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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsCorporate America: Saving the Twinkie but Not the Workers by Dean Baker
http://www.commondreams.org/view/2013/02/06-4No, I am not kidding. Steven Davidoff has a DealBook column touting the fact that Hostess Twinkies are likely to survive as a product, even though the company that makes them has gone bankrupt. The Twinkie brand, along with other iconic brands owned by the company, will be sold off in bankruptcy to other companies who expect to be able to profitably market them. Of course there is no guarantee that they will restart the old factories and rehire the Hostess workers, likely leaving them out in the cold.
There are two major issues here. First, in the United States firms can in general fire workers at will. This means that if they can find workers elsewhere in or outside the country who will work for less, then they can dump their current workforce and higher lower cost labor. This happens all the time. Most other wealthy countries require some sort of severance payment to longer term workers, but the United States does not.
Bankruptcy only changes the picture in this respect in cases where you have union contracts, which was the situation with Hostess. Bankruptcy voids these contracts allowing the company to change terms of employment and discharge workers in ways that would have prohibited under the union contract.
The other issue with bankruptcy is that it eliminates the company's pension obligations. While pensions are guaranteed by the government, the guarantee is not 100 percent. This means that a bankrupt company can leave many workers with sharply reduced pensions. In principle the pension is supposed to be a privileged creditor, standing at the front of the line to get the proceeds from the sale of Twinkies and other brands. However, it doesn't always work out this way. It remains to be seen what the situation will be with Hostess.
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Corporate America: Saving the Twinkie but Not the Workers by Dean Baker (Original Post)
xchrom
Feb 2013
OP
HiPointDem
(20,729 posts)1. +100.
Sherman A1
(38,958 posts)2. The workers have been screwed certainly
by a series of bad management and market changes. Yes, the workers pensions should be first in line for the proceeds of the bankruptcy without any doubt. That said, saving the brand(s) may help at least some of them find re-employment. Flowers Bakery has indicated in the deal on the bread lines of Wonder/Hostess that some 20 bakeries are involved. Someone has to work at those plants, transport the products and then deliver them to the stores.
It won't be the same, but it's a whole lot better than the brands completely going away.
marmar
(77,080 posts)3. Emblematic of contemporary capitalism.
nt