View Full Version : Hostess to close, lay off 18,500 after 'crippling' union fight
Team Sergeant
11-16-2012, 12:47
Sorry for your loss Dusty...... ;)
Hostess to close, lay off 18,500 after 'crippling' union fight
Published November 16, 2012
FoxNews.com
A small union's stubbornness in contract talks with Hostess is being blamed for the shutdown of one of America's snack food icons, the loss of 18,500 jobs just before the holiday season and much-needed tax revenue from hundreds of plants and shops across the country.
The privately-held company had reached a deal with the Teamsters, but a smaller union representing bakery workers refused to agree to concessions, prompting the mass layoffs and closing down of hundreds of plants, bakeries and delivery routes. That prompted harsh words from both the company and from Teamsters officials.
"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Chief Executive Gregory Rayburn said in a statement. "Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders."
The company said it will continue to ship out its well-known products until inventory runs out.
The national strike by members of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM) that began last week decimated the 82-year-old company’s ability to produce and deliver products at roughly 12 of its 33 plants. The company announced earlier in the week that the ax would fall on Friday if the strikers didn’t get back to work, but the union didn’t blink. BCTGM President Frank Hurt said Thursday that the crisis was the "result of nearly a decade of financial and operational mismanagement" and charged management was scapegoating workers to allow the Wall Street investors who own Hostess to sell.
Read more: http://www.foxnews.com/us/2012/11/16/hostess-brands-to-liquidate-lay-off-18500-after-crippling-union-fight/#ixzz2CPf1wU7O
"Ding Dong, the Ho-Ho's dead!" :D
I'm sure Moochelle is happy.
Pat
Team Sergeant
11-16-2012, 13:08
Brilliant work by the teamsters and other unions! How to vote yourself out of a job before the holidays.
Unions are attempting to take over Wal-Mart now. That should be fun to watch.
More evidence of the return of the feral liberal: they shit where they eat; they burn down their OWN houses when things don't go their way; and now they are killing their own jobs. Liberalism truly is a mental disorder. Too bad it is mass-afflicted as of late.
This is nothing....Atlas is Shrugging. You ain't seen nothin' yet!!!
My Father was an Ironworker.. He loved to hate the Unions. Up north he hated those the most from what I remember.
Brilliant work by the teamsters and other unions! How to vote yourself out of a job before the holidays.
Unions are attempting to take over Wal-Mart now. That should be fun to watch.
Surprisingly, the Teamsters had accepted concessions and were apparently imploring the Bakers Union to do the same.
The most interesting tidbit in the sad demise of Hostess is the fact that the Teamsters union ignored a strike by a fellow union and crossed the picket-line in a bid to save the company. The Teamsters, not exactly a shrinking violet, got a look at the company's books and realized the dire financial situation Hostess was in. They even implored the Bakers' Union, which called a strike, to accept wage concessions and get back to work. Alas, they didn't and now the company faces liquidation. The Bakers' Union ultimately accomplished what mere physics couldn't; they pushed the Twinkie past its sell-by date.
Link (http://www.breitbart.com/Big-Government/2012/11/16/teamsters-cross-picket-line-fail-to-save-twinkie)
Team Sergeant
11-16-2012, 13:43
Surprisingly, the Teamsters had accepted concessions and were apparently imploring the Bakers Union to do the same.
Yeah I read that but I'm sure it was the teamsters that made this strike a national strike.
Well dome teamsters.
mark46th
11-16-2012, 13:52
I wonder why they chose to shut down. I would have moved everything South of the border... Almost 20,000 jobs opening up in Mexico? Shit Howdy, er, Hola mierda....
You're going to see more and more of this in the next four years. If you haven't yet read it, go get a copy of ATLAS SHRUGGED, by Ayn Rand. It is spot-on. You'd think she wrote it with Obama in mind.
ZonieDiver
11-16-2012, 14:14
I wonder why they chose to shut down. I would have moved everything South of the border... Almost 20,000 jobs opening up in Mexico? Shit Howdy, er, Hola mierda....
"Bimbo" probably would have hired Zetas to keep the competition out!
Badger52
11-16-2012, 14:22
Yeah I read that but I'm sure it was the teamsters that made this strike a national strike.
Well dome teamsters.I recall something along the lines of this in the 80's when Iacocca said to the UAW, "Look guys, I've got thousands of jobs at $18/hr - I've got NO jobs at $22. What do you want to do?"
That one came out differently, though.
I think NBC should send someone to get a human interest story from the poor oppressed union members.
I recall something along the lines of this in the 80's when Iacocca said to the UAW, "Look guys, I've got thousands of jobs at $18/hr - I've got NO jobs at $22. What do you want to do?"
That one came out differently, though.
I think NBC should send someone to get a human interest story from the poor oppressed union members.
Geeeeez, did the Military ever have to buy a bunch of militerized Dodge trucks to keep that company afloat.
Probably still be able to find a few at some NG base out in the sticks.
mark46th
11-16-2012, 14:48
Bimbo is already up here. They bought out a Thomas's English Muffin facility a couple of miles away from me. Quieres unas galletas Gansita?
You're going to see more and more of this in the next four years. If you haven't yet read it, go get a copy of ATLAS SHRUGGED, by Ayn Rand. It is spot-on. You'd think she wrote it with Obama in mind.
great book. also check out Anthem as it relates to the current path were on.
ZonieDiver
11-16-2012, 15:04
Bimbo is already up here. They bought out a Thomas's English Muffin facility a couple of miles away from me. Quieres unas galletas Gansita?
Bimbo Bakeries, USA* bought Sara Lee (and NObody doesn't like Sara Lee :D)so, maybe they'll buy up all the Hostess assets, too! :lifter
* They produce brands such as: Thomas (muffins), Arnold, Orowheat, Boboli, Entenmann's, EarthGrain, Mrs. Baird's, and Stroehman's... along with Sara Lee.)
Bimbo Bakeries, USA* bought Sara Lee (and NObody doesn't like Sara Lee :D)
I doesn't like her! She's a Bimbo. :p
Pat
Old Dog New Trick
11-16-2012, 15:13
Geeeeez, did the Military ever have to buy a bunch of militerized Dodge trucks to keep that company afloat.
Probably still be able to find a few at some NG base out in the sticks.
The "K" car Reliance/Aries flooded the Army back in the day, a couple years later they flooded the DRMO lot as rusting waste...:rolleyes:
Far as Hostess goes, goes the country...:boohoo
I figure unemployment (actual) should hit >20% by years end (2013) :munchin
Badger52
11-16-2012, 16:20
Geeeeez, did the Military ever have to buy a bunch of militerized Dodge trucks to keep that company afloat.
Probably still be able to find a few at some NG base out in the sticks.There are some still around, the old M880 series. They serve the same function on base as any conveyance from one end to the other, like a golf cart. I recall before the end of my time that they didn't take a signal shelter that well & deadline rates went up.
As to the K-bodied G-ride, QP Old Dog New Trick summed that debacle up perfectly. (I thought it was doomed because they used to paint 'em that stupid minty green like the Class-A shirt fad of the time.)
I guess the union showed Hostess. The few dictating the outcome for the many who wished to continue to be employed. As a kid I grew up operating International Harvestor tractors and machinery, their union did them in back in the early 80's. I do not understand the mentality where nothing is better than something.
http://www.chicagotribune.com/business/breaking/chi-hostess-brands-seeks-court-permission-to-liquidate-20121116,0,3175964.story
"According to Becker, most of the company's employees had approved an 8 percent pay cut for the coming year, but the members of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union had voted against the reduction and a change in the pension plan. "
Now if any of you are serious about nationalizing the Twinkie please sign the petition at this site.
https://petitions.whitehouse.gov/petition/nationalize-twinkie-industry/cJz0ngJR
spherojon
11-16-2012, 17:21
http://www.naderlibrary.com/ghostbust.136c.gif
http://www.naderlibrary.com/ghostbust.136d.gif
I guess the union showed Hostess.
Yep! The parasite killed it's Hostess. ;)
Pat
Old Dog New Trick
11-16-2012, 17:43
Yep! The parasite killed it's Hostess. ;)
Pat
I don't know whether to :D or :( but that was funny!
Yep! The parasite killed it's Hostess. ;)
Pat
That's good!
Poor Tallahassee .... :( :( :(
ZonieDiver
11-16-2012, 18:41
Screw him! Poor ME! :D
A few times a year, I HAVE to have a Hostess Cupcake , well, actually two, because that's how they are packaged. Although they are a mere shadow of their former selves - smaller, coconut oil replaced with a lesser substance to satisfy the howling wolves of "healthy food"! Still... gotta have one!
However, just as valuable parts of General Motors would have been purchased by someone had that company allowed to have been taken into bankruptcy proceedings, SOMEONE will buy the name Hostess and such things as Twinkie, Cupcake, Ding Dongs, etc., just as the viable baking facilities, retail facilities, etc WILL be purchased by SOMEone - Bimbo, whomever.
That is how it is supposed to work, not government intervention.
Ok guess I need to go out and stock up on supplies before they are gone...."
Twinkie unions simply weren't meant to be :D
I saw a youtube video with a guy learning he was out of a job from the news reporter and then went on to talk about loyalty.
I read, three days earlier, that Hostess warned it's workers that they would close the doors on any factory that went on strike.
If I heard about it in NC 3 days ago, what makes me believe that this jackwagon just learned about it?
BTW, the union did nothing, made zero concession, to save the jobs of the Hostess workers. They actually are proud to have "stood their ground".
sf
The Reaper
11-16-2012, 21:03
I saw a youtube video with a guy learning he was out of a job from the news reporter and then went on to talk about loyalty.
I read, three days earlier, that Hostess warned it's workers that they would close the doors on any factory that went on strike.
If I heard about it in NC 3 days ago, what makes me believe that this jackwagon just learned about it?
BTW, the union did nothing, made zero concession, to save the jobs of the Hostess workers. They actually are proud to have "stood their ground".
sf
Well, they are about to be short several thousand dues paying members.
If I bought the right to make Twinkies after all of this, I damn sure wouldn't be making them in a non-right to work state.
TR
The New Jala-Twinkie-Peno's
Maine’s striking Hostess workers say company’s collapse a strong message of union resolve
http://bangordailynews.com/2012/11/16/business/maines-striking-hostess-workers-say-companys-collapse-a-strong-message-of-union-resolve/?ref=videos
"BIDDEFORD, Maine — Labor leaders in Maine say the resilience of the Hostess workers on the picket line at the company’s Biddeford plant, which is in the process of being shut down after the company on Friday said it would liquidate the business, gives them inspiration in the face of what they believe have been ongoing efforts — by politicians, including Gov. Paul LePage, and corporate investors — to reduce union influence.
Bakers’ union officials and their supporters say also that the demise of Hostess Brands Inc., which failed to convince striking workers to return to their jobs, is a warning sign for corporate investors seeking to squeeze more profits out of the working class............................."
The Unions view this as a win.
Interesting.
Happy Holidays.
This one is worth the long read. Kinda' got my eyes spinning a few times trying to keep track of who's who.
The Hostess Liquidation: A Curious Cast Of Characters As The Twinkie Tumbles
http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles
"Perhaps one of the most interesting aspects of the just announced Hostess liquidation, one that will be largely debated and discussed in the media, or maybe not at all, is the curious cast of characters and the peculiar history of this particular bankruptcy. Some may not be aware that the company's Chapter 11 (or colloquially known as 22) bankruptcy filing this January, which today became a Chapter 7 liquidation, was the second one in the company's recent history, with Hostess, previously Interstate Bakeries, emerging from its previous protracted multi-year bankruptcy in 2009. What is curious is that its emergence had all the drama of a anti-Mitt Romney PAC funded thriller, with a PE firm, in this case Ripplewood holdings, injecting $130 million in order to obtain equity control of Hostess as it was emerging last time. There were also more hedge funds, investment banks, strategic buyers, politicians involved in this particular story than one can shake a deep fried numismatic value Twinkie at. More importantly, however, as America has been habituated following the last season of the reality TV show known as the presidential election, if Private Equity then "bad."............"
The Unions view this as a win.
They are morons.
Well, they are about to be short several thousand dues paying members.
TR
18,500 if I heard correctly.
Old Dog New Trick
11-17-2012, 14:53
I suppose we now know, the Twinkie and a Ho-Ho, were not too big to fail! :boohoo
18,500 if I heard correctly.
That is correct but if you add the other jobs that were tied to them outside the company it will be a higher number.
Lunch truck that serves each factory, near by diner that gets 70-80 % of their business from the factory workers, etc etc......
I went to the base today for my monthly supply run and looked where the snack section was and they were cleaned out. The locals sure like their HOHO's and other Hostess products...... I usually never go down that isle but I wanted to look and was surprised.
Badger52
11-17-2012, 19:48
This one is worth the long read. Kinda' got my eyes spinning a few times trying to keep track of who's who.Holy Alien Corn Maze! But thanks that was interesting.
I liked this quote:
Looking back on the decision to reinvest in Hostess in the first bankruptcy, one of the lenders now says, "If you look in the dictionary at the definition of throwing good money after bad, there should be a picture of Hostess beside it."
Probably being too simplistic but there is definitely the urge to think of a few Guv operations that fit that paradigm, substituting all kinds of bi-partisan bak-sheesh (inflicted on the tax-payers) for the various Private Equity pavers of the yellow brick road.
Remington Raidr
11-17-2012, 22:16
with Obamacare, the worker will have healthcare, and they get a couple of years of UE bennies, so they don't see a downside.:rolleyes:
There are short term riches being made on Ebay though. I just saw three boxes of Twinkies go for $84. This is madness.
Kyobanim
11-18-2012, 09:17
Twinkie lovers, don't worry. The Mexicans will bail us out.
Team Sergeant
11-18-2012, 09:27
I'm waiting for the real union / teamsters battle with Wal-Mart. It's going to start here this coming week. I see a whole lot of people getting fired right before XMAS for not showing up to work.
Walmart will close the stores to send the message:
http://www.businessweek.com/stories/2006-02-12/no-union-please-were-wal-mart
Ho-Ho closing was a drop of water, Walmart closing will affect millions.
Yet more evidence that is the mental defect masquerading as liberalism.
I hope Walmart takes a hard line against the Marxists planners as well. Sooner or later, when the folks get tired of eating dandelion weeds, we'll be able to get back to a productive economy.
That is correct but if you add the other jobs that were tied to them outside the company it will be a higher number.
Lunch truck that serves each factory, near by diner that gets 70-80 % of their business from the factory workers, etc etc......
I went to the base today for my monthly supply run and looked where the snack section was and they were cleaned out. The locals sure like their HOHO's and other Hostess products...... I usually never go down that isle but I wanted to look and was surprised.
Good point, yes the domino affect will make it much higher.
There has been a run on here too, I might meander down that aisle and see what's left today.
The first Wal Mart v. union volley has been fired:
http://www.reuters.com/article/2012/11/16/us-walmart-union-idUSBRE8AF1DB20121116
:munchin
Shot out..... Wonder if the idiots here on the island join in.?
They sure do love the walmarts here....... I do every thing I can do to avoid them as they make Me crazy.
Preemptively fire all union employees. Period. Let WalMart shut its doors for a few weeks and see how they fare. Something tells me there are scores of folks out there who would love to work at Wal Mart.
"We are taking this action now because we cannot allow the UFCW to continue to intentionally seek to create an environment that could directly and adversely impact our customers and associates," Wal-Mart spokesman David Tovar said on Friday. "If they do, they will be held accountable."
Good for them.
Badger52
11-18-2012, 18:20
There are short term riches being made on Ebay though. I just saw three boxes of Twinkies go for $84. This is madness.You've not seen anything yet; wait till you find just the original BOXES going online and, OMG, if the serial numbers are all matching, er, um, I mean the use-before codes match.....?!!!!!!! Katie bar the door on the reserve!
Condition is, of course, everything.
I gotta shoot up to the tackle shop & get a deer registered; maybe I'll do a drive-by & see what, if anything, is shaking at Wal-Mart. It's been unseasonably warm during the day up here last few week or so... not sure how these folks fare in typical -15° wind chill.
I applaud WALMART for taking a stand, it's Their company and THEY built it not the government. However one has to believe that the unions felt somewhat emboldened by the chosen one being reelected not that it is going to do them any good. I am fortunate to live in a "right to work state" and think all workers should have that right.
Badger52
11-20-2012, 07:35
I gotta shoot up to the tackle shop & get a deer registered; maybe I'll do a drive-by & see what, if anything, is shaking at Wal-Mart. It's been unseasonably warm during the day up here last few week or so... not sure how these folks fare in typical -15° wind chill.Nothin' going on up here other than the usual poorly-stocked shelves based on what got put on the big trucks, and things people can't find because they got moved (again). Some Salvation Army bell-ringers.
I did run into 1 energetic young lady in the gun department who lamented that she had 4-5 customers stacked up by her lonesome, 2 for additional anterless-tag purchases, 1 wanted to look at a pair of Nikon binos and 1 that was interested in the Colt M4 sitting in the case. They left her w/o the requisite keys to the display cases and when she called back to management asking for someone to come out & give a little cust assist the response over her ear-bud was, "well, what do they want?" She dealt with it; hope she finds an employer that can appreciate her energy. Meanwhile alot of officious looking old ladies march around with clipboards checking throughput at the cash registers, standing there for 20 minutes to determine whether someone needs to open a third (out of 20) lanes.
(Dear Walmart: 20 items does not an express lane make. Try 6, cash only.)
Anyway, no Norma Rae dress-rehearsals up here. They have a few ticks dug-in, but this one has generally high turnover.
1stindoor
11-20-2012, 08:15
To bring the topic back to the Hostess aisle...it appears the judge is ordering mediation.
http://video.today.msnbc.msn.com/today/49898616/#49898616
To bring the topic back to the Hostess aisle...it appears the judge is ordering mediation.
http://video.today.msnbc.msn.com/today/49898616/#49898616
He must be a Ding Dong fan...
Dozer523
11-20-2012, 09:59
I live 26 miles down the highway from the final resting site of Mother Jones.
(Because MR2 likes it when I start posts like that and in answer to his question: Jameson cuz we have the obligatory Tri-annual family picture today and I WILL be smiling)
Anyway, here is the set up to my question: folks who are in the Union pay some serious dues and into a union funded retirement account. Amazingly, they often turn management of these funds over to the company managers to invest (a little bird told me it saw an interview on CNBC where one of the gripes the Union folks have is the mismanagement of that fund).
So MR2 here is my question with my second shot of Jameson's
Why don't the Unions invest directly in the Companies where they work so they have an ownership stake and an ownership right in the running of the company?
Since I've not commented on this topic, I'm honored Dozer that you would illicit my humble opinion. I'm not a SME on unions so my response will be conjecture.
I think unions allow management to manage their retirement funds because they negotiated it that way. I suspect it is a bit more complicated than just that. It is probable that the company contributes most or all of the funds into these accounts. It may be that government regulations (SEC) require the company to report said funds as assets.The company may need those assets as collateral for various business needs. Things that would improve the overall company's worth which in turn would help the union in the long run.
It is my opinion that companies and unions ideally form a symbiotic relationship, but all too often one becomes a parasite that often devours the other, destroying both in the end.
Your posts always make me smile Dozer. ;) :D
1stindoor
11-20-2012, 10:30
Why don't the Unions invest directly in the Companies where they work so they have an ownership stake and an ownership right in the running of the company?
...and there it is, the crux of the problem. My father, after retiring from the USAF, became very active in the union...eventually working at the national level, and that was somewhat the same question I asked him. Why doesn't the union invest in its workers and their future? He never could give me a good answer, but I suspect that was because his paycheck was directly related to the union members paying their dues and those dues getting a high return in the market.
Maine’s striking Hostess workers say company’s collapse a strong message of union resolve
http://bangordailynews.com/2012/11/16/business/maines-striking-hostess-workers-say-companys-collapse-a-strong-message-of-union-resolve/?ref=videos
"BIDDEFORD, Maine — Labor leaders in Maine say the resilience of the Hostess workers on the picket line at the company’s Biddeford plant, which is in the process of being shut down after the company on Friday said it would liquidate the business, gives them inspiration in the face of what they believe have been ongoing efforts — by politicians, including Gov. Paul LePage, and corporate investors — to reduce union influence.
Bakers’ union officials and their supporters say also that the demise of Hostess Brands Inc., which failed to convince striking workers to return to their jobs, is a warning sign for corporate investors seeking to squeeze more profits out of the working class............................."
The Unions view this as a win.
Interesting.
Happy Holidays.
I see unions as spoiled rich brats. All the can say is we want, all they know is their rights. Never, ever have I heard a union rep or member talk about duties, concessions, facing reality. No, not for the dear life of them. We want, we gotta have, can't do, not in my pd, not supposed to.
I hate unions with passion. Their utility ceased at least 100 years ago, when labour translated in actual slavery. Past that phase, it's only bragging and demanding. A former coworker of mine once started thinking about getting a union membership and becoming our division's union rep. We quickly and vehemently "talked" him out of that silly idea. Unions are like herpes: once they get a hold of you they never let go.
I now wonder if the victorious idiots that wouldn't budge will from now on start paying salaries to those 18,500 poor devils that effective immediately no longer receive a paycheck.
Again, way to go fuckers. :mad::mad:
Why don't the Unions invest directly in the Companies where they work so they have an ownership stake and an ownership right in the running of the company?
I've thought about this as well, and I'm just spit balling here, but wouldn't it be a conflict of interest if they did?
Say for example, the Teamsters (because when you think of Unions, they're usually the first ones to come to mind) .... Anyway, as an example, there are 100 Teamsters working for company A, and 50 Teamsters working for company B. Both companies are in competition with each other producing Brand X.
If the Union took that Union monies and invested it in Both companies, there would be more going into company A because of higher number of Teamsters employed with that company.
That would I'm sure piss of the lower numbered Teamsters employed with company B. Wouldn't it ???
I would think that the Union would want to keep things on an even playing field with their members. Plus, that just means more money would go into THEIR coffers instead of risking it on a company that might fold.
Again, just spit balling here.
PedOncoDoc
11-20-2012, 10:54
...and there it is, the crux of the problem. My father, after retiring from the USAF, became very active in the union...eventually working at the national level, and that was somewhat the same question I asked him. Why doesn't the union invest in its workers and their future? He never could give me a good answer, but I suspect that was because his paycheck was directly related to the union members paying their dues and those dues getting a high return in the market.
I've wondered the same thing - why don't the unions require proof of continuing education and hold members to standards to assure they are offering the best employees? If the best workers were all union in a "right to work environment", and the union invested in the workers to make sure of they represented the best of their trade (and reprimanded and/or dropped dead-weight employees), wouldn't this be a self-correcting problem?
I've wondered the same thing - why don't the unions require proof of continuing education and hold members to standards to assure they are offering the best employees? If the best workers were all union in a "right to work environment", and the union invested in the workers to make sure of they represented the best of their trade (and reprimanded and/or dropped dead-weight employees), wouldn't this be a self-correcting problem?
A fervent union guy once told me that the unions did that until the 1960's. It was the traditional "trades" unions that did that (machinists, plumbers, etc.) and not the newer "service" unions (food, hospitality, etc.). Those that didn't do quality work didn't get work until they could prove themselves in the union hall. I do not know what caused that to change.
GratefulCitizen
11-20-2012, 11:53
The 1997 UPS strike was about the pension fund.
The union needed control of the pension fund to subsidize the pension funds of other trucking companies that were going bankrupt.
Not sure what the company was planning to do if they gained control.
Our business agents' (union) position in disputes is that we enforce the contract, nothing more, and only if the employee is willing to stand up for himself.
"We're not out to bankrupt the company" is often stated in discussions among business agents and labor.
Hostess Mediation Fails, Liquidation To Proceed; Furious Laid Off Workers Now Turn On Labor Union
http://www.zerohedge.com/news/2012-11-20/hostess-mediation-fails-liquidation-proceed-furious-former-workers-now-turn-labor-un
"Last week, when discussing the next steps for the company, and specifically the hope that mediation may resolve the epic animosity between management and workers, we stated that "What makes a mediation improbable is that the antagonism between the feuding sides has certainly hit a level of no return: "Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy.........."
Going to be a long Holiday Season for some folks.
Maine’s striking Hostess workers say company’s collapse a strong message of union resolve
Hostess Mediation Fails, Liquidation To Proceed; Furious Laid Off Workers Now Turn On Labor Union
What a difference a day makes...
Why don't the Unions invest directly in the Companies where they work so they have an ownership stake and an ownership right in the running of the company?
Investing in individual companies is very risky. Investing in ONLY one company is insanely risky. That's why company managed 401K's are very diverse in their investment portfolios and why pension funds are heavily invested in bonds. Suppose the Bakers' union invests in Hostess, so the workers feel some ownership. Suddenly there is a massive drought, a recall on Twinkies, an explosion at a factory, or anything else that would plunge a companies stock price? Suddenly the value of your investment is slashed dramatically. Not too bad if you have 20 years to retire, but if you planned on settling in Florida next year, you may be screwed.
Stocks are risky and not for the feint of heart, because they deal in equity. Bond heavy funds, however, like pension funds are investments in debt. Debt is very stable, and by law, must be paid out first if a company goes into bankruptcy. So, the union pensions will be investing in bonds because they provide a constant payout or annuity. Thus in retirement, one can accurately predict income and have a bit of security and peace of mind.
All of that said, a company can structure its debt and equity however it likes. Very stable companies may opt to increase cash flow by selling corporate bonds, other companies may opt to focus solely on equity cash flows and carry little to no long term debt. As soon as the Unions get involved in "helping" companies structure their capital, the company will fail, because the structure will be biased towards the Union goals rather than the Company goals. I don't know the background of the Union bosses, but I doubt many of them have MBAs or higher degrees in accounting.
Why don't the Unions invest directly in the Companies where they work so they have an ownership stake and an ownership right in the running of the company?
Investing in individual companies is very risky. Investing in ONLY one company is insanely risky. That's why company managed 401K's are very diverse in their investment portfolios and why pension funds are heavily invested in bonds. Suppose the Bakers' union invests in Hostess, so the workers feel some ownership. Suddenly there is a massive drought, a recall on Twinkies, an explosion at a factory, or anything else that would plunge a companies stock price? Suddenly the value of your investment is slashed dramatically. Not too bad if you have 20 years to retire, but if you planned on settling in Florida next year, you may be screwed.
Stocks are risky and not for the feint of heart, because they deal in equity. Bond heavy funds, however, like pension funds are investments in debt. Debt is very stable, and by law, must be paid out first if a company goes into bankruptcy. So, the union pensions will be investing in bonds because they provide a constant payout or annuity. Thus in retirement, one can accurately predict income and have a bit of security and peace of mind.
All of that said, a company can structure its debt and equity however it likes. Very stable companies may opt to increase cash flow by selling corporate bonds, other companies may opt to focus solely on equity cash flows and carry little to no long term debt. As soon as the Unions get involved in "helping" companies structure their capital, the company will fail, because the structure will be biased towards the Union goals rather than the Company goals. I don't know the background of the Union bosses, but I doubt many of them have MBAs or higher degrees in accounting.
German unions actually have a seat on the board for the union rep and many of them hold MBAs. IG Metal was their largest union whe I lived there and they are amazingly still competitive in their area of specialization and only recently was Germany in second place as an export country -- to China. Before that, they have been number 1 for decades. This is with less than 1/3 our population and no natural resources to speak of... Not a bad model.
http://www.dailymail.co.uk/news/article-2251906/Twinkies-Legendary-cake-set-return-shelves-coming-months-new-ownership.html
Lets all keep out fingers crossed on this bit of news. Personally I miss those little powdered sugar donuts. :)