EDITORIAL
Extortion?
Don’t Give In!

Nov 26, 2012

On November 16, Hostess Brands slammed the doors when striking workers refused to cave in to company extortion. Across the country, 33 bakeries were immediately closed, with 565 distribution centers and 570 outlet stores soon to follow. 18,500 workers found themselves without a job.

This was only the latest, but not the last, card Hostess would play in its high-stakes poker game with workers.

Since 2004, Hostess had demanded and gotten multiple rounds of concessions: once when it went into bankruptcy in 2004, and once when it came out of bankruptcy in 2009. It unilaterally imposed an enormous take back in 2011, when it stopped making payments it owed to the pension fund and to the workers compensation fund. It reduced the number of its workers from 32,000 in 2005 to 20,000 at the beginning of 2011.

Late in 2011, it demanded more concessions. When workers refused to accept them, it again went into bankruptcy in January 2012. In the spring, it demanded that workers accept a salary freeze. Workers refused to budge on that demand.

In November, Hostess upped the ante, demanding an 8% cut in wages, which would have brought the wages of a shipping clerk, for example, down to $25,000 a year, reduced by multiple concessions from the $48,000 a year the workers made in 2004. The company also insisted that workers pick up another 20% of their health care costs–on top of what they already pay. All payments for retiree health care were to be terminated, and the pension plan shut down. Finally, it refused to put in any more than 25% of what it currently owes current retirees.

Hostess pretended that it could not afford “exorbitant” wage costs–almost as big a lie as the scrumptious looking pictures Hostess put into its ads for Twinkies!

The fact is, Hostess has had financial problems throughout all these years as the result of hostile buy-outs, mergers and so-called “investments” from private equity funds and Wall Street banks. It owed no debt to these vultures in 1975, just before a data processing company with no experience in foods bought up the original Hostess company (then called Interstate Brands). But then it merged in 1995, with Continental Brands. By 2004, when JPMorgan Chase helped the company to “restructure,” it had accumulated 748 million in debt, which went up to 850 million in 2009 when Ripplewood, a “private equity” company, and two funds from GE Capital took their stake in the company. Every buyout and “restructuring” transferred more millions to the financial interests that engineered them.

Just before Hostess demanded the latest wage cuts, management awarded a 300% increase in wages, bonuses, severance pay and pensions to one CEO, who promptly left the company, and immediate raises ranging from 35 to 80% for nine other top executives!

No, it’s not the workers who bled this company dry–it’s the capitalist dinosaurs driving the company to extinction.

Faced with this reality, workers organized by the Teamsters union at Hostess voted by a very narrow 53% to 47% margin to accept the new concessions. Members of the bakery workers union refused, and instead voted 92% for a strike. When Hostess set November 16^th for closing if the strike weren’t ended, the most determined workers refused to be bludgeoned and continued their strike.

In so doing, they laid out a road for the rest of the working class. Hostess workers are not the only ones to face such a bloodletting–look at Delphi, bounced back and forth between private equity companies and GM, only to be gobbled up by Romney’s old bait-and-switch company, Bain Capital. Look at Chrysler, devoured by Daimler, then Cerberus, then Fiat.

After insisting it would take nothing less than surrender, Hostess switched gears agreeing to “arbitration”–which certainly never favors the workers. But it shows that Hostess could be set back on its heels.

Whatever comes next, in standing up to capitalist extortion, Hostess workers have done the only thing that gives workers any chance to come out of the current dire situation with both some self-respect and some possibilities for the future.