Monday, November 19, 2012

The Twinkie Saga: It’s a Good Thing!

By Rich Kozlovich

I have linked a number or articles recently showing how the unions destroyed Hostess.  I really do think we need to see this more clearly. 

Unions cannot destroy a company unless the company lets it. 

Instead of taking the strong stance needed to stay competitive the company failed to say “no” when the unions demanded “yes”!  That’s their job to say “no”, and they failed to do so; and failed to do so for years.  It is the job of the union to demand the sun and the moon….and it surprises them when the company tries to give it to them.
"Ironically, the largest amount of that debt is owed to the unions themselves. When Hostess filed with the bankruptcy court, the company disclosed that its biggest unsecured creditor is the Bakery & Confectionary Union & Industry International Pension Fund, which it owes approximately $944.2 million. Its second-largest unsecured creditor, Central States, Southeast and Southwest Areas Pension Plan, is owed about $11.8 million. Hostess’s entire debt obligation is just over $1 billion. Thus, Hostess workers likely face not only a loss of their jobs, but their pensions as well, if the company goes under."
Who would agree to such unsustainable things?  The company makes these argreements based on foolish projections and bad judgement.  It is their job it say NO!  And they didn't do it.


At least I can understand the employees view.  They have no real vested interest and can go to work somewhere else…..at least in days gone by they could, but I cannot for the life of me understand the owner’s views.  I don’t know the financial makeup of Hostess, but I can tell you this.  If a union strikes a company that is large enough to withstand the financial loss for a short time the long term consequence is that it will be a cold day before they strike them again; but the company's leaders have to be willing to do the job they were hired to do.

In the course of my life I have had three experiences with unions.  The first was in the newspaper business.  The Cleveland newspapers printers union went on strike for about two months in the early 60’s to prevent the newspapers from going to what came to be known as “cold plate” printing at the time.  They finally agreed to allow it but the company had to agree not to get rid of the printers except through attrition.  Now there are no printers as we understood them at the newspapers any longer….and few newspapers.  Unless my memory fails me, those who were left joined the Teamsters, and for all I know they may not exist at all with modern computer and printing systems.  In fact, as I write this, I don’t even see newspaper trucks on the road any longer delivering papers to the paper boys (which don’t exist any longer) and to the distribution boxes.  So the Teamsters may be out also. 

Then I worked for a construction company that was building a power plant.  The company fired a man that should have been fired.  The union demanded he be returned to the job and the company brought him back.  I asked the union boss why he would do such a thing as he deserved to be fired, and we went back and forth until he realized that he was talking to an idiot child and calmly explained to me the most important lesson I ever learned about employee relations.  He said that it was his job to get the man back and the company’s job to fire him….and if the company refused to do their job he wasn’t going to do it for them.  That was an eye opener for me.  I wasn’t just a matter of determining what was right or wrong.  It was matter of "knowing" what is right and wrong and standing up for what was right.  Far too many labor relations people are too clever by half in their actions attempting to make side deals and not face the issue at hand…..if someone deserves to be fired, they are fired…..period, and in this case the company didn’t even attempt to make a side deal.  They just capitulated. 

I have a personal connection with the Bakers and Teamsters unions.  I used to be a “bread man”, delivering bread to grocery stores, restaurants and institutions.  The Teamsters union was the same union that represented the drivers and factory workers for the potato chip snack companies.  They had negotiated a four day work week the previous contract with the understanding that the men would do five days work in four.  It didn’t happen and Frito Lay didn’t like it.  When the next contract time came around  Frito Lay handed the union their contract restoring the five day week.  A contract they wrote; and the only contract they were willing to sign.   They handed it to the union and in effect said take it or leave it!  The union refused and told them they would shut down the factory also. 

Everyone walked out of the room, the company said don’t call us until you are willing to sign; the union went on strike for around two months.  They attempted to get the company back to the table but the company only asked if they were willing to sign the contract and when the union said no they pretty much hung up.  The union signed eventually and the union boss told me he would never strike them again because they were just too big.  They were big economically but they also had big castanets.

Unions have their dark side, especially when the government forces the companies to accept them, as the Wagner Act did during the FDR administration, and all the laws Congress has passed ever since.  However, industry must have leaders with big castanets or they are doomed.  The problem is the same problem throughout the world of large business.  Business is being run by bean counters, not leaders, and they will take the road of least resistance instead of earning the big bucks they make.  I find this true in the chemical companies as well as the service companies, especially when dealing with the media, the greenies and the government. 

We have the tendency to think that the “companies” aren’t working in their own best interests when they sign idiot contracts and make foolish agreements that no one would agree to in their personal life.  It isn’t the company….it’s the individuals in charge!  They are working to what they see as their own best interests.  In the large companies the stock holders have very little say about anything so they get away with it.  Does anyone really think the contracts the auto companies signed with the United Auto Workers were rational for the survival of the American auto industry?  Even auto company workers would roll their eyes at some of the stupidity the companies agreed to. 
Companies can be impacted negatively by a huge number of factors, but nothing destroys a company quite so badly as weak leaders that have no long term vision, government interference in things that are not their business and unions that don't believe there are long term negative consequences for their actions.  If you want to beat up on the unions, that’s fine; they deserve a smack….and more.  But don’t bleed all over yourself for the company.  They brought this on themselves, and I believe this will act as wake up call for others in industry that will have to come to grips with reality, including management, labor and government.  Especially government!
 And that's a "good thing"!
 

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