Sunday, November 18, 2012
Union Not The Bad Guy In Hostess Debacle
This is not the first time that Hostess has been in bankruptcy. They declared it back in 2004. At that time, the union stepped up and accepted huge cuts in pay and benefits -- about $110 million dollars worth of them. If that money had been put back into the business, it might have been saved -- but it wasn't. It went into the pockets of the Wall Street equity and hedge funds that now controlled the company, and those firms continued to make the company borrow money to give themselves even more profits.
By 2011, the company was even worse off (thanks to the Wall Street looting), and they demanded the union give them even more concessions. The union refused, noting that company executives had received huge pay raises at the same time they were demanding more cuts in pay and benefits from union workers (the CEO received a salary increase from $750,000 to $2,550,000 a year, and other executives got equally outrageous raises).
The truth is that the Wall Street equity and hedge funds walk away from this having made millions in profits. Even creditors will probably do OK, because they'll get paid back from proceeds gained by selling the company's secret recipes and physical assets. The real losers in this greed raid from Wall Street are the union workers. They have lost their jobs. All they got was the blame (even though it was not their fault).