Unions didn't kill hostess

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Your usual talent to distort truth and leave out pertinent facts was on prominent display in your editorial of Nov. 24, “Consuming the Hostess.”

The failure of Hostess Brands was not due to the unreasonableness of striking workers. The facts that you left out are as follows:

Hostess was acquired by a Bain Capital-style private equity firm, Ripplewood Holdings, in 2004. Since that time, these “restructuring experts” loaded the company with debt and appointed a succession of no less than six CEOs, none of whom had any experience in the baking business. Promises to invest in the company’s future were never kept, despite the unions having previously accepted major cuts in wages and benefits to help the company survive. During this same time, of course, executives enjoyed steadily increasing raises.

When the company made the latest round of demands for even further cuts, the Teamsters Union voted to accept them by a narrow margin. But members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union had grown weary with management’s games. They refused to “give up their pensions only to see another management team fail, and see Wall Street investors walk away with untold millions”, according to its president, Frank Hurt. They realized that “the plans of the Wall Street investors all along were to sell the company in whole or in part, in order to maximize the profits of these vulture capitalists, regardless of the impact on the workforce,” again according to Hurt.

In other words, Hostess had planned to close plants even if the workers had accepted the latest rounds of cuts and stayed at work. In reality, this is just the latest example of a company being poorly managed, run into the ground and then bled dry for maximum profits by private-equity investors.

Maintaining the fantasy that unions, despite having accepted major previous cuts, are entirely responsible for what is in fact a colossal failure on the part of management, ensures that the ever-increasing profits of Wall Street elites are well-served. But it causes a real disservice to those millions of middle-class Americans who are being forced to work harder and harder for less and less.

Joni Ellsworth

North Augusta S.C.

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dwb619
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dwb619 12/07/12 - 01:36 am
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two sides

There are two sides to every story,probably more. While all that you said is true, it doesn't "play" well in this area.
Plus, this was only the business of the company and the affected unions.

RMSHEFF
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RMSHEFF 12/07/12 - 10:08 am
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The Wall Street article Joni quoted from...

If you read the Wall Street Journal article Joni quoted from she left out everything that did not fit in her storyline. Example...". The private equity guys will likely lose most of their investment, since their stake in the company will be worthless. It's also not clear that the hedge funds and other lenders that supplied Hostess with its mountain of loans will fare much better. When it entered Chapter 11 this year, the company owed around $935 million, if you include the additional loan it took out to keep the lights on and creme flowing.

As you can see the evil "vulture capitalist" lost all the money they invested as did the hedge funds that made the loans. Does she really believe they invested all this money just to loose it. When they bought Hostess they thought they could turn it around, make it profitable and sell it. Thats what they do. It would have gone bankrupt years ago. It is sad for the workers but the fact is they could not compete with lower wage non union rivals who are doing just fine.

KSL
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KSL 12/07/12 - 10:21 am
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RMSHEFF

Thanks for for telling the rest of the story so conveniently left out. The left is so very good at telling only their side.

billcass
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billcass 12/07/12 - 12:05 pm
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Who owns the company?

Ms. Ellsworth leaves out one important fact. It is the owners and investors in the company who get to decide whether to keep it afloat, not the employees. She uses convenient, politically charged words like a "Bain-capital type investment firm" to play the same class warfare game the President plays. Well, here is a news flash: These capital investment firms are in business to make money, and their shareholders (usually government pension funds) will lose money if they make bad investments. So why did they invest in Hostess? To make money. So when the union thugs tried to extort more money out of them (some of these laborers were making upwards to $35 per hour according to reports) they made a common sense decision to simply shut down. If they can't make money, the hedge fund loses money, and their investors lose money.
So yes, Ms. Ellsworth, it was the union that caused this. And they have reaped what they have sowed. But not to worry. Given the escalating rates of people on disability since President Obama took office, they will be well taken care of.

YeCats
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YeCats 12/07/12 - 01:01 pm
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Skys are really changing?

I'm shocked. Bush didn't get blame.

I wonder if the author every bought/consumed the brand?

andrewcweaver
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andrewcweaver 12/07/12 - 04:14 pm
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Executive bonuses to close the company?

@billcass The Union did NOT cause this. Lets take that $35 dollar an hour employee, for example, he,or she makes 67200 before taxes. Yet, the CEO, Gregory Rayburn made 2.5 MILLION! Which was TRIPLE what he made before. AND NOW, they are giving their executives bonuses totaling 1.8 MILLION, to liquidate the company THAT THEY RAN INTO THE GROUND. If those CEO's weren't so greedy, they may have been able to keep their company running. And this isn't the FIRST time Hostess has filed bankruptcy, they filed in 2004.

I bet that employee making $35 an hour probably wishes he had a job now. How's he supposed to support his family now? You know, the sad part about the whole thing is the fact that those executives didn't give a DAMN about those employees. Maybe you should review all of the facts before you make an ignorant comment like that.
She was right calling it a "Bain Capital-style private equity firm." Bain Capital did the exact same thing, ran a company into the ground, and BLED it dry.

RMSHEFF
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RMSHEFF 12/07/12 - 04:28 pm
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andrewcweaver

You obviously no nothing about how business works. If the cost of what you produce ie. Labor and materials and all fixed cost exceed what you can sell your product for you loose money. Its a question of math and maybe the company was not run well. If you would have been in charge what would you have done. If you are competing with a bakery down the street with lower labor cost you must make up the difference in other areas and obviously that could not be done. They were borrowing money just to make payroll and keep the lights on. The same is true of GM. The Obama bailout of GM or actually the auto unions is only a short term patch. If GM cannot bring their labor cost in line with the non union competition they stand NO chance of surviving long term and will require future bailouts. I will bet you GM will be circling the drain within 10 years. The problem is the American people are majority owners of GM and stand to loose the most. Have you ever noticed Obama only invest our money in dying companies?

dichotomy
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dichotomy 12/07/12 - 04:35 pm
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Wrong!

Joni.........you DID see the part about the rules that Hostess Bread could not be delivered in the same trucks as Twinkies......drivers could not take the product from the truck into the store so there had to be ANOTHER union guy ON EACH truck......so now they had to pay 4 people and have 2 trucks to do the job of 1 man and 1 truck.

You can Bain Capital all you want to Joni but silly butt UNION crap cost 18,000 people their jobs in plants that Hostess had NOT planned to close.

rmwhitley
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rmwhitley 12/07/12 - 06:01 pm
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Show me a union
Unpublished

designed to help the average American and I'll show you how gubmint motors and chrysler motor co. are going to give their vehicles away from now on. All union thugs, I mean workers, are going to work for free.

chascushman
6653
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chascushman 12/07/12 - 06:20 pm
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It is sad to say but the
Unpublished

It is sad to say but the moochers won the election

chascushman
6653
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chascushman 12/07/12 - 06:29 pm
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Bain Capital
Unpublished

I have seen several companies like Bain Capital take over companies in trouble. Most of time they saved the companies from closing and all employees losing their jobs. The ‘Bain Capital’ companies did make cuts and lay off 15 to 20% of the employees but they saved the 80 to 85% of the employee’s jobs.

KSL
121219
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KSL 12/07/12 - 10:36 pm
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I would like to see Joni's

I would like to see Joni's justification of the union rules.

KSL
121219
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KSL 12/07/12 - 10:37 pm
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Do you

Reckon we will see an adequate explanation?

KasparHauser
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KasparHauser 12/09/12 - 03:22 pm
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Human Checkvalves
Unpublished

I wonder, was the following phrase whited out on the 'blame the unions' readers' screen:

"Maintaining the fantasy that unions, despite having accepted major previous cuts, are entirely responsible for what is in fact a colossal failure on the part of management, ... "?

And, why is it I seem to smell 'sour grapes' so strongly whenever this kind of topic is discussed by people living in Right-To-Work states, where it was the Chamber of Commerce types who seem to have run the campaigns to decree them so?

And, how many people here would be willing to give up their pension plans just to give an incompetent management team the chance to go bankrupt, AGAIN? They certainly wouldn't do it with their Social Security checks, I bet.

But, then, those who bemoan the passing of Hostess probably also are still fighting chlorination of drinking water, not to mention fluoridation (P.O.E, P.B.F).

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