Monday, November 19, 2012

Unions and the Hostess Situation

Unions are interesting creatures. And for decades now, they have been one of the more controversial parts of the American work force.

Union supporters claim that unions are great for workers, and exist only for that benefit. The other side believes unions but unfair restrictions and financial burdens on employers.

The truth, as with most things, probably lies somewhere in between.

Sometimes the relationship between a union and an employer reaches critical mass.  The unions demand more, the employer demands more, and a stalemate ensues. Often, those stalemates lead to strikes by the union or lockouts by the employer. In the end, both sides normally end up compromising something that they could have before the work stoppage, and work resumes with both sides feeling a little bit better for having puffed out their chest to make a point.

By now you've heard about Hostess.  Hostess is an example of what happens when a union and an employer reaches critical mass.  And in this particular situation, it is an example of what happens when unions refuse to back down against an employer that is already up against a wall.

Businesses Will Fight to Survive

Businesses don't like to fail.  It's bad for communities.  It's bad for employees. It's bad

Once in a while, a small neighborhood business will close its doors when Mom & Pop get to old to keep at it, and no one else wants to take over.  Other than that, though...there's only one reason a business fails: it just can't afford to keep the operation running anymore.

That's other.  A business will fight and fight to survive...but if it can't make money, it will inevitably fold.  No profitable business ever closes.  Ever.

Unions Will Fight to Survive

It's no different for a union, really.  They can only do what they do if they continue to receive dues.  If there is not a benefit to belonging to a union, the members will eventually turn against the union and drive them out of the shop.

To due this, the unions will fight relentlessly for its employees.  Originally formed to see that workers were treated fairly, unions now work to get workers far more than their skills and abilities would be worth in any other place.

The unions will sometimes go so intensely after a fight, that they put the employees in a worse situation.  Sometimes, a union will draw such an unreasonable line in the sand that the employer can't ever meet the demands.

When an Unstoppable Force Meets an Immovable Object

So, what have we learned?  That sometimes an unstoppable force (The union demanding certain wages and benefits for its members) does run into an immovable object (a company so teetering on the edge of survival that it simply cannot concede any further.)  And when that impact occurs, there is only one possible annihilation.

And that's exactly what happened when the Bakery, Confectionery, Tobacco Workers and Grain Millers Union failed to step back from its demands against Hostess.  The unstoppable force refused to take a different path and instead proceeded full steam ahead into the immovable object.  BAM!  Annihilation. 

I'm not sure what the Bakers' Union was thinking, either.  Hostess had made it clear to the unions (Teamsters also represented a large portion of workers in the company) that they absolutely could not afford the demands made to them.  The Teamsters listened.  The Teamsters even went to the Bakers' Union and told them they did not believe Hostess would be able to survive if they conceded to the union demands.

Ultimately, Survival is the Union's Call

The Bakers' Union refused to yield.  The immovable Hostess object, and their employees, were completely at the mercy of the union.  The immovable object could not move, it could only wait.  Hostess knew there were only three possible outcomes:

  1. The union backed down, and Hostess survived, for now; or, 
  2. the union kept at it until Hostesses relented, at which time Hostess would close; or 
  3. Hostess just put themselves out of their misery and closed on their own.

Note that no matter what happens to Hostess and their employees  at this stage the burden of the results are completely on the shoulders of the union.  If the Union backs down, there's a shot at survival.   If the Union refuses to step down, the Hostess fails and it's employees join the ranks of the unemployed. Hostess no longer has a say.

So what decision did the Bakers' Union make?  Well, of course you know the answer to that already.  The Union, despite being clearly warned of the consequences, made the decision that they would rather be unemployed than employed.

The Decision Affected Thousands Outside of the Union

Unions in states like Indiana complain about right-to-work laws.  They claim that by allowing non-union workers into a union shop, that non-members will be taking advantage of the union's work without having to pay dues.

Well, obviously that concern is not reciprocal.  Hostess employed approximately 18,500 people.  Of those people, only 6,700 belonged to the Bakers' Union.  Yet the decision of 6.700 people to not back down ended up costing almost 12,000 other people their jobs, too.

One Final Thought

I don't hate unions.  I do, though, find it hard to accept that any organization that supposedly exists solely for the purpose of helping its members will allow the members to become unemployed before allowing them to concede.

I don't blame you for fighting, just have to know when to say when.  This time you forced a large company out of business.  This time, those 18,500 unemployed people are on you.

1 comment:

  1. While the decision to drive the final blow might ultimately be laid at the feet of the Bakers Union in this case, the facts are that Hostess hasn't been a profitable company for several years and has already gone through managed bankruptcy to organize and eliminate some debts. It was already well on its way to being a thing of the past, this just sped up the process.

    I haven't been able to verify if the executives did indeed get huge increases in pay over the past few years, but the market has changed for Hostess. Even among snack junk foods, there are just frankly more options that are also reasonably priced. Most grocers have dozens of different varieties of bread from at least 10 different manufacturers. It was a product that hasn't changed much with the times.