Rockler: Blaming unions for company shutdown gives top Hostess officials advantage
Hostess Brands, Inc. – maker of such confections like the Twinkie – announced Friday it was going to go bankrupt. Cleverly and deceptively, the company blamed it on overly demanding unions. Americans raced to convenience stores and supermarkets to gather the remaining products available.
Because union workers asked for more benefits, the company’s profit was going to be unsustainable. The new contract with employees would reduce salaries by 8 percent, cut pensions and health care contributions. Approximately 18,500 workers would be laid off. The company’s CEO attempted to try and politicize the closing, by blaming unions. A careful inspection of the company’s history reveals a different story.
Gregory Rayburn, Hostess CEO, said, “The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products.”
But the facts have been distorted. Blaming unions for the end of the company is tougher to do when we consider some of the other choices the company has made. The previous CEO accepted a 300 percent salary increase despite being $1 billion in debt. His salary went from $750,000 to $2.55 million. Other top executives got 75-80 percent raises in 2011, The Wall Street Journal reported on April 9.
Rayburn became the new CEO and reduced his salary and the salaries of the other top executives to one dollar per year, as a symbolic gesture. Blaming the unions for his company’s failures can only do so much to cover up a company’s past.
Rayburn said, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.”
For conservatives and others want to hold unions accountable – the end of Hostess fits into the narrative we’ve seen elsewhere. Last year, Scott Walker blamed public employee unions in Ohio for creating an unsustainable state financial structure. He signed a controversial bill which ended public employees from collective bargaining. Walker blamed the unions for being unable to compromise and negotiate.
While unions may be a part of the issue, the rest of a company’s finances need to be taken into account, too. The bankruptcy of hostess also fits into the other narrative of increasing executive pay. Occupy Wall Street and other Occupy movements protested, among other subjects, the increasing pay and benefits which executives are receiving, while other workers are asked to take pay cuts.
Hostess also has had a history of financial problems. It filed for bankruptcy in January 2012.
Perhaps, we’d be better off without such products like the Twinkie. With nearly 36 percent of the population overweight, and an additional 33 percent obese, who are not included in the overweight percentage, the 2.5 grams of saturated fat (13 percent of the recommended daily intake based on a 2,000 calorie diet) might be better off left out of American’s diets.
Americans everywhere might be forced to purchase real bread, not Hostess’ soft, sugary and spongy Wonder Bread – a product which should hardly be allowed to be called bread. The CEO of Hostess blamed health care costs increasing for one of the reasons they had to shut down. It and makers of other unhealthy products are causing their own demise.
Yet, Americans can’t seem to get enough. On Craigslist, one man listed a box of 16 Twinkies and Ding Dongs for $300. The brands will be sold off, so as long as a buyer for the product comes along, we will likely not see the end of the pastry. Blaming unions for the end of the overall company, would not account for the full picture.
Harmen Rockler is a senior newspaper journalism and political science major. His column appears weekly. He can be reached at firstname.lastname@example.org or followed on Twitter at @LeftofBoston.
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