liquidate and only met because the judge ordered it. For there to have been an agreement to be reached, both need to have wanted to reach one.

right, i recall reading that the judge ordered the sit down because it wouldn't be prudent to precede without doing that first.
not sure why the media put spin on that story.

 

[BAllen]

So, when does the gubmint bail them out? Someone needs to remind them that it is too big to fail.

 

[ghengis86]

http://www.zerohedge.com/news/2012-...ceed-furious-former-workers-now-turn-labor-un

Last week, when discussing the next steps for the company, and specifically the hope that mediation may resolve the epic animosity between management and workers, we stated that "What makes a mediation improbable is that the antagonism between the feuding sides has certainly hit a level of no return: "Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation." Sure enough, moments ago we learned that mediation has now failed and the liquidation may proceed. And since in America nobody understands that proper sequence of events involved in a bankruptcy liquidation, where the valuable parts always end up being acquired by someone, in this case the Twinkie brand and recipe, let the pointless Ebay bidding wars over twinkies continue. As for what really happens next, if indeed Bimbo is prohibited from acquiring the assets in the Stalking Horse auction due to anti-trust limitations, then the buyer will almost certainly be a "financial", i.e., another PE firm, whose coming means the end of any hopes and dreams of preserving union status at fresh start Hostess, or whatever the new firm will be named.

From the WSJ:


Hostess Brands Inc. said Tuesday night it would proceed with liquidation plans after mediation fails.

Earlier Tuesday, the head of the bakers union whose strike precipitated Hostess liquidation plans didn't attend a last-ditch mediation session and wasn't hopeful about its prospects, he said.

"I'm not too optimistic about this mediation," Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said when reached earlier Tuesday afternoon in Columbus, Ohio. He said he couldn't get to New York, where the session was taking place; instead, he said, the union's secretary-treasurer was attending.



The mediation came at a judge's suggestion after the Twinkie maker said Friday that a week-long strike by the bakers left the company no choice but to seek a bankruptcy judge's approval for liquidation.



The judge, Robert Drain, urged mediation, citing among other things the hope for saving some 18,500 jobs. The company filed for bankruptcy protection for the second time in January.



The judge indicated Monday that if mediation wasn't successful, Hostess could return to court Wednesday to pursue its liquidation plan.



Doug Mansky, a Hostess driver in Detroit and a member of the International Brotherhood of Teamsters, was in the process of moving to a cheaper condominium on Tuesday, after his union had agreed to an 8% pay cut that he said would shave $200 a week from his income. After Judge Drain cleared Hostess to impose the same new labor terms on the bakers union, they went on strike.



"I hope things work out. I'm going to be 49 and trying to find a job in a market that's terrible," Mr. Mansky said.

Sadly, the reality of learning just how bad the labor market truly is, all smoke and mirrors of a recovery aside, will now have to be experienced by not only Mr. Manksy but 18,499 of his fellow co-workers, who may have been duped into hoping by their union that by holding out a hardline stance, they would gain something.

They have now lost everything. And not too unexpectedly, the workers are now turning on the Union!


ome Hostess workers in another union awaiting the
mediation results criticized Mr. Hurt, the 20-year president of the
bakers union, who defended his decisions and actions during the
company's bankruptcy process.



Scott Quenneville, a Hostess truck driver represented by the Teamsters, said he feels his colleagues were misled by Mr. Hurt into believing that a buyer would swoop in for the company. Mr. Hurt on Sunday said he thought there was a good chance a buyer would emerge who would give union members their jobs back.



"Frank misled a lot of people. He was not going to settle for anything less than closing the company down, because they didn't want that 8% pay cut," said Mr. Quenneville. "If you don't want the job, leave the job. Why ruin 18,000 jobs?"



"I didn't mislead anybody on anything," Mr. Hurt said. He said he didn't tell workers preparing to strike that a buyer for Hostess was definitely waiting in the wings.



Mr. Hurt said, "I don't want anybody to think that anybody is guaranteeing anyone anything, but we did know that there were people taking a look at this company."

This would be a truly fantastic drama, if people's lives were not at stake. And no, not one former Hostess worker will retain their job at the new company: that much is certain.

As we said, if only people had a basic understanding of how bankruptcy truly worked, and what the real state of the economy was, then Hostess' workers may have had a chance and some amicable comrpomise would have been possible.

Then again, if people in America actually understood economics and simple finance, then the "Ohio outcome", and many others, would have likely been quite different.

Now we can only hope we were not correct about the ultimate outcome too: namely that the US government will effectively hijack the bankruptcy process, and in doing so "bailout" a junk food maker, just so 18k votes can be preserved at the expense of creditors and making yet another mockery of the bankruptcy process, and property rights in the US.

Then again, this is precisely what the Union was likely hoping for all along, because once the government starts bailing everyone out, just where does it draw the line?

 

[torchbearer]

So, when does the gubmint bail them out? Someone needs to remind them that it is too big to fail.

if only bakers ran our government(or had a cartel that was partnered with it).

 

[CaseyJones]

So, when does the gubmint bail them out? Someone needs to remind them that it is too big to fail.

 

[Danke]

I'll bet Dollars to Donuts that the judge is corrupt.

 

[ghengis86]

if only bakers ran our government(or had a cartel that was partnered with it).

oh, the stealth bailout is highly probable:
http://www.zerohedge.com/news/2012-...ion-management-seeks-pay-175-million-incentiv
But wait, it gets better: because it is quite likely that should an emboldened US Trustee get her wishes granted, will push to continue operating Hostess as a going concern, potentially with a court appointed, and US Trustee selected management team.

In essence this could result in a stealth nationalization of the junk food maker, which would preserve the jobs of the workers for the time being, but crush the balance of the capital structure, i.e., secured and unsecured creditors.

Impossible, you say? It has happened, to a big extent, before. Recall a certain bankruptcy case of one General Motors, where the claims of creditors were primed by those of the labor unions.

Granted, such a perversion of the bankruptcy process would be historic, but in a country in which everyone is to blame for everything, and in which property rights are becoming a very nebulous concept, we would certainly not be surprised if the US government ends up "bailing out" Hostess by a mandatory flipping the capital structure, over the cries of the company's creditors, further pushing the country into the twilight Banana zone.

 

[mad cow]

I saw some Wonder Bread in the supermarket today.I didn't check the date.

 

[AuH20]

So the workers are rebelling against their labor leaders for misleading them???? Golly golly gumgrops!! It can't be true! Labor leaders manipulating their own people??? No way!!!

ome Hostess workers in another union awaiting the
mediation results criticized Mr. Hurt, the 20-year president of the
bakers union, who defended his decisions and actions during the
company's bankruptcy process.

Scott Quenneville, a Hostess truck driver represented by the Teamsters, said he feels his colleagues were misled by Mr. Hurt into believing that a buyer would swoop in for the company. Mr. Hurt on Sunday said he thought there was a good chance a buyer would emerge who would give union members their jobs back.

"Frank misled a lot of people. He was not going to settle for anything less than closing the company down, because they didn't want that 8% pay cut," said Mr. Quenneville. "If you don't want the job, leave the job. Why ruin 18,000 jobs?"

"I didn't mislead anybody on anything," Mr. Hurt said. He said he didn't tell workers preparing to strike that a buyer for Hostess was definitely waiting in the wings.

Mr. Hurt said, "I don't want anybody to think that anybody is guaranteeing anyone anything, but we did know that there were people taking a look at this company."

 

[torchbearer]

whoa

 

[torchbearer]

truth is coming out.

 

[madengr]

Doug Mansky, a Hostess driver in Detroit and a member of the International Brotherhood of Teamsters, was in the process of moving to a cheaper condominium on Tuesday, after his union had agreed to an 8% pay cut that he said would shave $200 a week from his income. After Judge Drain cleared Hostess to impose the same new labor terms on the bakers union, they went on strike.

$200/week lost from an 8% cut? That means he was making $130k/year driving a fucking bread truck.

 

[torchbearer]

$200/week lost from an 8% cut? That means he was making $130k/year driving a fucking bread truck.

shit, i'm in the wrong profession.

 

[KingRobbStark]

If i was buying the company i would dissolve the union.

 

[Kodaddy]

An 8% cut would mean $200 less a week????? That means he was making $2500/ week!!! That's $130,000 a year!!! I'd take a 20% cut!!! Where do I sign???

 

[torchbearer]

If i was buying the company i would dissolve the union.

well, that is why the bankruptcy is bad news for the union.
if someone had bought the company prior, the buyer would have to buy the labor contracts too.
but in the bankuptcy court, those contracts are now void. people can pick and choose what assets they want to buy, and that money goes to the creditors.

 

[aGameOfThrones]

Grupo Bimbo is thinking of buying them and will keep the 18k jobs in the US rather than Mexico.

 

[JK/SEA]

An 8% cut would mean $200 less a week????? That means he was making $2500/ week!!! That's $130,000 a year!!! I'd take a 20% cut!!! Where do I sign???

thats Teamster wages, not Bakers wages. All you need to learn is how to stack trays of product, put em on a truck with a pallet jack, and wait for the driver who has a CDL license to drive it away when the truck is full. Oh yeah, you might need training on how to use a broom. Teamsters have a more powerful union as you might imagine. Don't forget, the Teamster union has a lot more clout than the Bakers. Guess will see what happens now.