The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Show Us The Way

“The operation was a success, but the patient died.”

“We had to destroy the village to save it.”

Massada. That worked out well too.

I’m sure the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union approves of these classic oxymoronic statements, because its members are currently patting themselves on the back for standing up to Hostess Brands, Inc and not giving an inch in contentious labor negotiations that had put them on the picket line. “I think we’re the first ones who have stood up and said, ‘We’re not going to let you get away with it,’” was the message the union’s resolve sent according to  Sue Tapley, the strike captain at the Biddeford, Maine Hostess plant. “You can fight them. You can shut them down.” “Unions have been losing power for years,” added  a striking worker outside of the same plant. “This is an exceptional case. If Hostess had been allowed to get away with what they’d been trying to do, other corporations would have lined up to try the same tactics. Hopefully, this will be an example to other companies not to break their unions.”

Because of that noble resolve, Hostess, which has been losing money and flirting with bankruptcy for years, decided to liquidate the company. 18,500 people, including the strikers, are about to lose their jobs, permanently, just in time for the holidays. Taxpayers, of course, will now be responsible for their existence as well as the welfare of their families, our consolation prize for also losing the guilty pleasures of Hostess Cupcakes, Zingers, Snow Balls, Suzy-Q’s, Coffee Cakes, and, of course, Twinkies. Clearly, a brilliant victory for organized labor!

The statements of the various strikers embrace the “moronic” in oxymoronic. Negotiations that cannot solve an impasse with the result that the enterprise at the center  of the negotiations goes up in smoke are nothing to cheer about, for by definition they failed. This means the negotiators on both sides failed, and as a result, people and society generally are hurt. I wouldn’t think it would be necessary to xplain this, but that is a bad thing, not a good thing. The union members seem to think demonstrating the power to destroy a business is the same as proving their value to society. Among the reasons unions have declined in popularity in the U.S. is that they have too often behaved irresponsibly to the detriment of many industries and occupations, including those in the public sector. Combating greed, unfair treatment and poor working conditions is laudable; engaging extortion and destructive behavior is not. The crowing by the union for its “achievement” of putting Hostess out of business is the equivalent of kidnappers boasting about killing their hostage when the ransom wasn’t paid.

The owners of Hostess share responsibility and are little better, but they are better. The threat to liquidate if the union didn’t stop its strike and moderate its demands was an extreme bargaining tactic, but I have not heard any Hostess officials say that the business’s collapse was a glorious victory because it would show future unions that management means what it says when it threatens suicide. (Does this mean that the Bakers Union is right, because the first side to declare victory wins? They probably think so. If you’ll call  losing 18,500 jobs, including your own, a victory, you’ll believe anything.)

This was no victory for anybody, especially the public. Ethical negotiation means a shared commitment to reach accord, before the point of mutually assured destruction is reached. Here both sides failed miserably, and it was a failure of skill, resolve, values, ethics and character. An organization that sees a catastrophic collapse in bargaining as something to be proud of is so ethically warped that it cannot be trusted. Such an organization mistakenly believes that it is ethical conduct to reject the principle of sacrificing to achieve the greater good, in favor of showing power, determination and resolve. To believe that is to elevate stubbornness over survival.

We will see if the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union is an aberration, or the herald of a new, disastrous age of no compromises and principled suicides. The National Hockey League strike and the government’s efforts to avoid the fiscal cliff will provide some useful data on the question.

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Spark: Instapundit

Sources:

43 thoughts on “The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Show Us The Way

  1. It probably is a victory for the union, because the union represents more than just the Hostess employees. In any negotiation, the party with the best bargaining position is the party that can most easily walk away, but only if the other party believes it will. After the destruction of Hostess, the next time the union is in negotiations with some other company, they’ll sit down at the table having proven they have the strength of resolve to destroy a company if they don’t get what they want.

    Of course, that’s probably not what the Hostess employees were hoping for when they joined the union. The probably wanted to be the beneficiaries of union strength, not the sacrifice the union made to prove its strength. The union exploited them as coldly as any corporation would have.

    • Good take, though I doubt that the collapse of Hostess will confer any future advantage to the union. When employee benefits make staying in business unprofitable, its an easy call—shut down. How the concept too hold that businesses have an obligation to run at a loss or be unable to turn a profit in order to provide jobs for a workforce that will keep demanding more, I will never understand. Hostess was hardly the Pullman company. The owners who shutter the company will be far better off than the 18,500 who lose their jobs–twas ever thus.

      • If some of the stories are true, (e.g. http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery) then Hostess’s last offer wasn’t a very good one. Hostess was in big trouble, and that’s likely all they could afford. So now 18,500 people aren’t going to have jobs, but they would have been really crappy jobs, and they might not have survived much longer anyway. This jobs disaster might just be a case of failing to postpone the inevitable.

              • I found it in some untouched back mail! I’ve already posted several Alamo notices on my Facebook page today, including one from Jerry Patterson. The Alamo fell 177 years ago this day. The American Thermopylae!

                • It has been romanticized as the Texan Thermopylae, but I haven’t heard it referred to as the American one….

                  I love the study of Texas Revolution.

                  For what was essentially a small sideshow on the world stage, lots of lessons can be gleaned.

                  The story of a bunch of ill-disciplined hot-heads, a dozen George Washington hopefuls charging off in multiple directions, half of whom ended up dead along with *all* their men while separately and simultaneously pursuing a grand objective.

                  There is a miracle in this indeed: Sam Houston managing to keep away long enough to pull off a victory despite a thoroughly insubordinate army.

                  Both the Alamo Garrison and the Presidio La Bahia Garrison were ordered to displace to the Colorado river. Houston knew that natural barrier was essentially the geographic line between the south central open prairies (which was favorable to Santa Anna’s Army and Cavalry) and the east Texas piney woods (which were favorable to the fighting style of Houston’s American-originated army).

                  That they didn’t, and were both massacre which, along with several other smaller massacres destroyed about 50% of the armed revolutionaries, putting the whole Revolution in serious jeopardy.

                  Even though the Alamo battle happened because of insubordination and those who guard history would be quick to say “Don’t pretend the Alamo was a necessary delaying feature so Houston could buy time”, I don’t know how the scenario would have played out otherwise.

                  The Alamo assault cost Santa Anna upwards of 1/3 of his effective army in KIA and WIA. Meaning he then had to pursue Houston with about 1,200 men. It cost Houston just under 200 fighters.

                  Had the Alamo garrison displaced to Gonzalez as ordered (and joined the rag-tag force there at the time), Houston would have had something like 600 soldiers by the time Santa Anna would have arrived vicinity Gonzalez with his force of 2,000.

                  Who’s to say the resulting battle or chase across Texas would have ended up far worse for the Texans.

                  I’d say the jury is still out on the Alamo being Texas’s Thermopylae – certainly it can not be conclusively said that no it wasn’t, like many history revisionists would have us believe.

                  On a side note, once when I was making a standard pilgrimage to the Alamo, while walking the sacred grounds behind the Low Barracks, I came unglued on a miscreant who cavalierly tossed a candy bar wrapper on the hallowed ground.

                  The Godless savage must have been from some wretched place like California or from the rotting anarchy of Austin.

                  • It was ill-disciplined hotheads who made America, Tex. The worst of them came to Texas! It can’t be said that the 189 defenders didn’t punch a huge hole in Santa Anna’s effectives list. What continues to amaze me, though, is how Ozzie Osbourne got out of Texas alive!

                    • I agree, a certain energetic drive away from consolidating forces or as we put it a lack of discipline serves the nation well, especially on the frontier and in a free market. Military applications? Not so great, wouldn’t you say?

                    • Yet, we somehow muddle through! Another example of this was Bunker Hill. All the British had to do was seize the neck of the Charles Town peninsula and starve the militiamen into surrender. Fortunately, they chose a frontal assault instead… proving that professional military men can blunder just as badly as rank amateurs. The same might be said for Santa Anna at the Alamo.

                    • Funny thing about Santa Anna:
                      He was elected as a classical liberal (like our Founders) revolutionary.
                      He soon supported a sort of progressivism in Mexico.
                      Once in power he took this to hyperactive, ramrodding many ideas he thought good through Mexico’s legislature.
                      He debased the church’s impact on citizens, he disarmed the populace.

                      Once that was done, he decided the Legislature was a mere formality and figured he could handle all the functions of the government on his own.

                      Interesting process that.

                    • History DOES tend to repeat itself. Unfortunately, there are other factors of similarity. Santa Anna also brutally repressed any opposition within Mexico to his rule, as the people of Michoacan and Morelos States could have testified. He also made lousy military policy in foreign intanglements and lost a lot of his own country in the process. A little food for thought!

                    • Remember this day in history (9 Mar 1836). General Houston arrived at Burnham’s crossing on his way to the forces gathering at Gonzalez. Here he delayed for an entire day, giving rise to the earliest political spin doctor’s in Texas. Anti-Houston factions will insist he spent his day there obliterated with drunkenness, while Pro-Houston factions insist he formulated a defensive strategy (unaware of the fate of the Alamo) to pull back all the forces to the Colorado. Both sides have ample evidence for truth, neither side willing to admit they are probably both right.

                      Also, Colonel Neill’s relief force to the Alamo (they too unaware of its reduction) was also pushed back by Mexican Army pickets. Captain Juan Seguin and a Lieutenant Smith detached and aggressively reconnoitered forward. A small microcosm of the cooperation between native Tejanos and early immigrant Americans that was engendered in the young Texan republic. A cooperation not meant to last long when waves of less tolerant Americans poured into the newly founded Republic.

                    • Any time!

                      I love Texas Revolution history, my most re-read book is probably “Texian Iliad” by Stephen Hardin.

                      I contend that if any student of history that wants to learn the overarching themes of human conflicts throughout history, then study 1) the Peloponnesian war and 2) the Texas Revolution.

                      And maybe War of the Roses.

                  • Poor Sam had to endure those boozing slanders all his life! Thanks for reminding me about Seguin’s foray. There were a lot of interesting small actions between the fall of the Alamo and the decision at San Jacinto.

  2. You have to do a heap of digging to find that the mean old company isn’t picking on it’s workers. Pay particular attention to the comments on the pension plans, the union rules and who can do what, and it’s not hard to figure out why it takes a union crew of 10 days to fix a sewer in Chicago. So the city has to raise taxes but Hostess goes bankrupt. http://www.forbes.com/sites/kylesmith/2012/02/15/the-teamsters-union-is-taking-away-our-twinkies/

  3. What if, in place of a union, it was an electric power company that would not budge to offer lower rates, forcing bakeries to shut down?

    Would the ethical analysis be any different?

    • The electric company charges its rates based on a narrow window, the floor of which is a minimum necessary without going out of business itself and the ceiling of which is a maximum possible without losing competition to another electric company.

      The electric company cannot go below without going out of business in turn.

      The Union can relax demands on certain perks in order to keep people employed.

      So that is not a fair analogy

  4. As a result of this incident, I’m starting to believe that unemployed union members whose strike put a company out of business should be ineligible for unemployment benefits. The union could have avoided this, and having failed to do so, the 18,500 newly-unemployed are THEIR responsibility, NOT MINE.

    –Dwayne

  5. Could one or more U.S. major league sports be the next Hostess Brands Inc.? (Nah – it’ll just be Boeing, and the teams and the fans will keep on flying to games and vacations on European, Brazilian and Chinese jets.)

    • Well, from what I read the NFL and MLB are in pretty good shape, and I would assume that the NBA is better after their new agreement.

      On the other hand, I do wonder how many complete seasons the NHL can afford to lose before things start to collapse — or some wealthy hockey fanatics try their hand at forming a league that will actually go out and play hockey. Can the success of the AFL be repeated a half century later?

  6. You can look up the facts on this case, but Hostess and the private equity firm that owns it have been leeching money out of the company for 8 years. Requiring workers to take more and more cuts in pay and benefits while putting none of those profits back into the company. Then they end contractually required pension contributions and fail to put any of those savings back into the company. THEN they file bankruptcy and at the same time jack up the pay of senior executives by 60%-200% all while demanding 28% pay cuts for all union workers. So, top pay would go from about $16 to about $12.

    In this case it’s not the union but Hostess that’s the ethical dunce.

    • This isn’t a business management blog, Eric. Hostess went under once before, and its purchasers have a right to run the company as they choose, stupid, greedy, or not. The point remains that killing the business and losing the jobs is neither productive nor right; it is destructive and wrong, and the union being happy that everyone’s out of work as a symbolic victory is Bizarro World nonsense. The article made no judgments about the owners’ conduct at all, and “yeah, but the other guys are worse” is not a valid ethical argument. Let me know when Hostess says having to liquidate is a victory for management.

  7. Hostess is playing a game of halves. 2004 a top baker would make $45K a year, now that’s $34K a year (with a slashing of benefits), with the latest “best” offer from Hostess would leave bakers making $25K with nearly no benefits.

    So, the union accepts this deal and in two years Hostess is back in bankruptcy breaking the previous contract and demanding bakers take a pay cut to $15K a year with no benefits. When does it end?

    “Hey Jack, I know we hired your company for an ethics conference but we’re only going to pay you 1/2 of what the contract said. We’d pay you more, but the conference organizers needed a 200% increase in their pay so we can’t pay you what was promised or the conference will go bankrupt. If you say no, we’ll just cancel the conference and won’t pay you anything.”

    You can’t say the union is unethical in this instance if you know the whole story. There is a point where you can be pushed only so far and the only ethical action is to force change, even if that change is very painful.

    • What change did they force? They just put their own company out of business—it doesn’t change a thing other than that.
      The contract you describe in my case is nothing like a long-term commitment on pensions and employment contracts. If a company promised to keep me coming back for 10 years at an escalating fee, suffered financial reversals and said, “We can either pay you less than we thought we could afford 10 years ago, or not use you at all, your choice,” I would take the deal. The old phrase “Don’t cut off your nose to spite your face” comes to mind.

      • So, you take the contract at 75% of what was promised. You find out at the conference that the savings from your reduced pay didn’t go to improve the conference and make it more viable for the future but went to lease a flashy car for the conference director.

        Next year the conference director says your participation last year was the prime attraction and your participation in the conference this year is required for the conference to happen. But, the conference has again fallen on hard times. You’ll have to do the conference for 75% of what you got paid last year. They’ll cover your airplane ticket but you have to cover all of your other expenses. Say yes and the conference continues. Say no, and it doesn’t happen. Oh, did I mention that you’re learning this two weeks before the conference is to happen?

        Yes, I understand my analogy was not perfect. Maybe the one above is a little closer. Either way, if you can’t see my point then I must ask a simple question. How many times to you have to get smacked in the mouth before it’s ethically OK to walk away table? How low does offer from Hostess have to be before it’s OK for the union to strike? According to you a 28%+ pay cut plus loss of benefits isn’t a big enough hit, then what? 50%? 75%? Maybe they have to wait for a 90% pay cut?

        What the union won in the strike is peoples’ attention. It’s discussed in the news and on CNBC, MSNBC and the like. Maybe just maybe people learn a little bit more about vulture capitalists and the wanton destruction they wreak on our economy. They also got the attention of the bankruptcy judge. I’m guessing a 92% strike vote from the union and company management that gave themselves 6-figure bonuses on top of the pay increases smelled a little fishy.

        • Oh, please. What the union LOST is `18,500 jobs. Burning down the town to save it—that’s all this is. Those executives have their parachutes, the workers don’t. I walk away from the game if there’s a better one that will let me play. Otherwise, it’s a tantrum, nothing more.

          • Got it. The pee-ons and untouchables should be happy they have a job and thank their stars they get any pay check at all.

            You’re flat out wrong in this case. This is a frying pan/fire type situation and the history of hostess management says the fire is looking a hell of a lot better than the frying pan.

            Anyway, have a great Thanksgiving everyone.

              • So is there a point where you think people should say “sorry, I’m better off jobless than working for you”?
                I don’t know how it works for union employees or for hourly workers, because I’ve been a been salaried for 30 years, but from that perspective, taking too big a pay cut can be worse than being laid off – your next job will usually set your wage based to some extent on what your last job paid you. And if you take too big a cut, companies think there must be a problem with you.
                Maybe it will turn out to be more of a Pyrrhic victory than not; but the company was asking the employees to beggar themselves because the execs screwed up. There was no guarantee that the execs would do any better this time
                If they were even going to try. The current CEO has made a career of dismantling bankrupt companies. I would venture to guess that the real strategy was to make the union an offer the union couldn’t NOT refuse, so the execs could get their bankruptcy rolling.

                • “I don’t know how it works for union employees or for hourly workers, because I’ve been a been salaried for 30 years, but from that perspective, taking too big a pay cut can be worse than being laid off – your next job will usually set your wage based to some extent on what your last job paid you. And if you take too big a cut, companies think there must be a problem with you.”

                  What?!

                  I’ve always negotiated my salaries/benefits based on what value I thought I was bringing to my employer based on how my skills fit in with the grand scheme of things, not based on what my previous salaries were. Sometimes it is more than before, sometimes it is less.

            • The problem is that the executives, with their golden parachutes, can just retire, take their time in finding another job, or even possibly start another business. The laid-off workers…not so much. Basically, I’m not sure this incident will change anything, since it’s showing us that executives will still win even if the company goes down.

              • Yes, those problematic executives. Almost like one day they were formed by the hand of Satan out of clay made from greed and unfairness. Yes, Satan created these unrepentant monsters and from day one of their creation they were CEOs out destroying workers lives. They never worked a day in their life, they never had a childhood, they didn’t have mothers, they weren’t educated, they magically appeared as evil people in charge of companies one day.

                WRONG! Most CEOs and business owners got there because they worked HARDER and worked SMARTER than their peers. The vast majority got to the top due to hard work, intelligence, and loyalty to good leaders. They fully deserve those ‘golden parachutes’ from a life lived working.

                Quit spewing your class envy hatred.

                CEOs make what they make, in the case of a publicly traded company, because the shareholders are content with what they make, since the CEOs are the ones making the tough decisions. If you don’t like the system, don’t buy into publicly traded companies and don’t work for one. Free market works both ways.

                When you say the problem is Executives with golden parachutes you have made no logical connection nor attempted to propose a fair solution to said problem. The problem is interference with the free market.

                • Dude, I have no trouble with executives in and of themselves; I might have voted for Obama, but I think we need men like Romney as well, at least in the private sector. Hell, I even have respect for the so-called “robber barons”, particularly Carnegie and Rockefeller. What I was actually saying was that when unions issue doomsday ultimatums, actually carrying them out seems to hurt the strikers far more than it does the management, at least in this case. I’m not using the term “golden parachute” in the pejorative, just saying that the executives will have a lot more resources to work with when the company goes down than the union folk.

                  • We need men like Romney…especially in the Private sector. Yet, men like Obama, especially in the government sector, tend to dissuade and discourage men like Romney in the private sector from doing what is best for the country (what is best, by the way, comes from the Free Market, not the government).

                    You claim you said that the unions following through on ultimatums are the hurtful actions. You say that no where. Your implication is that the safety-netted CEO’s can just brush aside the unions and fold the company since they are so secured. Yet, every businessman I know would never want to do such a thing, EVEN if it were the right thing to do by the numbers.

                    My own boss, even here in seemingly recession-proof Texas, revealed to us that we were finally suffering slightly from the nation-wide recession.

                    He showed us, quite frankly, all the numbers behind our financial situation. For 2 years we’d not expanded the company at a proper pace. He literally showed us how he could sell the company and invest all the money from the sell in a mediocre bank account and the money would expand more rapidly off that interest than at our current market performance. However, we knew he would not do that, because he cares about the people in his company and he cares about the industry we are in…

                    AND

                    …he cares about ensuring that the consumer, his clients are getting the product for which he trained his whole life to give them.

                    I take that out in its own line because modern society has forgotten what business/industry/companies are for.

                    1) Many claim business exist to provide jobs (a strong motivator, but WRONG)
                    2) Many claim business exists so capitalists can make money (a strong motivator, but WRONG)

                    Business exists because people want some thing or some service, and other people have realized they have the skill and aggressiveness to provide it. (what follows that is Jobs (1) and Profit (2))

                    • Well, the fact that the people running Hostess did ultimately chose to liquidate the company would indicate that they ultimately felt it was more profitable to “just brush aside the unions.” I’m not disputing your statement that most executives would be reluctant to do this (one of our family friends could probably have retired years ago, but is still working simply because he likes to, after all), but in this case, it’s damn obvious that the strike was the tipping point.

                      Also, note that my comment was a reply to Eric R; in that context, it should be clear I was trying to convince him that, contrary to his own beliefs, these sort of ultimatums seem to generally be bad ideas.

  8. The people running Hostess did not see it as more profitable to ignore the union’s utimatum. They are earning NO profit now. They had to close shop simply because giving in to the unions would have also earned NO profit…even worse it would have LOST money. The math is pure. This was not a decision to make profit…that is just ludicrous.

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