Hostess Brands closing for good
http://money.cnn.com/2012/11/16/news/companies/hostess-closing/index.html?hpt=hp_t4
Unions are not automatically bad, just like private equity is not automatically bad. However, just like private equity (something that should be very familiar to anyone who didn’t sleep the last two years; Romney represented the ‘best’ of private equity) is incentivized to make short-term decisions to maximize investor’s profits, unions are incentivized to grab the biggest piece of the pie they can. This, naturally, provides for a rather robust adversarial relationship betwixt ‘management’ and ‘workers’, one that can trivially devolve into personal acrimony that winds up in idiotic decisions that result in the worst case for everyone. This is a classic case. Hostess was struggling financially for the better part of a decade (I didn’t do any research on the whos, whys or werefores, but I speculate that it was crappy management decisions that triggered the angst of the workers that lead to the massive levels of distrust we see today), has already been through bankruptcy and is in bankruptcy again. It says that it will liquidate if one of the unions that represent its workers goes on strike and what happens? The union goes on strike! Result: instead of an 8% paycut to this particular union members (which, btw, would be made up in the next several years and replaced with a cumulative 25% cut of the company AND representation on the board), now they get a 100% paycut, but most critically, the _other_ 15,000 employees of Hostess ALSO get a 100% paycut as well.
Yes, there are good unions and unions have played pivotal parts in our nations successful industrialization. Yes, there are ‘vulture capitalists’ that take perfectly good companies and drive them into bankruptcy. But just like there are good private equity firms that makes the decisions the original owners could not (or would not) do, thus reviving a failing organization, there are idiot unions, managed, no doubt, by people who have never worked a day in their lives, that destroy perfectly good companies through their idiot demands. If a company is publicly traded then their books are wide open. If the books are not a faithful representation of the business, guess what? That is fraud and people go to jail for that. If the union doesn’t trust management to represent their best interests, I understand, but unless management is committing fraud (and it is publicly traded, naturally), the numbers don’t lie and any independent auditor can tell the union that their demands will drive a company out of business.
Were I one of those other 15K workers now unemployed because of those baker’s and their idiot decisions I might be doing some rampaging on their asses right about now!
