Hostess workers strike may kill company

[balrog666]

Perhaps that's what the Hostess employees did.

That's why I asked if these were good jobs or rotten jobs. If they were lousy jobs, then it's no big deal that they are gone.

If these were pretty good jobs that people wanted to have, even at the reduced pay level, then obviously they screwed up.

85% of the union employees had already agreed to the new contract details (Hostess had to deal with a great many different unions), so they must have preferred to keep the jobs they had. I'll trust their judgement on that.

But they got burned by those obdurate fellows of the Bakers Union. If I were any of those Teamsters, et al, I'd rather angry at those guys right about now.

 

[Jomante]

85% of the union employees had already agreed to the new contract details (Hostess had to deal with a great many different unions), so they must have preferred to keep the jobs they had. I'll trust their judgement on that.

But they got burned by those obdurate fellows of the Bakers Union. If I were any of those Teamsters, et al, I'd rather angry at those guys right about now.

From this article:

"Do it, shut it down," a woman yelled at 5 p.m. Thursday from the picket line formed at the company's Indianapolis plant.

The union business agent said he'd prefer to see Hostess sold.

"It's definitely got to be better than what this company's trying to implement. There are other bakeries out there looking to purchase some of these locations. These employees have the opportunity to go back in (under a new owner)."

Looks like they got what they wanted. Of course, we'll have to see if the other bakeries who buy these, assuming any do, will then go on to hire the above two people.

 

[The_Animus]

You're going to educate me on a topic you admit you know nothing about?

Perhaps you should educate yourself, and read up on the actual case at hand.

You repeatedly asked how top management at a failing firm can benefit from it failing.

1. Buy a failing company for hundreds of millions of dollars.
2. Run it into the ground and force it into closure.
3. ?
4. Profit!

Surely someone can explain Step 3?

I explained step 3. Have a great day.

 

[geni]

Congratulations unions. You bankrupted the company and now nobody gets anything.

Err the company has saleable assets. So the banks will definently get some money back and those who chose to buy them well presumably do so on the bases that they get an acceptable deal. So "nobody gets anything" suggests a missunderstanding on capitalism. Sucks for the shareholders mind but well thats shares for you.

 

[geni]

You think companies waste money hiring CEO's for no reason.

For all practical purposes "companies" don't hire CEOs. Boards of directors do. For the most part they hire CEOs that will allow them to remain on the board of directors. Actual ability to run the company is secondary.

 

[geni]

I'm shocked, shocked, shocked that none of the people who claim this was a big conspiracy by equity firms to run Hostes into bankruptcy because somehow this means big money for the equity firm has supported the claim.

1. Buy a failing company for hundreds of millions of dollars.
2. Run it into the ground and force it into closure.
3. ?
4. Profit!

Surely someone can explain Step 3?

Make sure the company's assets are worth more than you paid for the thing. It is a fairly rational business strategy. If you are good at optimising liquidation values you may well make more from selling up than it cost you to buy the thing in the first place.

Indeed I can think of historic examples where companies failing to liquidate at the right time has resulted in a significantly reduced payout to shareholders.

 

[WildCat]

You repeatedly asked how top management at a failing firm can benefit from it failing.



I explained step 3. Have a great day.

You are confusing "top management" with "ownership", and it is the owners (the dreaded private equity firm oooh scary) who supposedly are making the big profit in Step 4 from the mysterious process of Step 3.

So please explain Step 3.

 

[WildCat]

Make sure the company's assets are worth more than you paid for the thing. It is a fairly rational business strategy. If you are good at optimising liquidation values you may well make more from selling up than it cost you to buy the thing in the first place.

Indeed I can think of historic examples where companies failing to liquidate at the right time has resulted in a significantly reduced payout to shareholders.

Is that what has happened here? That should be the case, remember you have to prove the conspiracy theory that Hostess was taken over for the express purpose of forcing it to fail.

eta: oh, and you also have to prove the claim that causing the company to fail somehow makes it even more profitable than if it had become, errr, profitable.

 

[Meadmaker]

85% of the union employees had already agreed to the new contract details (Hostess had to deal with a great many different unions), so they must have preferred to keep the jobs they had. I'll trust their judgement on that.

But they got burned by those obdurate fellows of the Bakers Union. If I were any of those Teamsters, et al, I'd rather angry at those guys right about now.

But the possibility exists that the Teamsters had great jobs, and the Bakers had lousy jobs. While the Teamsters would probably be angry, the Bakers really have to put the Bakers first.

So I'm just curious what sort of deal the Bakers were being offered. Is it something that most of us who don't bake Twinkies for a living would envy, or would most of us say that we wouldn't work for those wages either?



Meanwhile, the managers/owners had a choice as well. Bummer that they couldn't attract good people who were willing to work at a wage that would make the owners some money, but that's the way the Twinkie crumbles. I guess they'll have to find some other job. Some of them will have to take a pay cut, I'll guess, but that's life. Their company failed. That is, kind of by definition, a sign of bad management, so a pay cut seems appropriate. Maybe they'll do better next time.

Assuming of course that they don't make out like bandits by selling the brand names and baking facilities to other parties.

 

[The_Animus]

eta: oh, and you also have to prove the claim that causing the company to fail somehow makes it even more profitable than if it had become, errr, profitable.

Why? One way is easy and profitable, the other is hard and has no guarantee of success or greater profitability.

 

[WildCat]

But the possibility exists that the Teamsters had great jobs, and the Bakers had lousy jobs. While the Teamsters would probably be angry, the Bakers really have to put the Bakers first.

So I'm just curious what sort of deal the Bakers were being offered. Is it something that most of us who don't bake Twinkies for a living would envy, or would most of us say that we wouldn't work for those wages either?

The question is, would Hostess have been able to find workers willing to work for the lower wage if the union were to suddenly disappear? Because the union isn't just refusing to work for those wages, they've also prevented anyone else from working for those wages if they wanted.

Meanwhile, the managers/owners had a choice as well. Bummer that they couldn't attract good people who were willing to work at a wage that would make the owners some money, but that's the way the Twinkie crumbles. I guess they'll have to find some other job. Some of them will have to take a pay cut, I'll guess, but that's life. Their company failed. That is, kind of by definition, a sign of bad management, so a pay cut seems appropriate. Maybe they'll do better next time.

Assuming of course that they don't make out like bandits by selling the brand names and baking facilities to other parties.

How has the community of managers/owners grown or contracted over the past 40 years? How about private industry unions, has their membership increased or decreased over the last 40 years?

That's the way the Twinkie crumbles when you refuse to change with the times. It's not 1920 any more.

 

[ProBonoShill]

Instead of asking others, several times, to educate you on the topic of most every thread you post in, why don't you take a few minutes and look it up. I believe I've posted links in other threads you were a part of which answer this. But just for you I'll post them again.

http://www.rollingstone.com/politic...tory-of-mitt-romney-and-bain-capital-20120829

Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing>>>SNIP

That article makes no sense.

Are we to believe a successful enterprise like Goldman Sachs just hands over millions of dollars to Bain Capital, so they can acquire troubled companies and then watch their money go down the drain when the business goes bankrupt?

And they do this multiple times?

Does Lloyd Blankfein know about this?

 

[WildCat]

That article makes no sense.

Are we to believe a successful enterprise like Goldman Sachs just hands over millions of dollars to Bain Capital, so they can acquire troubled companies and then watch their money go down the drain when the business goes bankrupt?

And they do this multiple times?

Does Lloyd Blankfein know about this?

It's amazing how they somehow make boatloads of money by deliberately making companies fail.

That's how you make the big bucks apparently, knowing what Step 3 is. No wonder no one here will tell!

 

[StankApe]

step 3- work 80 hr weeks trying to formulate a plan to expand business followed by more 80 hr weeks putting the plan into action hoping that you can increase quarterly earnings enough to revitalize the stock price , then you can put it up for sale and turn a profit quickly while maintaining the value of your options.

that's the real way to profit from a takeover, either by the above, or by removing a competitor , which doesn't apply in this case

 

[Meadmaker]

The question is, would Hostess have been able to find workers willing to work for the lower wage if the union were to suddenly disappear? Because the union isn't just refusing to work for those wages, they've also prevented anyone else from working for those wages if they wanted.

I guess we'll find out. The market for snacks hasn't changed. There are ovens waiting to be used, and the union can try to get into whatever plant tries to take over those bakeries, but the new management is under no obligation to pay the new workers high wages. When those ovens get fired up again, and many of them will, they won't be staffed by union employees.

 

[jj]

step 3- work 80 hr weeks trying to formulate a plan to expand business followed by more 80 hr weeks putting the plan into action hoping that you can increase quarterly earnings enough to revitalize the stock price , then you can put it up for sale and turn a profit quickly while maintaining the value of your options.

that's the real way to profit from a takeover, either by the above, or by removing a competitor , which doesn't apply in this case

So, you're ignoring how the officers of this company made out like bandits on the money "saved" from the employees, without reinvesting a thing, and how they stripped it and ripped it?

This is not an unknown method, it happened in the 1920's too, before the now-demised set of regulations was set in place to prevent deliberate destruction like this.

 

[StankApe]

evidence for the stripping and ripping? it looks like they are going to have a hard time cashing in those fat stock options when the stock is worth nothing. I have no idea how much the brands and facilities will bring, but they have to pay off the creditors first.

No, it was much better to have the company work than to have it go under. Corporate pirates buy companies and liquidate them immediately. Why waste money fiddling around with union negotiations when you can cut costs down to 0 by stopping production the day you take over?

 

[geni]

Is that what has happened here? That should be the case, remember you have to prove the conspiracy theory that Hostess was taken over for the express purpose of forcing it to fail.

Why would you describe extracting the most profitable outcome to be making something fail?

 

[geni]

The question is, would Hostess have been able to find workers willing to work for the lower wage if the union were to suddenly disappear? Because the union isn't just refusing to work for those wages, they've also prevented anyone else from working for those wages if they wanted.

No they aren't. The factories weren't closed shops.

 

[geni]

step 3- work 80 hr weeks trying to formulate a plan to expand business followed by more 80 hr weeks putting the plan into action hoping that you can increase quarterly earnings enough to revitalize the stock price , then you can put it up for sale and turn a profit quickly while maintaining the value of your options.

that's the real way to profit from a takeover, either by the above, or by removing a competitor , which doesn't apply in this case

Not remotely.

The most straigtforward approach is to pick up on an an asset that other potential purchasers have missed (say land) and liquidate.

Next is rather than expanding you instead shrink the company in the process removing those parts of it that aren't profitable leaving a smaller but profitable core. This of course requires that there actualy be a profitable core rather than it just being accountacy smoke and mirrors.

Thirdly you can try cutting costs to below sustainable levels to make the company profitable while hoping that the assets +the profits over the 2-3 years before the thing collapses are more than you paid for the thing.

Expanding the business? Thats kinda a high risk approach.