Posts Tagged ‘GTL’

Well it looks like everyone is going to have to start eating Mrs. Freashly’s from now on.
Hostess, who filed chapter 11 bankruptcy in January this year, has decided to close down and lay off 18,500 employees, according to the LA times website.

But why are they doing such a thing?

Hostess’ chief executive, Gregory F. Rayburn said “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.”

For those that don’t really understand what filing bankruptcy entails, let me explain a little bit. If you went to a government school, like I had the misfortune of doing, chances are you didn’t learn a damn thing about finances, unless you are just nerdy enough to Bing it, like me. In this instance, when a company is failing and they have more debt than they can pay, they can go to bankruptcy court and file chapter 11. What do they go there for? To ask the government to bail them out with our tax dollars? No, they ask the court to grant them fiscal protection from their creditors to cease any and all collection activities while the company readjusts it’s debts and restructures. This means all contracts are null and void, everyone from the suppliers to the unions. The lenders are usually going to be happy with whatever arrangement that they can make because if they don’t work with them the company may go out of business and then they won’t get any of their money back. So the bankruptcy protects the investors, makes sure the lenders get paid, and makes it possible for the company to continue to keep their employees.

Since the courts approved their filing, the unions have to take a new deal. Hostess laid out a deal with cuts to their wages and their benefits package. The unions shot it down so Hostess offered to work with them as much as they could. The unions threaded to strike, Hostess let them, and the media, know that if there is a strike, we will be forced to close the plants. Hostess told them, straight up, if these plants stop producing and delivering product on time that they would have to shut down. What did the unions do?

STRIKE! They ignored the warnings and chose to stand outside with signs. Nobody crossed the picket lines so Hostess closed up shop.

Hostess ended fiscal year 2010 with a net loss of $341 million. In their bankruptcy filing their biggest creditor was the Bakery & Confectionary Union & Industry International Pension Fund for the humble sum of $944 million. All their other debts combined come to about $304.22 million, that includes one other pension fund and their vendors and everything else.

The union released this statement:

“The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,” said union President Frank Hurt. “The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company’s most valuable asset – its workers.”

I’d say that the financial mismanagement looks to be agreeing to those union pensions. This is what unions do. This why I’m proud to live in a right to work state and I’ll fight unionization tooth and nail if it ever tries to infest my area or my company. Unions are outdated and unnecessary in America today. Sure if I moved to Chicago, bloody Illinois I could be a union goon and get paid more but all that does is drive up the cost of living. Gas is as cheap in my state as it is anywhere in the US and I work for a company that pays at least as good, and better in most cases, than any similar industry in my area. When you have a right to work state unions aren’t needed. That’s why they fight it. They force workers to join through intimidation and ruin companies.

As always I want to know what you think in the comments below, and if you want more of the truth, subscribe up top. I still have more to say on unions but I’ll have to save that ammo for another battle, until then remember
Facts are to Liberals, as beef broth is to vegans.