The howling has already begun from the mad partisans on the right. Cries of ‘union thuggery’ are ringing out in the blogosphere, certainly to reverberate out into the mainstream conservative media.
For those who like a few facts before passing judgment, it seemed like a good idea to put together a few highlights from the almost decade long struggle to save the iconic brand.
First, this is the second bankruptcy the company is going through. The first one, in 2004, led to significant concessions from all employees, and a loss of several plants, outlets, and about a third of the workforce. Turns out, that wasn’t enough.
Enter the ‘venture’ capitalists.
During the first bankruptcy, the company actually fought off several attempts to buy the company, instead turning over equity to several equity firms, many of whom, ironically, get their money from large pension funds. They managed to emerge from bankruptcy in 2009. Then things started to go downhill.
The company filed again this year, 2012, and continued to operate with $75 million more from the equity firms. They installed Gregory Rayburn as Chief Restructuring Officer, with a compensation package of $1.5 million, plus cash incentives and a $1.95 million “long term compensation” package. Rayburn’s company also was paid $120k per month in ‘fees’.
It was also discovered that immediately prior to filing bankruptcy in 2012, Hostess executives received raises up to 80%, despite having promised that all employees, including management, would share in the concessions necessary to keep the company afloat..
Then the company wanted more concessions from its employees. The unions refused the concessions but agreed not to strike, as long as they weren’t forced into a contract. Hostess went to a judge and force the unions into a contract.
The entire time, Ripplewood, the major equity stakeholder, was charging the company a $3 million annual ‘management fee.’
The baker’s union, which is being blamed for the shut down, says that the latest offer from Hostess amounted to as much as a 32% reduction, on top of what they already conceded in the previous bankruptcy.
A route driver, who works 60 hour weeks, recently told the New York Post, “My take home pay for last week: $418.50. I was making $550. You’re a smart guy, you do the math.”
Reprinted from TheRationalProgressive.com