Topics: Labor Unions

Sean Higgins: Nothing sweet about labor relations at Hostess

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Opinion,Columnists,Sean Higgins,Labor unions

Everyone knows the rap against Twinkies and the other confections made by Hostess: They're the worst kind of junk food, all sugar and empty calories. Expect to see a new argument added: They're union-busting, too.

Hostess, which is finally re-emerging from bankruptcy after closing down last year, went in full damage-control mode this week after a Wall Street Journal story indicated it was going to keep unions out of its workforce.

The Journal quoted C. Dean Metropoulos, head of one of the two private equity companies reviving the iconic snack company, as saying: "We do not expect to be involved in the union going forward."

In a press release Monday, Hostess Brands cravenly walked that back: "The recent statements in the press attributed to various Hostess officials are incomplete and do not reflect the policies of Hostess."

Lawyers clearly dictated that wording, since it's against federal labor law to block any union organizing. But how many think Metropoulos wasn't saying what he really thought?

The media flap reopened the main wound regarding Hostess' closure: Was it the result of union intransigence? The company fingered the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union as the culprit.

"Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs," it said in a statement at the time, claiming that the BCTGM, which represented 5,000 of its workers, rejected a "last, best offer" in September.

The union denied that, claiming it was being scapegoated and the company's problem was "mountains of debt, declining sales and lost market share."

The union has a point. Twinkies are a lot less popular now than in their heyday. When Hostess closed, it occurred to me that I hadn't had one of their products in a dog's age. (Nor did I decide I had been missing much when I got the last fruit pie at a CVS that day.)

Fortune magazine reported last year that Hostess' sales were $2.5 billion in 2011, down from $3.5 billion in 2004. It had been eclipsed in the U.S. by Grupo Bimbo, the Mexican company that owns Sara Lee.

But $2.5 billion is still a lot of sales. The company ought to have been able to survive. But Hostess had other problems.

It had already gone through a 2004 bankruptcy, citing $575 million in debts. By all accounts, management didn't use the opportunity to reorganize effectively. It actually had $860 million in debt when it declared bankruptcy in 2012.

The company's other problems included the fact that it was subject to 372 collective-bargaining agreements spread out over 54 bakeries, 1,000 distribution centers and 1,200 outlet stores. It also paid $103 million a year into 40 different pension plans.

The Teamsters, which represented an additional 6,700 Hostess employees, were given a look at the company books and reluctantly agreed to tough concessions. But the BCTGM wasn't in the mood. Still stinging from the 2004 concessions, it refused to give up more.

When a strike by its workers resulted in Hostess closing operations in November, the Teamsters lashed out at the other union. "The BCTGM chose ... to not substantively look for a solution or engage in the process," it said in a press release.

In an interview posted on the BCTGM website, union President David Durkee explained:

"Our members had given up on Hostess and this management team. I don't know how to put it any other way. They gave up."

CNN quoted one worker at the time of the closure as saying: "The point is the jobs they're offering us aren't worth saving."

With labor/management relations that poisonous, it's hardly surprising the new Hostess wants to keep the unions -- or at least BCTGM out.

Sean Higgins (shiggins@washingtonexaminer.com) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @seanghiggins.

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