Friday, November 16, 2012

Twinkies Goes Under for Good Thanks to Union Demands

Twinkies maker Hostess is going out of business. And it was the unions that killed it.

Accordingto NBC, Hostess Brands Inc. offered a contract to its unions that cut both wages and benefits. “The privately held company filed for Chapter 11 protection in January, it’s second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess has argued that workers must make concessions for it to exit bankruptcy and improve its financial position.”

In defense of the unions, NBC adds that the 80+ year-old company “was fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating.”

Fair enough. But none of that – from the necessity of making sacrifices during tough economic times, to fighting competition and trends – is surprising; it’s all part of running a business.

Yet the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union acted as if those were all technicalities. As if the company’s foremost responsibility was to ensure consistently shiny-rainbow conditions for its employees rather than staying solvent.

That’s not to say that treating employees well isn’t important. I firmly believe that any business (such as mine) that sees its workers as mere commodities only ends up suffering in the end. Happy workers are usually the best kind of workers.

Yet employees aren’t the ones who built the company. (Sorry Elizabeth Warren and President Obama.) They’re not the ones who sign paychecks. It’s not their name on the line, and ultimately, it’s not their property.

It’s the business owner’s.

And in this case, CEO Gregory F. Rayburn warned employees that he would have to take drastic action if they didn’t stop striking. Coerced by their union reps though, they didn’t heed the warning and, as a result, Rayburn issued this statement:

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike. 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.”

That’s reality, something that liberally-led unions refuse to acknowledge. But reality has a way of encroaching on delusions eventually,  just like it did with Hostess.

(On a side note, do you know that a business can’t even go under without government approval? Hostess had to file a motion with the U.S. Bankruptcy Court to close down. And that motion can at least theoretically be refused.)

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