Union Misjudgment Costs Hostess Jobs

Nov 19, 2012

Photographer: Tina Fineberg/Bloomberg.

As America witnesses the Great Twinkie Bubble of 2012, Hostess will appear before a U.S. bankruptcy judge seeking permission to shut down its operations and begin liquidating the company. If the judge agrees, physical assets like the bakeries, warehouses, and related equipment as well as intangible assets—product brands and their recipes—will go up for sale to pay off its debts.

Economist Dean Baker defends the Bakery, Confectionery, and Tobacco Workers and Grain Millers International Union [BCTGM] representing Hostess bakery workers, for rejecting the company’s final offer, refusing to end their strike, and pushing it into liquidation, writing, “[I]t is not clear that they had a better route available to them.”

The choice was quite clear. Hostess said the union had to accept its final offer or the company would shut down. It’s doing exactly that, and 18,500 workers will be unemployed.

It seems that the BCTGM thought Hostess was bluffing and spread the rumor that Mexico-based Groupo Bimbo would buy the company which wouldn’t happen due to antitrust issues.

Even the Teamsters who represent other Hostess workers disagreed with the BCTGM’s strike. “The BCTGM chose a different path, as is their prerogative, to not substantively look for a solution or engage in the process,” the union said in a press release. The Teamsters looked at the company’s financial information and realized that liquidation was “not an empty threat or a negotiating tactic, but the certain outcome” if the bakers continued to strike. They wanted BCTGM members to “determine their fate in a secret ballot vote.” Unfortunately bakery union leaders didn’t allow that to happen. What’s most tragic and ignored by Baker is that the BCTGM, representing only 5,000 Hostess workers, cost 18,500 their jobs.

Yet, the BCTGM president continues to engage in wishful thinking by hoping that there’s a buyer out there willing to save the company and all those jobs [h/t Ed Morrissey].

AFL-CIO president Richard Trumka in backing the BCTGM, wants America to give thanks to the “bakery workers for taking a stand.” The 18,500 workers who will endure a very unhappy Thanksgiving because of the BCTGM’s misjudgment probably do not agree.

UPDATE: Hostess' demise has been postponed. USA Today reports:

Hostess Brands and its second largest union will go into mediation to try and resolve their differences, meaning the Irving, Texas-based company won't go out of business just yet. The news came Monday after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week.

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