Hostess seeks executive bonuses as it puts employees out of work

Bloomberg reports that Hostess Brands will seek permission from a bankruptcy judge to pay executives as much as $1.75 million in bonuses to oversee the liquidation of the company and lay off 18,500 workers. Hostess, which filed for bankruptcy in January for the second time in eight years, announced on Friday, November 16 that it would liquidate the company rather than seek a fair deal on a new contract with striking bakery workers.

The workers went on strike on November 9 after Hostess tried to implement terms of a final offer that 92 percent of BCTGM members rejected in September. The final offer would have cut wages by 8 percent, increased worker health care costs by 20 percent, and ended eight-hour work shifts.

Workers rejected the offer because in 2009 they agreed to concessions that helped get Hostess out of its first bankruptcy, then watched as money that should have been used to invest in making the company strong again was diverted to pay executive bonuses, a large debt obligation, and fees to the private equity companies.

Before declaring bankruptcy, Hostess stopped paying money into the workers’ pension. BCTGM estimates that Hostess now owes $160 million to the workers’ pension.

Meanwhile, Richard Trumka, president of the AFL-CIO, blasted the private equity firms, Ripplewood Holdings, Monarch Alternative Investments, and Silver Point Capital, which own Hostess, and praised the striking workers for taking a stand against Wall Street greed:

Pundits should be applauding the bakery workers of Hostess Brands for standing up to Wall Street interests and standing for decent working standards and the middle class.

The truth is that the Bain-style vulture capitalists invested in Hostess to profit not by making quality products, but by bleeding the company of every dollar before discarding it.

They’re doing it because they can, because that’s what Wall Street  speculators do when they get their hands into a company’s till.

And today, the millionaires are walking away, with an added twist.  They’re blaming the bakers and others who faithfully made the iconic  Twinkies and other Hostess goods for decades—not for untold riches but  for a decent paycheck and good benefits.

Trumka said that in 2011, Hostess reported sales of $2.5 billion but ended up losing $341 million because of payments on nearly $1 billion worth of debt that the private equity companies took on to purchase Hostess.

Trumka said that it was heartbreaking to see so many workers hurt by Wall Street greed, but that he is inspired the courage of the bakery workers who have taken a stand against this greed.

“The unified bakery workers rejected the last cruel deal from  executives by a vote of 92 percent. They chose to raise their heads with  pride, as well they should,” Trumka said. “One way or another, working people in America have to stop this race to the bottom.”

Hostess files for liquidation; strike continues

Hostess Brands on November 16 filed a motion in federal bankruptcy court seeking permission to close down its business and liquidate its assets. The company had threatened to liquidate if a strike by its bakery workers continued past a 5:00 P.M., November 15 deadline. The deadline came and went; the bakery workers remained on strike, and the company began liquidation proceedings on Friday morning.

Hostess on Friday suspended operations at its 33 bakeries across the US; Workers at the 24 bakeries that have been on strike remained on strike.

On Saturday, November 16, Bloomberg reported that C.Dean Metropoulos & Co., a private equity firm that has saved other struggling US food and beverage brands from oblivion, is considering buying Hostess. Metropoulos owns Pabst Brewing Co. and purchased Chef Boyardee, Vlasic Pickles, and Bumble Bee Tuna when they were facing difficulties.

Before the November 15 deadline, strikers at one Hostess, according to USA Today,  remained defiant in face of the news that Hostess planned to shut down its operations. “You have to take a stand for what you believe in,” said John Smith, who has worked for Hostess for 22 years, to USA Today. “They gave us a take-it-or-leave-it deal. We can’t take the financial abuse.”

Smith works at Hostess’ Indianapolis bakery where on Thursday afternoon about 45 workers walked the picket lines, and chanted, “No pension, no deal.”

In July 2011 before it filed for bankruptcy, Hostess unilaterally stopped making contributions  totaling about $160 million to the workers’ pension fund.

After it filed for bankruptcy in January 2012, the company sought new labor agreements with its unions, including its two largest unions BCTGM, which represents bakery workers, and the Teamsters, which represents workers at its distribution centers.

After months of negotiations, it made a final offer that included an 8 percent wage cut, a 20 percent increase in worker health care costs, and work rule changes designed to eliminate jobs.

By a narrow margin, Teamster members voted to accept the final offer. BCTGM members, on the other hand, voted overwhelmingly to reject the offer, and the union began striking after Hostess began unilaterally implementing its final offer.

BCTGM leaders blamed Hostess’ financial troubles on mismanagement, and objected to the way that the company tried to dig itself out of its hole by shifting more costs to its workers.

“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 Frank Hurt, BCTGM president.  “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.

“They sought to force the workers, who had already taken significant wage and benefit cuts, to absorb even greater cuts including the loss of their pension contributions. I have said consistently throughout this process that the BCTGM is a highly democratic organization and that our Hostess members themselves would determine their future. By an overwhelming majority, 92 percent, these workers rejected the company’s outrageous proposal, fully aware of the potential consequences.”

Teamster leaders said that they too were frustrated by Hostess’ mismanagement but that had hoped to work “constructively (with Hostess) to find a solution to preserve jobs.”

The Teamsters on Thursday issued a statement urging BCTGM to hold a secret ballot of BCTGM members at Hostess to determine if the workers want to continue their strike in light of the company’s announced intentions of winding down its operations.

If Hostess carries through with its liquidation plans it would mean the closure of 33 bakeries, 565 distribution centers, 550 outlet stores, and 5,500 delivery routes.

Hurt said that striking workers would be glad to return to work and help the company fight through its bankruptcy if Hostess rescinds “the horrendous wage and benefit reductions, including pension, and the restoration of the cuts that have already taken place.”

Walmart labor unrest grows

Walmart faces more labor unrest as dozens of workers at its warehouse in Mira Loma, California walked of the job on Wednesday, November 14.

The walkout comes just eight days before Walmart associates in stores across the US plan to strike against company retaliation against associates who speak up for better working conditions on Black Friday, November 23 .

Workers at the Mira Loma warehouse are employed by Walmart contractors NFI, which operates the warehouse, and Warestaff, a temporary staffing agency

In September, workers at the warehouse went on strike to protest unfair labor practices. They returned to work when Walmart agreed to take action to enforce its “Standards for Suppliers,” a guide for what Walmart considers ethical and humane treatment of its contractors’ workforce.

But since their return to work, the warehouse workers have faced many of the same conditions that led to the strike: lack of safety on the job, extreme heat in the warehouse, lack of access to drinking water, and faulty and unsafe equipment.

These conditions led several workers to speak out and demand decent treatment. Their employers responded by cutting their hours, demoting some, and firing others.

“I was fired for trying to make where I work safe,” said David Garcia. “It has been tough. My kids need food, school supplies, and an apartment to sleep in at night, but right now it is difficult to provide them these basic things.”

According to Warehouse Workers United, a worker center supporting the strikers and other warehouse workers in Southern California, Walmart should take responsibility for its contractors’ actions and ensure that workers at its warehouses work under humane conditions.

“Walmart must intervene to uphold its own stated ‘Standards for Suppliers’ and involve workers in order to eliminate inhumane and illegal working conditions,” said Guadalupe Palma, a director of Warehouse Workers United.

The warehouse workers did not say how long they planned to stay on strike. In addition to the strikes in Southern California, workers at Walmart’s largest warehouse in Elwood, Illinois went strike in September and returned to work 21 days later with back pay for the time they were on strike. They continue to fight for better conditions and respect on the job.

Last month, about 160 Walmart workers across the US participated in nationwide strikes against the company, the first strikes by company employees in Walmart’s 50-year history.

Meanwhile, members of OUR Walmart, a nationwide organization of Walmart associates, plan to strike Walmart on Black Friday. They will be joined by community supporters who are organizing non-violent direct actions against Walmart on the same day.

Members of OUR have been speaking out on the job for better pay, affordable health care, more working hours, and respect from their employer.

In return, some have had their hours cut or been demoted. “Walmart has intimidated, threatened, and otherwise retaliated against associates for having the moral courage to see issues within our workplace and to organize for constructive change,” reads a message about the strike on OUR’s website.

Walmart associates recently received more bad news about their company’s health care plan. Managers told workers that their health care plan premium would increase by 36 percent next year, making it the third year in a row for double digit premium increases.

“Last year, my monthly premiums went up 33 percent, and this year it’s going up another 25 percent,” said Dan Hindman, an associate at the Pasadena, California Walmart. ” I can barely afford Walmart health care right now. But I don’t want to lose coverage for my son and me.”

OUR is urging Walmart associates to sign a pledge on its website not to work on Black Friday. “Together, we can show Walmart that we truly are the family they claim to be through peaceful protest!” reads a message on the OUR website.  “Let’s embolden and empower each other, stand side-by-side and peaceably stand our ground, in the name of respect for ourselves and each other!”

Union charges Hostess with misinformation campaign to weaken strike

The number of Hostess Brand bakeries that are either on strike or whose workers are honoring picket lines established  by strikers increased to 24 as the strike that began on November 9 spread across the nation.

In an attempt to disrupt the growing unity of Hostess bakery workers, Hostess CEO Gregory Rayburn announced that because of the strike the company is closing three of its production facilities.

BCTGM, the union of the striking workers, called the announcement by Rayburn another in a series of false public statements about the company’s bankruptcy and subsequent contract negotiations with BCTGM that were part of the bankruptcy proceedings.

“The recent claim by Hostess CEO Greg Rayburn that our strike is the reason for the closure of the three bakeries is simply not true,” said Frank Hurt, BCTGM president. “That statement is a continuation of a disturbing pattern by the company of issuing public statements that are erroneous at best and disingenuous at worst.”

Hurt said that the company’s reorganization plan filed with the bankruptcy court well before the strike began states that Hostess management planned to close nine bakeries, which the company refused to identify.

In addition, Hurt said the company’s final offer that 92 percent of BCTGM members rejected in September called for the closure of nine unidentified bakeries

“Rejection (of the final offer)  came from every corner of the country,” Hurt said. “(Members) were being asked to vote on a proposal with massive concessions, knowing that their plant could very well be one of those to be closed.

“Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars.”

As further proof that Hostess wasn’t telling the truth about the closures, Hurt said that St Louis mayor Francis Slay was quoted by  KMOX news as saying, “I was told months ago they were planning on closing the site in St. Louis…  And there was no indication at that time it had anything to do with the strike.”

In addition to St. Louis, Hostess said that it plans to close bakeries in Cincinnati and Seattle.

Hostess filed for bankruptcy in January, the second time in the last eight years. When the company emerged from bankruptcy the first time, it was able to do so because its union workers agreed to $110 million in concessions and facility closures that cost about half of the unionized workforce their jobs.

Workers who remained on the job hoped that their investment would lead to the rebirth of a company that had been badly mismanaged.

After the workers agreed to the concessions, three private equity companies, Ripplewood Holdings, Monarch Alternative Investmenes, and Silver Point Capital, took control of the company and pledged to invest in modernizing the facilities that stayed open and rebranding the company’s signature products–Wonder Bread, Twinkies, Hostess Cupcakes, etc.

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

According to the union, workers voted to strike because they felt that past promises were broken and striking was the only way to gain a voice in important decisions that would affect their future.

In addition to plant closures, Hostess’ final offer included an 8 percent wage cut, a 20 percent increase in worker health care costs, and the end to eight-hour work shifts.

The company in July 2011 also quit making contributions to the workers’ pension fund and instead pocketed the $160 million that was supposed to go toward providing their workers with a secure retirement.

The following Hostess facilities are on strike: Lenexa, Kansas; Biddeford, Maine; Columbus, Indiana; Norwood Ohio; Peoria, Illinois; Tulsa, Oklahoma; Orlando, Florida; Memphis (at the River Gate Transport facility); Jacksonville, Florida; Billings, Montana; and Oakland, California.

The following are honoring picket lines: Indianapolis; Philadelphia; Emporia, Kansas; Hodgkins, Illinois; St. Louis; Memphis (the production facility); Schiller Park, Illinois; Los Angeles; Glendale, California; Sacramento; Knoxville, Tennessee; Cincinnati; and Rocky Mount, North Carolina.

Hurt said that “company claims that union members are crossing picket lines and maintaining production at striking plants are vastly untrue.”

Voters approve minimum wage increases in three cities

Voters in three US cities approved ballot proposals on Election Day to increase the local minimum wage well above the federal minimum wage. “This was a major victory for workers in Albuquerque, San Jose, and Long Beach (California),” said Christine Owens, executive director of the National Employment Law Project, which provided assistance to supporters of the minimum wage increase campaigns.

“With growing numbers of working families relying on low-wage jobs to make ends meet, the voters recognize that raising the minimum wage fulfills our basic obligation to ensure that work provides a path out of poverty,” added Owens. “Higher wages for the lowest-paid workers in our economy will promote and help accelerate the post-recession recovery.”

In Albuquerque, the minimum wage increases from $7.50 an hour to $8.50 an hour, and it increases as the cost of living increases. Tipped workers, whose minimum wage is now $2.13 an hour will see their minimum wage increase to 60 percent of the minimum wage.

In Long Beach, the minimum wage increase affects only hotel workers. The city has invested heavily, and with some success, in the tourism industry, but while hotel corporations have profited from the investment, their workers have been left behind.

The new city ordinance approved by 63.2 percent of the voters raises the minimum wage for hotel workers to $13 an hour and requires owners to give hotel employees at least five sick days a year.

In San Jose, Measure D, the ballot proposal that increased the local minimum wage from $8 an hour to $10 an hour, was approved by 59 percent of the voters. Measure D also ties future minimum wage increases to increases in the cost of living.

Organized labor played a key role in winning these minimum wage increases. The San Jose initiative  began as a project of sociology students at San Jose State University that quickly won the support of the South Bay Central Labor Council.

The labor council helped organize the Raise the Wage San Jose coalition, which included the local NAACP chapter, Pride @ Work, Sacred Heart Community Services, Campus Alliance for Justice, and other community, student, and labor groups. The coalition led a petition gathering drive that succeeded in putting Measure D on the November ballot.

Opponents of the Measure D including the Chamber of Commerce, owners of restaurants and hotels, and Mayor Chuck Reed, argued that raising the minimum wage would cost many low-paid workers their jobs and hurt small businesses.

But a report issued in October by Dr. Michael Reich, an economist and director of the Institute for Research on Labor and Employment at the University of California at Berkeley, found that raising the minimum wage to $10 in San Jose would increase operating costs of low-wage businesses by less than 0.25 percent and raise restaurant prices by only 0.71 percent.

At the same time, 69,000 workers, or 18.9 percent of the San Jose workforce, would receive a pay raise that would increase consumer spending by $190 million, and create 200 new jobs.

Cindy Chavez, executive officer of the South Bay Central Labor Council, praised the passage of Measure D and the students who initiated the campaign. “This is a victory for tens of thousands of hard working San Jose residents,” Chavez said. “The students who took on this challenge should be extremely proud of themselves for standing up for what’s right.”

The Albuquerque initiative, which won the support of 66 percent of the voters, was also the result of a grassroots effort. Working America, an affiliate of the AFL-CIO, the Progressive Voter Alliance of Central New Mexico; Albuquerque Interfaith; and the Organizers in the Land of Enchantment joined together to gather enough petition signatures to get the minimum wage initiative on the ballot and to educate and mobilize voters to support the initiative.

Albuquerque is the second city in New Mexico to increase the local minimum wage above the federal minimum wage. Santa Fe did so in 2003 and at the time, tied future minimum wage increases to increases in the cost of living. The current minimum wage in Santa Fe is $10.29 an hour.

Opponents of Santa Fe’s minimum wage increase warned that raising the minimum wage would lead to layoffs and job losses, especially in the city’s tourism industry, the city’s main economic driver. But Santa Fe’s current unemployment rate is 5.8 percent, one of the lowest rates in New Mexico and well below the national rate of 7.9 percent.

Hostess bakery workers on strike

Members of the Bakery, Confectionary, Tobacco Workers, and Grain Millers Union (BCTGM) who work for Hostess Brands began walking off the job on Friday, November 9 to protest an 8 percent wage cut unilaterally implemented by the company at about one-third of its 34 bakeries in the US.

By  Monday morning, workers at 11 Hostess bakeries had gone on strike, and workers at 12 other Hostess bakeries were honoring picket lines established by the strikers.

Some locals at Hostess’ plants can legally strike either because the bankruptcy court ruled that they could do so, or because the local terminated its contract with Hostess and, therefore, is free to strike under rules resulting from the National Labor Relations Act, or because Hostess has implemented its final offer.

Because of contract language that is still in effect for other locals, these locals are free to honor picket lines established by striking BCTGM locals.

The strike began at the Hostess bakery in Lenexa, Kansas and then spread to Biddeford, Maine; Columbus, Indiana; Norwood Ohio; Peoria, Illinois; Tulsa, Oklahoma; Orlando, Florida, Memphis (at the River Gate Transport facility); Jacksonville, Florida; Billings, Montana; and Oakland, California.

BCTGM locals in Indianapolis; Philadelphia; Emporia, Kansas; Hodgkins, Illinois; St. Louis; Memphis (the production facility); Schiller Park, Illinois; Los Angeles; Glendale, California; Sacramento; Knoxville, Tennessee; and Cincinnati honored picket lines established by the strikers.

Hostess, which is trying to emerge from bankruptcy, received permission in October from the bankruptcy court to begin implementing terms of a final offer that 92 percent of BCTGM members had rejected in September.

In addition to the wage cut, the company’s final offer included higher worker health care costs, an end to the eight-hour workday, and the elimination of retiree Medi-gap insurance and a pension supplement used to pay health care and funeral costs.

Hostess stopped making payments to the workers’ pension fund during the summer of 2011 and pocketed the money that should have gone toward ensuring its workers a secure retirment.

Prior to the rejecting the offer, the workers had voted to authorize a strike if the union and company could not reach a fair deal on a new contract.

Instead of immediately implementing its final offer, the company waited for about three weeks, and then announced on October 22 that it would be implementing the 8 percent wage cut at about one-third of its facilities.

Hostess’ management hoped that the rolling and incremental implementation of its wage cut would make workers less likely to strike.

But when the reduced pay began to show up on the workers’ paychecks, the union called for strikes at bakeries directly affected.  In addition to establishing pickets at their own bakeries, workers set up pickets that were honored at other nearby Hostess bakeries.

“Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years,” said Frank Hurt, BCTGM president. “Our members are not just striking for themselves, but for all unionized workers across North America who are covered by collective bargaining agreements.”

Hurt said that it was essential that workers stand up to the private equity firms that now own Hostess.

After workers in 2009 agreed to concessions that helped the new private equity owners exit Hostess’ first bankruptcy, they watched as “money that was supposed to go toward capital investment, product development, plant improvement, and new equipment went to executive bonuses and payouts to the hedge funds that own Hostess Brands,” said Hurt.

Hurt said that members voted to strike because past performance by the company’s owners suggest that they have little interest in making the investments needed to turn the company around, and striking is the only leverage that the workers have to make the owners get serious about saving the company.

“Our members have fought hard for decades through the collective bargaining process to build a decent standard of living for themselves and their families,” said Hurt. “The deplorable actions taken by Hostess would take our members back to the workplace standards of the 1950s. Our members have now said ‘no’ to Hostess and the Wall Street investors in the only means available to them, the strike. The BCTGM International Union stands in full and uncompromising support of our striking members.”

The principle owner of Hostess is Ripplewood Holdings, a private equity firm.  Monarch Alternative Funding and Silver Point Capital also have a stake in the company.

BCTGM, Hostess’ second largest union, represents about 6,000 workers. Members of the Teamsters, which represents about 7,500 Hostess workers, voted in September to accept the concessions. The Teamsters primarily represents delivery drivers while BCTGM primarily represents bakery workers.

Union members mobilize to protect safety net

Union members joined progressive allies on November 8 at more than 100 local protests against possible cuts to Social Security, Medicare, and Medicaid. The proposed cuts to three of the nation’s most popular safety net programs are on the table as President Obama and Republican Congressional leaders begin negotiations on debt reduction legislation that could be enacted before the current lame duck Congress adjourns in December.

Opponents of the safety net programs, including corporate officers and Wall Street insiders, have insisted that any new budget deal must include cuts to the safety net. The Congressional Progressive Caucus reports that these CEOs and private equity owners have financed “a $30 million lobbying effort to cut Social Security, Medicare, and Medicaid before this Congress goes home for the holidays.”

In response, the AFL-CIO and progressive groups have initiated a grassroots mobilization effort to oppose the cuts. The November 8 actions kicked off the mobilization campaign.

One of these actions took place in Cincinnati, where protestors gathered in front of the local office of US Sen. Rob Portman for a press conference. At the press conference, a young woman, whose son is disabled, described her son’s Medicaid benefits as a lifeline for her family.

In Milwaukee, the demonstrators attended a forum on the proposed cuts sponsored by US Rep. Gwen Moore. At the forum,  IAM member Brad Esson described the importance of Social Security.

“I’ve spent my entire life working hard to pay the bills for myself and my family,” Esson said. “I believe that every person deserves the chance to retire in dignity. Shame on any congressperson that does not share that core American belief.”

Richard Trumka, president of the AFL-CIO said that Thursday’s actions were designed “to hold elected leaders accountable.”

Trumka referred to the results of exit polling during the Presidential elections that show broad support for maintaining the safety net. A survey conducted by Hart Associates at polls during Tuesday’s election found that 73 percent of those polled think protecting Social Security and Medicare is more important than reducing the deficit and 64 percent favored raising taxes on the rich rather than cutting benefits

“The people advocating for benefit cuts to Medicare, Medicaid and Social Security are the same folks who want to cut taxes for the richest 2 percent,” Trumka said. “With working families across the country still struggling, we can’t afford to pay for any more tax breaks for those who need them the least.”

Among those who have helped finance the lobbying effort to scale back the nation’s safety net is billionaire Pete Peterson, cofounder of the Blackstone Group, one the world’s largest private equity firms.

According to Bill Black, an economist at the University of Missouri-Kansas City and author of The Best Way to Rob a Bank Is to Own One, Peterson’s foundation, the Peter G. Peterson Foundation, has been funding a media campaign to press “the false meme that the safety net is unsustainable and a threat to the nation.”

The foundation has also helped finance a lobbying group called the Third Way, which represents businesses and individuals aligned with what Black calls the Wall Street wing of the Democratic Party.

The Third Way, Committee for a Responsible Federal Budget, The Concord Coalition, and New America Foundation are all front groups for Wall Street insiders like Peterson that have been conducting an intense lobbying effort to reduce Social Security, Medicare, and Medicare.

Their hope is that reduced benefits will erode support for safety net programs and make their privatization easier. Black describes the proposed cuts as “the opening wedge of efforts to unravel the safety net.”

James Galbraith, an economist at the University of Texas at Austin, writing for says that leaders of the finance industry have long looked on the payroll taxes that support Social Security and Medicare as giant revenue streams that should be diverted to private interests like hedge funds, private equity companies, and insurance companies.

They also see these benefits as a public good that undermine the foundation of market principles that have served them so well.

“Social Security, Medicare and Medicaid are the main way ordinary Americans connect to their federal government,” writes Galbraith. “They have made a vast change in family life, unburdening the young of their parents and ensuring that every working person contributes whether they have parents, dependents, survivors or disabled of their own to look after. These programs do this work seamlessly, for next to nothing; their managers earn civil service salaries and the checks arrive on time. For the private competition, this is intolerable; the model is a threat to free markets and must be destroyed.”