(Photo courtesy of Flickr Creative Commons)
Like many Americans, I was saddened by the news that Hostess Bakeries in the United States would cease operations, because who doesn’t have fond memories of, and love, for a Twinkie or Ding Dong?
But as a business owner, I was even more saddened that 18,500 employees would lose their jobs because the Bakery, Confectionary, Tobacco and Grain Millers (BCTGM) Union went on strike rather than negotiate a new contract. The closure also means the end of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores.
According to a press release issued by Hostess: “The wind down was necessitated by an inflated cost structure that put the company at a profound competitive disadvantage. The biggest component of the company’s costs was its collective bargaining agreements that covered 15,000 of 18,500 employees.”
On my radio show, Made in America, I recently had a conversation with Fred Wszolek, spokesman for the Workforce Fairness Institute (WFI), an organization committed to educating voters, employers, employees and citizens about issues affecting the workplace.
According to Wszolek, Hostess had 372 different collective bargaining agreements, to the point where drivers could only deliver Twinkies, but not Wonder Bread, another Hostess U.S. brand, and vice versa.
It seems that the strike and closures could have been avoided because according to USA Today, “The company had obtained the support of its largest union, the International Brotherhood of Teamsters, and its lenders. However, the BCTGM leadership chose not to negotiate a new labor contract and instead, when presented with a final offer, launched a campaign to cripple the company’s operations and force it to liquidate.”
Ironically, Hostess in Canada, a non-union company, is doing well and is still manufacturing Twinkies.
The Associated Press reported that “Hostess, which had been contributing $100 million a year in pension costs for workers, offered workers a new contract that would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits. The baker’s union rejected the offer and decided to strike.”
I’m not sure if unions watch the news or read newspapers, but the American public is largely turning its back on unions because they are losing more jobs than protecting them. And stunts like the Service Employees International Union (SEIU) calling a strike on Thanksgiving morning at LAX doesn’t win them any fans.
According to the Bureau of Labor Statistics, only 12.4 percent of the American work force, or 16 million Americans, belonged to a union in 2008, down from 35 percent in the 1950s. Only 7.6 percent of workers in the private sector are in unions, compared with 36.8 percent of public sector employees.
A New York Times story in July noted that “the percentage of workers in unions has dropped as companies have closed many unionized operations and moved them overseas and as many employers have grown more sophisticated in beating back unionization efforts. Moreover, as the American work force has grown more prosperous in the decades of World War II, many workers concluded that they did not need a union to represent them.”
The backlash against unions is being felt in a meaningful way. A new “right-to-work” law is being introduced that would allow workers to skip paying union dues, but still receive the benefits of union-negotiated contracts. The right-to-work idea is spreading to the Midwest, where unions traditionally have a stronger base.
Fortune magazine wrote that “The Indiana Chamber maintains that employment grew 100 percent in right-to-work states over the 30-year period between 1977 and 2008, and increased only 57 percent in other states.”
Twenty-two states have passed right-to-work laws that let workers decide whether to support unions or not. Right-to-work prohibits companies from firing workers for not paying union dues. It protects employees’ right-to-work, whether or not they support unions.
A prime example is the SEIU at LAX, where airport personnel are trying to decertify their union because they can secure higher wages and better health benefits by negotiating directly with management (and save themselves $2 million in annual union dues). Or look at Boeing, which plans to move manufacturing operations to South Carolina to be in a business friendly, right-to-work state. Then there’s the game-changing right-to-work legislation being discussed in union-friendly Pennsylvania.
Something is amiss, and that is not good news for union bosses.
For unions to be relevant, they must reinvent themselves and stop operating in their “I Love Lucy” world. That world passed us by decades ago.
There are 25 million unemployed and underemployed Americans yearning for good paying jobs. And now, thanks to union arrogance, 18,500 more Americans are joining these ranks.
Anybody who thinks there is a winner in the Hostess debacle (with apologies to the brand) is a Ding Dong.
DEC
