Nearly two weeks ago on
November16th, Hostess food brands filed for bankruptcy, requesting permission
to close all of its businesses and sell their assets. Hostess food brand was
established in 1930 and has created classic American treats that have been
around for many decades including Twinkies, Devil Dogs, Snowballs, Coffee
Cakes, and Yoddles. However the question is, after so many decades of business,
what caused this American company to file for bankruptcy?
One
side of this Twinkie controversy claims that the Bakery,
Confectionery, Tobacco and Grain Millers Union caused Hostess's bankruptcy. The
makers of these iconic junk foods had to navigate through more than three
hundred labor contracts and a walk out earlier this month after Hostess
received Bankruptcy court approval to implement a wage cut that was not
including in its contract. After Hostess presented a new contract to the
unions, which cut salaries across the company by 8% in the first year of the
five-year agreement, but then were scheduled to bump up 3% in the next three
years and 1%in the final year, union workers rejected the deal and went on strike. (Hostess Brands closing for good). Instead of riding out the strike, Hostess Brand
decided to liquidate and on November 16th Hostess shut
down its 33 bakeries and 565 distribution centers and have prepared to fire
nearly 18,500 employees.
However
the other side of the Twinkie controversy blames years of greedy management and
constant executive changes. Since the 1980's, Hostess has been sold three
times, racking up debt and shedding profitable assets. In the past decade,
there has been seven different CEO's, and many say this has resulted in an
unstable company. Because of the constant money troubles, the company filed for
bankruptcy two times in the past decade, in 2004 and 2011. It has also been noted that the current CEO
tripled his pay after cutting worker's salary in a previous bankruptcy. Earlier
this year, members of the BCTGM Union were well aware
that as the company was preparing to file for bankruptcy, the Hostess CEO was
awarded a 300 percent raise and at least nine other top executives received
massive pay raises even though executives denied the unions their current salaries and implemented wage cuts.
After 82 years of business, Hostess Brand has gone bankrupt. But what do you think really caused Hostess’s bankruptcy, unions or greed?
Greed definitely has ruined this company. If the management hadn't been so bad the company would probably still be functioning. Its ridiculous what the CEO's of this company have been doing! I can't even believe one of them raised their salary by 300%. That is just unheard of! It is very unfortunate for a company like Hostess that has to go through these situations. It saddens me because their Twinkies, Ho Hos, and Ding Dongs have been one of my childhood favorites,so hopefully they will come to an agreement with the union.
ReplyDeleteI'm a child of Hostess/Wonder. Both of my parents and an uncle are retired from the Memphis plant. I worked there 13 years and I saw then it was unsustainable.
ReplyDeleteIt began with the leveraged buyouts in the 80s and it ended with the vulture capitalists.
The only thing left to loot in the world is pensions.
After that there will be no inheritance to leave because the corporate government will take that too.