Under the Maple Canopy

Singing Union Songs Since 2009

Myth: The Unions are to Blame for Hostess’ Problems

There are plenty of businesses these days blaming their financial problems on unrelated issues (i.e. Papa Johns, Jimmy Johns, et al. and the PPACA).  Unfortunately, in our rather fact-free political world, most folks will take what business leaders say at face value without understanding the complexities underlying the situation.

Another example?  Hostess blames the union for their closing.

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO’s with no true experience in the wholesale baking business have left this company unable to compete or survive.

You know what’s disgusting? Union busting.


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