Union launches boycott to save jobs

The union representing laid off workers at the Nabisco bakery in Chicago has launched a boycott campaign to protest the layoffs.

The Bakery, Confectionary, Tobacco, and Grain Millers Union (BCTGM) is urging consumers not to buy Oreos, Chips Ahoy, and Ritz Crackers made in Mexico.

The union on March 23 also announced that it would be sending teams of workers laid off at the Chicago bakery to communities all over the US to publicize the boycott.

Two days before the union made its announcement, Mondelez International, the owner of the Chicago bakery, laid off 277 workers at the bakery.

Mondelez, the world’s largest maker of snack foods, is in the process of moving much of the work done at the Chicago bakery to Mexico. When the process is complete, 600 of the 1200 jobs at the bakery will be eliminated.

In July 2015, Mondelez told its Chicago workers that instead of investing to upgrade the Chicago bakery, it would be shutting down some of its production and moving the work to Mexico.

Prior to the announcement, Mondelez had made the workers an offer that the company knew the workers couldn’t accept–agree to $46 million a year in concessions in perpetuity, and the company would invest in upgrading the plant.

David Durkee, international president of BCTGM called Mondelez’s offer a sham.

“They made an offer that was so ridiculous they knew it could never be accepted,” said Durkee.

Had workers accepted the proposed concessions, their pay and benefits would have been cut by 60 percent.

“I don’t know of anybody who could support a family if 60 percent of their pay is cut today,” said Jethro Head, vice president Midwest Region BCTGM.

According to Durkee, Mondelez’s offer was made to justify a decision that had already been made.

Mondelez was ranked 91 on the 2015 Fortune 500 list of the world’s largest corporations.

It is the product of a Byzantine restructuring of the commercial food business that involved Kraft, General Mills, Nabisco, and the RJ Reynolds Tobacco Company.

After a series of mergers, restructuring, and spinoffs, Kraft in 2010 split itself in two. One company continued to make and sell food products under the Kraft and other brands.

The other became Mondelez, a global snack food corporation, that makes Oreos, Cadbury candy, and a host of other popular snack foods.

The Wall Street Journal reports that the split was forced by Trian Fund Management, a hedge fund and activist investor with major holdings in Kraft.

Five years later, according to the Journal, William Ackman another hedge fund manager and activist investor acquired a $5.5 billion stake in Mondelez. The Journal reports at the time of the acquisition that Ackman “believes that Mondelez has to grow revenue faster and cut costs significantly or sell itself to a rival.”

At about the same time that Ackman was calling for cost cuts, Mondelez announced that it would be moving much of the work done at its Chicago bakery to Mexico.

Mondelez’s Chicago Nabisco bakery has been a fixture on Chicago’s Southwest Side since the 1950s.

Most of its workers are African American or Latino, many live in neighborhoods near the bakery, and quite a few have worked at the bakery for decades.

The Chicago Tribune reports that the Chicago bakery has been “crucial to Mondelez’s North American bakery business in part due to its location and because its skilled workers know how to make a variety of cookies and crackers.”

BCTGM says that the timing of the Chicago layoffs suggests that the company is trying to gain leverage just as Mondelez and BCTGM begin a round of negotiations on a new collective bargaining agreement that covers 2,200 BCTGM members who work for Mondelez  at six locations across the US.

The union’s boycott campaign will give workers and consumers across the country an opportunity to stand in solidarity with laid off Mondelez workers and those who remain on the job but are facing the possibility of more cuts to their wages and benefits.

“(Mondelez) wants Americans to buy Oreo, Ritz Crackers, and Chips Ahoy, but (the company) isn’t interested in investing in Americans to make them,” said Head. “(Mondelez) wants to box up our decades of experience and use it to exploit the good people of Mexico.”

Memphis Kellogg workers return to work after nine-month lockout

Workers returned to work at Kellogg Company in Memphis after being locked out for nine months. A federal judge issued an injunction ending the lockout and requiring Kellogg to return to the bargaining table and bargain in good faith.

Judge Samuel H. Hays of the Western District of Tennessee issued the injunction after finding that “there is reasonable cause to believe that Kellogg has engaged in unfair labor practices.”

Attorneys for the National Labor Relations Board petitioned the court for the injunction after the NLRB’s General Counsel in March found that Kellogg had committed unfair labor practices.

“A federal judge agreed entirely and unequivocally with the union and the National Labor Relations Board,” said David B. Durkee, president of the Bakery, Confectionery, Tobacco Workers, and Grain Millers (BCTGM), the locked out workers’ union.

The NLRB sought the injunction against Kellogg, the cereal manufacturer, after the five-member National Labor Relations Board headquartered in Washington DC unanimously authorized its attorney to seek the injunction.

According to the BCTGM, the board’s decision to seek an injunction is highly unusual. “Out of the tens of thousands of unfair labor practice charges filed in 2013, the Board sought pre-trial injunctions in only 40 cases,” said a media release from BCTGM.

Durkee in an earlier message to members said that the board’s action would not have been possible without a 2013 mass mobilization of union workers to end a Senate filibuster by Republicans to prevent the appointment of a new National Labor Relations Board.

The mobilization known as “Give Me Five” generated grassroots pressure on the Senate to change the rules that allowed a small minority of Senators to prevent the President from appointing new members to the NLRB.

The filibuster paralyzed the NLRB and prevented it from ruling on matters similar to the Kellogg lockout.

“What the labor movement accomplished in the spring of 2013 with our highly successful “Give Me Five” campaign and what that effort is yielding today for our members will stand as a lasting testament to the power of grassroots labor mobilization,” said Durkee.

The ordeal of the locked out workers began last year when Kellogg at its Memphis plant informed BCTGM Local 252G that the company wanted to open negotiations on a local Supplemental Agreement that was set to expire in October 2013.

The Memphis plant is one of four Kellogg plants whose workers belong to BCTGM. A Master Agreement covers wages, benefits, and other matters for all four plants. But each plant has a Supplemental Agreement that covers local issues.

When Kellogg came to the bargaining table, its proposals shocked BCTGM negotiators.

The company proposed that all new hires be classified as casual workers, who would be paid $6 an hour less than regular employees and have no health care or pension benefits. Subsequently, the company clarified its position to the union and said that if a regular employee was laid off and then rehired, the employee would be classified as a casual worker.

The company also wanted to eliminate a cap on the number of casual workers that could be employed at one time. The current agreement limits the number of casuals to 30 percent of the workforce.

The company wanted eventually to end regular employment and make all work at its Memphis plant casual work.

The union’s position was that redefining casual work was a matter to be negotiated when bargaining over the Master Agreement began.

The company responded that the union could either accept the company’s proposal or union members would be locked out.

When the union refused, the company locked out 225 workers on October 22, 2013.

As a result, Kellogg workers in Memphis went nine months without a paycheck or health insurance.

“Memphis families have endured foreclosure notices on their homes, repossession of vehicles, delayed medical procedures, depleted savings, children taken out of schools, children with disabilities whose parents are desperately trying to cobble together ongoing care by whatever means possible, the hounding of bill collectors, and the toll on family relationships that surpasses any monetary worth,” said Kevin Bradshaw, Local 252G president during the lockout.

Kellogg argued that its concession demands were necessary because the company needed to lower labor costs to stay competitive.

But while Kellogg was telling workers that it was facing hard times, it gave the company’s CEO John Bryant a 21 percent raise, boosting his yearly salary to $8 million.

Kellogg has reluctantly agreed to return the laid off workers to their jobs and to resume bargaining with the union.

However, the company could be facing more problems. One hundred twenty of the locked out workers have filed complaints with the US Equal Employment Opportunity Commission. The complaints say that Kellogg’s lockout of its mostly African-American workforce at the Memphis plant was racially motivated.

Bradshaw said that the union and the workers would pursue their claims against the company.

“Locked out, but not beaten, mistreated but unbending, disillusioned by this company’s disgusting reward for faithful service, but not disheartened,” said Bradshaw at a July 31 media conference announcing the EEOC complaints.

As Hostess prepares to sell brands, workers set the record straight on company’s demise

Hostess, which filed for bankruptcy last year and began liquidating its assets in November, announced that it has accepted the latest stalking-horse bid worth $410 million for the purchase of its snack cake brands, bringing the total amount of stalking-horse bids for its bakery brands up to $858 million. The bids establish a floor where bidding will begin at a February 28 auction when the bankrupt company’s brands and assets will be put up for sale.

C. Dean Metropoulos & Co. and Apollo Global Management joined together to submit the snack cake bid. The bid is a proposed price for brands such as Twinkies and Dolly Madison and five bakeries where the products were made.

C. Dean Metropoulos & Co. has bought other famous but troubled brands including Pabst Brewing Co. and successfully turned them around.

“We share these bidders’ goal of quickly restoring Twinkies®, CupCakes®, Ding Dongs® and Ho Hos®, among others, to shelves across America, and view new, serious ownership as a necessity for building a sustainable model for these brands moving forward,” said David Durkee, president of BCTGM, a union representing 5,000 Hostess bakery workers. “The BCTGM looks forward to the opportunity to work together productively and is now engaging with bidders who recognize the value that we can bring to an ongoing business.”

Previously, Hostess had accepted a $360 million bid from Flowers Food, Inc. for Wonder Bread, Butternut, and other bread brands and 20 bakeries where they were made. Two other companies made successful stalking-horse bids on other lesser known Hostess brands.

The $858 million stalking-horse bids are almost twice as high as a 2011 estimate of the company’s worth.

Hostess went out of business in November after BCTGM members went on strike.

Before the strike, members overwhelmingly rejected the company’s take-or-leave-it final contract offer that cut wages by 27 percent over five years, increased worker health care expenses, reduced health care benefits, and did not restore pension contributions.

The media has dutifully reported that the strike caused Hostess to go out of business and lay off 18,000 workers, but Mike Hummel, a member of BCTGM Local 218 and a 14-year Hostess employee, tells a different story in a video entitled, “Inside the Hostess Bankery: Who Keeps the Dough.”

According to Hummel, the three private equity firms that own Hostess purposely provoked the strike by making a lowball final last best offer, which they knew BCTGM members could not accept. They then used the strike as an excuse to liquidate the company and sell off its assets.

The sale, says Hummel, will turn a nice profit for the private equity firms.

Ripplewood Holdings, Silver Point Capital, and Monarch Alternative Capital bought Hostess in 2009 after the company filed for bankruptcy for the first time. As part of the deal, the new owners asked Hostess union workers to make contract concessions estimated to be worth $110 million.

The new owners said that they would use money saved by the concessions to modernize the bakeries and make Hostess products competitive.

Among other concessions, workers agreed to allow the owners to deduct $10 a week per worker from worker paychecks. The deductions would be used to fund infrastructure improvements at the bakeries.

But according to the workers interviewed by Hummel, those investments never took place.

The CEO gave himself and other executive raises and bonuses, then blamed the workers for the bankruptcy, said Kenneth, a Local 218 member. “I feel if they were going to do something like that, they should put it on the fact that they didn’t spend money on equipment that we were working with because a lot of equipment was breaking down and needing repairs,” he said. “The money they stuck in their pockets should have been money that they should have invested in the company.”

Other workers interviewed by Hummel tell a similar story. Workers constantly had to make do with broken and antiquated equipment and few if any of the promised modernizations ever got off the ground.

In addition to not keeping their promise to invest in the company, the new owners decided to keep workers’ money that was supposed to be used to fund pensions.

Under terms of the old contract, BCTGM members’ compensation package includes $4.25 per hour per worker that went to the workers’ pension fund, which pays for a pension, retiree insurance, and a death benefit. But in August 2011, Hostess stopped sending that $4.25 an hour to the pension plan and instead kept it. Some of that money was used to pay executive bonuses and raises.

“They stole $50 million from our pension,” Hummel said.

The company owners have never returned this money, and the bankruptcy court has ruled that they don’t have to.

According to Hummel, the theft of their pension and the new owners’ broken promise to invest in the company made BCTGM members wary of making more sacrifices, and that’s what led to the company’s demise.

American Crystal Sugar seeks a larger slice at workers’ expense

Locked out workers at American Crystal Sugar earlier this month rejected the company’s offer to end the lockout. The company’s offer, which hasn’t changed since American Crystal made its original final offer in August 2011, would increase worker health care premiums thus reducing take home pay, increase out of pocket health care expenses, and reduce job security by making outsourcing easier and more common. It also takes steps toward eliminating seniority rights.

The workers’ most recent vote was the fourth time in 16 months that members of the Bakery, Confectionary, Tobacco, and Grain Millers Union have rejected the company’s offer.

In a recent New York Times column, Paul Krugman observes that

The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense.

American Crystal joins a growing list of highly profitable firms including Caterpillar, GE, IBM, Lockheed Martin, and Verizon seeking a larger slice at their workers expense.

In fiscal year 2011, which ended on August 31, 2011, American Crystal reported net revenue of $811 million, but when it came time to negotiate a new contract with its 1,300 unionized workers, the company demanded that they accept benefit cuts and more job insecurity.

Reasoning that their labor had helped create the company’s wealth and that they deserved at least a portion of it to help maintain their benefits and job security, BCTGM members found the company’s final offer to be unreasonable. When a vote was taken in August 2011, 90 percent rejected the final offer, but agreed to keep negotiating.

The company chose to lock them out.

Three other times during the 16-month lockout, American Crystal has made the same offer, and every time a majority of workers has rejected it.

In addition to hurting the workers, the lockout has hurt local communities in Minnesota, North Dakota, and Iowa where American Crystal has processing facilities and packaging and transportation sites.

Last December a report by the Minnesota AFL-CIO found that the lockout was doing serious damage to local communities where American Crystal workers live. According the report published in December 2011, the loss of income resulting from the lockout cost local economies more than $18 million. Those losses have likely grown since the report was published.

American Crystal is a cooperative of sugar beet growers, and the growers have been hurt as well. Growers belonging to American Crystal will receive $58.67 per ton, $14 less than they received last year. Growers at thee other co-ops in the region are projected this year to receive $74.05 per ton, $74.05 per ton, and $87.74 per ton.

Even American Crystal’s bottom line has been hurt by the lockout. Net proceeds, which fell to $555 million in 2011, are 30 percent lower than 2011’s. Since the company began operating its processing facilities with replacement workers, tons of poor quality, unsalable product have filled the company’s warehouses.

But the company appears to believe that its long-term interest lies in paying less for the labor that makes its sugar. American Crystal CEO Dave Berg likened workers who demand their fair share of the company’s wealth as a “cancerous tumor” and told co-op members that, “We can’t let a labor contract make us sick forever and ever and ever. We have to treat the disease and that’s what (the lockout is about).”

Berg’s attitude and the company’s intransigence has led the AFL-CIO to call for a boycott of American Crystal products. It has also caused BCTGM and the AFL-CIO to suspend lobbying efforts in support of the federal sugar support program, which restricts foreign sugar imports and is vital to the profitability of the sugar industry. The sugar support program is part of a larger Farm Bill being negotiated by Congress.

So far 100,000 people across the US have signed a petition pledging support of the American Crystal boycott, but when a delegation of workers and community supporters tried to present the petition to a recent company board meeting, they were turned away.

American Crystal seems determined to continue demanding sacrifices from its workers no matter what the consequences.

Hostess, bakery workers head to mediation; liquidation on hold–for now

Federal bankruptcy judge Robert Drain on Monday urged Hostess Brands to seek the help of a mediator to resolve a strike by members of its bakery union, BCTGM. Hostess agreed, temporarily putting its planned liquidation on hold.

Negotiators from Hostess and BCTGM will meet with a mediator on Tuesday morning.

The Teamsters, Hostess largest union, which primarily represents delivery drivers and those who support the drivers, said that it would “closely monitor the mediation . . . and assist in any way we can to help the two sides reach an agreement that keeps the company’s doors open.”

BCTGM did not issue a statement about the mediation.

BCTGM did, however, submit a motion Monday in bankruptcy court that joined other unions affected by the possible liquidation in objecting to the company’s request to be allowed to begin winding down operations.

In its pleadings, BCTGM carefully laid out reasons why its members went on strike even though they knew that there was a good chance that Hostess would react to the strike by going out of business.

Foremost among their reasons was the belief that the company’s owners were not interested in meaningful restructuring that could make the company viable again.

Members of the union suspected, instead, that the private equity companies that now own Hostess–Ripplewood Holdings, Monarch Alternative Investments, and Silver Point Capital–were more interested in diverting company assets to their own pockets

The pleadings point to past experience to justify their concerns. In 2009 as part of a deal to help Hostess exit from its first bankruptcy, BCTGM members agreed to reductions in their health and welfare plans and work rule changes that achieved “significant labor cost savings.”

In return, according to BCTGM, the company agreed to invest these savings in new equipment, new technology, rebranding its products, such as Twinkies and Wonder Bread, and plant modernization–investments that could help Hostess regain its lost market share that led to its first bankruptcy.

But this reinvestment never took place. Hostess used savings generated by the workers’ concessions instead to pay private equity fees to its new owners and executive pay increases and bonuses.

The company also took on more debt. To buy the company in 2009, Hostess’ new private equity owners borrowed $713 million. Since then the company’s debt has increased to $860 million.

When the first bankruptcy ended, BCTGM warned that unless the company got serious about reinvesting in its operations, the company’s heavy debt load would soon lead to another bankruptcy. The warning proved prescient.

Instead of working with its unions to avoid a second bankruptcy, the company again blamed workers for its troubles.

After the company declared its second bankruptcy, it began bargaining with the bakery workers on a new contract. During the negotiations, Hostess demanded that the bakery workers agree to an 8 percent wage cut, 20 percent higher worker health care costs, allowing the company to freeze pension contributions until 2015, and the elimination of eight-hour work shifts.

Having been burnt once, BCTGM members were skeptical about accepting more concessions. In September when Hostess stopped negotiating and made its final offer, 92 percent of the BCTGM membership voted to reject it.

When the company decided to unilaterally implement its final offer, the union felt that it had no choice but to strike. Savings from any concessions that workers made would once again be diverted to the private equity firms instead of into meaningful investment in operations. Without new investments in operations, the firm would soon be back in bankruptcy court for the third time.

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.”

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.”

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.

Hostess prepares to implement final offer, BCTGM prepares to strike

Hostess Brands workers are waiting for the company to make its next move as Hostess tries to impose a new labor contract that has been approved by a bankruptcy court. One of the unions that represents workers at the company’s bakeries, the Bakery, Confectionary, Tobacco Workers, and Grain Millers Union (BCTGM), has said that imposing the terms of the new contract will result in a strike by its members.

In September, 92 percent of BCTGM members rejected a final offer by Hostess, which in January filed for Chapter 11 bankruptcy. Hostess’ final offer, which cuts pay by 8 percent, freezes pensions, increases worker health care costs, and changes work rules, was a key piece of the company’s plan to exit bankruptcy.

Before BCTGM rejected Hostess’ final offer, 54 percent of Teamster members who work for Hostess and voted on the offer chose to accept it. Teamster leaders did not endorse the final offer, but told members that rejecting it could result in job losses.

Prior the voting, Hostess CEO Gregory Rayburn’s said that if either of the two unions or the 10 other unions that have smaller numbers of members working for Hostess rejected the final offer, the company would shut down and liquidate its assets.

After BCTGM members rejected the offer, Hostess changed its mind about going out of business and instead returned to court to ask the bankruptcy judge to allow the company to impose the terms of its final offer. It argued that imposing the offer was essential if the company wanted to exit bankruptcy because high labor costs had caused the bankruptcy.

Throughout the bankruptcy proceeding, both the Teamsters and BCTGM have maintained that poor management rather than high labor costs caused the business failure that resulted in Hostess’ second bankruptcy in less than ten years.

“Our members have seen this company squander more than $50 million that it was contractually obligated to put towards our members’ pension,” said BCTGM President Frank Hurt after members rejected the final offer.  “They have seen the company fail to invest in product development and new plant and equipment as was promised when the company emerged from its previous bankruptcy (in 2009) and for which our members made significant concessions.”

Last spring a business restructuring expert hired by the Teamsters testified at a bankruptcy hearing that Hostess management failed to invest sufficiently in modernizing production, hollowed out Hostess’ once dominant distribution system, and did a poor job of marketing its products.

Another expert hired by the Teamsters testified at the same hearing that Hostess’ labor costs were comparable to regional competitors.

Nevertheless, during the October hearing on Hostess’ request to be allowed to impose its final offer, the judge sided with the company and on October 4 ruled that the company could proceed with imposing its final offer on BCTGM and five other unions that either rejected the offer or are still considering it.

After winning the judges approval, Hostess said that it will impose the final offer within the next 45 days. BCTGM has said that doing so will result in a strike.

BCTGM locals have been meeting to plan for a strike if the company imposes the new terms.

After BCTGM members rejected the company’s final offer in September, Hurt explained why.

“(Members) rejected (the offer) because it was an outrageously unfair proposal from a company that has destroyed the trust of its workers through years of mismanagement, greed and unfulfilled promises,” Hurt said.

The company exited from its first bankruptcy in 2009 after both the BCTGM, the Teamsters, and other unions agreed to concessions. Teamsters estimated the cost of their concessions to be $60 million.

After the unions agreed to concessions, Hostess’ former owner Interstate Bakeries Corporation reached a deal with Ripplewood Holdings, a private equity company, for Ripplewood to purchase the company.

Ripplewood committed $130 million of its own money to the deal and borrowed hundreds of millions of dollars from General Electric Capital, GE Capital Markets, Monarch Master Funding, and Silver Point Finance.

As part of the deal, Ripplewood paid itself $3 million in management fees to oversee the restructuring of Hostess.

Hurt is wary that Hostess’ final offer to its union employees is just another way to force another round of concessions that will make Hostess more attractive to another private equity buyout.

“Our members know that this is a company that is controlled by Wall Street private equity and hedge fund firms, whose sole objective is to maximize their own returns, not rebuild a company for the long haul,” Hurt said.

Hurt said that a deal with Hostess is still possible if Hostess pays the $50 million in pension contributions that it has withheld from BCTGM members and returns to the bargaining table with a fair offer that includes a plan for long-term growth at the company.