Sunday, November 25, 2012

Having Cake and Not Be Able To Eat It At All.

Well, the unions killed the goose that laid the golden twinkie. The tasty Hostess Company will not return as it was.  Some have asked the question, "Was Hostess not too big to fail?" Apparently, the union bosses involved did not have as much influence with the White House as the auto worker union bosses did. Imagine, if you will, federal money being borrowed for bailing out Hostess, but thy feds telling bond owners to take a hike, firing the CEO and making the unions part-owners of the company and non-union suppliers left out in the cold.  That is what happened with Chrysler and General Motors.

As usual, union bosses screwed things up.  It is ludicrous, especially in this dreadful economy, to expect a company devoted to sweet snacks to survive without cutting their expenses. You would think that even a union thug was smart enough to see that striking against court-ordered restructuring of union benefits would leave Hostess with no other option but to cut their losses and sell off their assets. But it has been a long time since union bosses have been realistic about strengthening the workers' positions. Mainly, union bosses are trying to feather their own nests and currying political connections.

Mexico can make the products much cheaper and maybe just as tasty. Hopefully, other companies will buy the brands and they can continue the iconic brand of Hostess alive, perhaps in more business-friendly states. Most of us would prefer to have our tasty treats made in our own country, or even in our own states or towns, but unions are making it more and more difficult for people to have good jobs. Right-to-work states, for the most part, have more work and more jobs. Supply and demand is still the best control in any economy. If you build a company, workers will come. If you are a thriving company and want and need to keep good workers, you will naturally pay more and offer  more benefits than your competitor. If your product is wanted, you will prosper. If your product becomes less attractive to the consumer, you need to change your product or, perhaps, cut the cost of your product to make it more appealing. This is the simple reality of business in the free market place. However, when the unions enter the equation, reality is suspended for many. There is never an end of company money, as far as union bosses are concerned. The investors and management are always "fat cats" who are trying to live big on the backs of the workers. Have you looked at how big union bosses live? Have union members asked union bosses to cut back?

GM, as George Will recently noted, had become a health insurance company for its employees and twice as many retired employees, and which had to try to sell enough cars on the side to pay for all of the employee benefits. The only fix that would preserve the status quo for unions and their Democrat cronies was to have the big "Auto-Bailout". It was actually a union bail-out, but that is getting too technical . Hostess is doing the only practical and honest thing it can do, after filing bankruptcy several times since 2004, trying to keep the company and over 18,000 jobs afloat. I only wish General Motors had done the same thing. GM might have come back leaner and meaner and with products the country and the rest of the world want and can sell without government subsidies. Can you imagine a government subsidized twinkie? Michelle Obama might have a say in what goes into it. It would be like the Chevy Volt: nobody would want have one, let alone eat it.


Michael K. Mayer said...

Hostess is just a company. And too and investor and others who have skin in that game...there are other investments. There was nothing but sentiment keeping Hostess from going under. Do people not understand that entrepreneurs don't grow up hoping to create a company to support moochers. This country must reevaluate the employer/employee relationship. If an employee wants more than what he has contracted for his services...he should look into risking it all to start a company. In a competitive, then you will see companies offering benefits...not to get just any old random union Joe, but the best the market has to offer.

Randy said...

But then, if they started risking their own money, they would be asked to pay their "fair share" of taxes. And risking would mean that they would have a way less-than a 50% chance of making the investment back. That would be crazy! And they would also run the risk of becoming evil free marketeers.