The Hostess unions thought they held a royal flush.
As it turns out, they weren’t even in the game.
After 18,500 Hostess employees lost their jobs because the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union went out on strike (the Teamsters did not want to strike) the company went into bankruptcy and shut down, as its executives had warned it would, given a labor stoppage.
Now there is a new owner, who is reopening the plants that make Twinkies, Ho Hos and Ding Dong brands. Only they are reopening without any unions.
That’s one big step for American capitalism. And one big step backward for unions.
According to The Wall Street Journal, after the recent sale of the company to Metropoulos & Co. and Apollo Global Management, the baker’s union president in February expressed confidence that his thousands of out-of-work members would find opportunity at the reopened Hostess facilities. The union president was quoted as saying, “The only way to have a seamless restart would be to hire back unionized bakers.”
“Only our members know how to get that equipment running,” he boasted.
Apparently, the new owners disagree and want nothing to do with the bloated unions. They have said they expect capacity to be back by September where it was before Hostess shut down.
Where once there were 11 bakeries, now there will be only five, including one in Emporia, Kan., where eventually 300 workers will be employed. Where once there were 18,500 in the Hostess organization, there will be only 1,500 under new ownership.
Production jobs are advertised at $11.30 per hour and maintenance jobs at $17.43 per hour.
The unionized bakers at Hostess were bringing in twice the national average, according to information from the U.S. Department of Labor. That wage scale, plus pensions, made Hostess uncompetitive.
The previous owners of Hostess asked the unions to roll back their pay and warned the company could not survive with the cost structure the way it was. Ignoring them instead, the bakers went on strike.
This is reminiscent of the 1981 confrontation between the air controllers and President Ronald Reagan. The controllers’ union PATCO threatened to go on strike (illegally), and Reagan warned them if they did, he would fire them and replace them with non-union employees.
PATCO thought the president was bluffing. Union members did not think he could replace them and still keep the planes flying. They thought they were irreplaceable. Reagan busted the union and kept the planes flying with new non-union employees, at a much-reduced pay scale.
Hostess unions either did not learn from that event, or they chose to ignore it. They were arrogant, thinking Hostess was bluffing and would not shut down — or if it did, a new owner would have to hire them back.
With unemployment as high as it is in the United States, and with global competition breathing down our necks, unions throughout the nation should heed the lesson of Hostess.
The unions at the Claycomo plant obviously have heeded the lessons. Ford Motor Co. officials have said they would not be expanding their Claycomo plant, were it not for a good working relationship with the unions.
If only Hostess and its unions were more in harmony.
The downward pressure on wages at companies all over America puts unions in a bind. Either they get competitive — like the unions at Ford’s Claycomo plant — or they will find themselves unemployed, like the 18,500 individuals who once worked for Hostess.