Sunday, November 18, 2012

Unions, Managers, and the End of Hostess

As I'm sure you all have heard already, Hostess, the maker of Twinkies and other unhealthy snacks, has had to declare bankruptcy and sell off its assets. This has cost 18,500 workers their jobs, right before Christmas no less, and hurt the economies of cities where the company has operations.

The straw that broke the camel's back was the recent strike by the unionized workers. However, as my  more left-wing Facebook friends pointed out, the company's executives were increasing their salaries at a time when the company wasn't doing well in terms of income. Lest you think this is just leftist agitprop intent on absolving unions from blame, there's this article from Daily Finance that confirms it.

When I first posted on this on Facebook, I criticized the union for killing the goose that laid the golden egg. However, with the whole thing about management raising their salaries when the company was hurting coming out, it seems they're not the only ones guilty of that particular folly.

Seriously, there's some major short-sightedness going on with both labor and management. Had the unions been more flexible (some of them were, but others weren't), that wouldn't have solved the issue of the managers raising their salaries rather than investing the funds in the business or the structural problems of the company not changing its products even in our more health-conscious age, but at least it would have kept 18,500 workers employed in the short run. And even though the Daily Finance article references how many of the managers agreed to reduce their salaries, others didn't. And then there's the lack of innovation or adaptation to changing tastes as well, which was another problem.

Everyone involved should have thought more about the long-run, be it their own employment (the less-flexible unions that didn't agree to the concessions) or the management who raised their salaries in a time of stagnant or declining revenue and weren't being innovative. Now everyone involved has no jobs and, for the moment, America has no Twinkies.

1 comment:

  1. There is plenty of blame to go around, however the left wants to only blame management while the right wants to blame the union. Both sides, except the unions who wanted to remain employed a month before Christmas and got screwed by the Bakers, are at fault for Hostess' second bankruptcy since 2009 and going out of business.

    Twinkies will return, someone will want that brand and the others. I have a personal preference about which company buys the intellectual property and that's McKee Foods (makers of Little Debbie). I'm from Collegedale, where McKee's HQ and basically 50% of its production is located. My dad has worked there for almost 35 years and will be 67 in a few months but doesn't plan to retire anytime soon.

    When news of Hostess possibility going out of business at the beginning of last week, my dad said that by Wednesday they had quadrupled lines of products that directly competed with Hostess (their versions of Hostess products) from 1 line to 4 to 5 starting this last Saturday night.

    I'm beginning to drag on and jumping from topic to topic not every well, but basically with Hostess going out of business McKee will become #1 in their industry. If McKee is interested and is able to get the intellectual property of Twinkies then starts selling them, it'll be a feather in Little Debbie's White straw hat and actually get them publicity because compared to Hostess' cultural footprint is dwarfed (yes, Little Debbies are talked about in the cultural sphere but nothing compared to Twinkies as seen since Hostess went out of business).

    Sorry for the long, sometimes rambling, reply but I sorta have a personal connection to this whole situation in a way and wanted to express it (probably not well). Thanks for reading.