KENSINGTON, Md. – The Bakery Workers (BCTGM), the Teamsters, and other unions representing Hostess Foods employees scrambled to protect their members as the snack food company filed for bankruptcy on Jan. 11 for the second time this century.
The 2011 filing, like that of ’04, could affect some 5,500 BCTGM workers at Hostess plants nationwide, union President Frank Hurt told Press Associates Union News Service. The Teamsters report that they represent 7,500 Hostess drivers and merchandisers. Several other unions have smaller contingents at Hostess.
Regardless of the final details, Hurt predicted his members would be harmed by whatever the federal bankruptcy judge in New York City permits the firm’s owners – mostly a group of venture capitalists – to do.
“Those with the gold make the rules,” he said, including the company’s lawyers in that group. “And hourly workers are left holding the bag.”
The big question, Hurt said, will be if the bankruptcy court gives the reorganizers of Hostess so much leeway in cutting workers’ pay, pensions, and benefits and tearing up union contracts that it doesn’t make sense to continue the effort to save Hostess.
“I haven’t heard from our attorneys to what extent the law will let them” – the company’s bankruptcy overseers – “gut our contracts,” he added. “I’m telling our members we want to keep the company in business.”
Hurt instructed his union’s attorneys, appearing at the Jan. 11 hearing, to get the court to order company officials “to tell us the bottom line you need to keep it in business – and let us decide whether we will work under those conditions or not.”
Hostess first flagged the unions that it was headed for the financial rocks last summer, Hurt explained. It approached the unions and told them it would stop paying the firm’s share of pension plan contributions. It also wanted to cut costs by proposing “a lousy-ass” health insurance plan for the workers, he added.
The Teamsters said, and Hurt agreed, that workers’ sacrifices helped Hostess emerge in 2009 from its first bankruptcy. In a statement, Teamsters Bakery Conference Director Dennis Raymond said his union “remains committed to working with all stakeholders during the bankruptcy to find a mutually agreeable solution, if possible.”
In a formal statement, Hurt said Hostess’ financial problems – which have prompted the firm to stop its payment into the jointly run union-management Taft-Hartley multi-employer plan covering the industry – were the result of mismanagement. Hostess claims its pension obligation of $1 billion is too much.
“I find it deeply offensive and highly disingenuous for the company to claim [that] its financial woes are the result of its union contracts and pension and health benefits obligations,” Hurt’s statement said. “We contend the company is in dire financial shape because of a string of failed business decisions made by a series of ineffective executives who have been running this company for the past decade.
“BCTGM has contracts with dozens of baking companies across the country, including Bimbo Bakeries USA, the nation’s largest and most successful. The vast majority of those companies are doing just fine because they have experienced baking industry professionals managing them,” he added.
BCTGM called Hostess “a longstanding participant” in the Taft-Hartley pension fund. It said $1 billion is the Hostess’ “withdrawal liability”-the cumulative amount it would have to pay present retirees and workers when they retire if Hostess dropped out of the multi-employer plan.
“Contributions Hostess paid into the fund were negotiated through the collective bargaining process and are part of an overall economic compensation package. Pension benefits that retirees receive each month are paid by the fund and not the individual companies,” BCTGM noted.
Both unions hope Hostess gets back on its feet and members retain their jobs, and will fight for that, while working with other stakeholders to restructure the firm.
“We remain hopeful that solutions can be found to ensure the permanent continuation of Hostess Brands,” Hurt said in the statement. “We will work with the stakeholders throughout the process to find a solution that protects the interests of our members and helps enable the company to remain a viable business entity.
The Teamsters’ Raymond said that management must sacrifice, too. “Our members have already given at the well, and this time it will take sacrifices among all parties – management, lenders, equity holders, and employees – to restructure Hostess into a viable enterprise well-positioned for future growth,” he said.
But Hurt was more pessimistic in the interview. Noting the venture capital firms that control Hostess are in it to make money for themselves, he said that their interests “are driving” the bankruptcy filing, “and that doesn’t bode well for us.”
Hurt concluded, “It’s criminal what happens to workers in this country” in corporate bankruptcies.
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