Thursday, May 10, 2012

Hostess Threatens Layoff Of 184 In Wisconsin

Hostess Wholesale Bakeries notified the Department of Workforce Development that it plans to layoff 184 Wisconsin workers from nine plants across the state yesterday.

The news is bad, but just hints at the entire story.

Hostess filed bankruptcy protection in January amid negotiations with Teamsters regarding pay, pensions and various concessions. Hostess and business types were quick to paint the problem as union greed and stubbornness...until it was discovered by Dow Jones Daily that Hostess executives were bleeding the company with illegal bonuses - increasing their take home compensation between 35% to 80%.

Hostess CEO, Brian Driscoll saw his compensation increase by 300% as the ship went down.

On May 4th workers were dealt a severe blow by a federal judge who allowed Hostess executives to cancel existing contracts.

Hostess has already ceased pension payment contributions to thousands of workers and are showing signs of using bankruptcy laws to avoid pension obligations from previous years.

In a play straight out of the Mitt Romney/Bain Capital book of business:
Use bankruptcy to cancel contracts and abandon promises made to workers, suck up the cash to pad executive pay, reorganize the company to hire (or even rehire) workers at a lower wage, no benefits and extinguished pensions and blame the entire thing on workers who had negotiated contracts in good faith with the company.