Twinkies Defense Is Private Equity's Pension Offense: Street ... www.thestreet.com/story/11771361/1/twinkies-d... ...Looking around, I found this on the net:
Hostess Brands goes out of business after employees say no wage cut
Hostess Bakery struggling with production issues and net income, refused to accept BCTGM Union proposal to keep existing wage rates and to restore the pension plan.
Gregory F. Rayburn, CEO, says the recent loss of bakery production from the strike worsened the unmet economic obligations. Frustrated at the unions and workers he publicly announced that he is closing Hostess Brands Bakery which includes 18,000 job eliminations and "closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States."
View slideshow: No more Twinkies: Hostess Bakery closes doors after Union dispute
The primary issues cited by owner Rayburn was the looming cost of healthcare, union wages, and pension plans. The company already had issues at their production plants which were not operating at optimal levels. The cost per product was increasing with slow production. Union operations complicated production, pay, management. 83 percent of Hostess Brand's 18,500 employees were subject to 360 collective bargaining agreements with 12 separate unions.
Rayburn proposed to the unions the following offer according to BCTGM:
Hostess Brands Proposal:
An immediate 8 percent wage reduction and elimination of the eight-hour work day.
401k plan beginning 2015,
Employee healthcare cost sharing 20 percent increase,
Elimination of the employees’ W-1 (retiree Medigap insurance) and P-Plan (a pension supplement used to pay health and funeral costs);
Closure of additional plants (10-12) without reporting reasons to the unions.
$100 million to union in the form of 25 percent equity stake in Hostess Brands
Current pay rates stay
Begin 401k now
Pay back their pension amount
Without agreeable negotiation legal action will continue.
Stop labor until agreement made.
At least according to this article, not only would they refuse a pay cut, but they demanded their pensions back. They also decided to strike (or as they say, stop labor) unless these demands were met.
2 days ago ... The Hostess liquidation may prove how hedge funds can score profits by hoisting pensions onto taxpayers.... as both parties return to the negotiation table on a pay and benefit deal that could keep the company in business.]...