Washington / DC. (ibt) The Teamsters Union submitted a proposal that provides a realistic path forward to save Twinkie-maker Hostess Brands Inc. after years of failed management initiatives, including recent revelations that executives looted the company by giving themselves raises of up to 240 percent before declaring bankruptcy.
«The Teamsters´ proposal demands that executives, as well as all stakeholders, actually share equally in the financial sacrifices necessary for Hostess to emerge from bankruptcy instead of paying lip-service to the concept», said Ken Hall, Teamsters General Secretary-Treasurer.
«Hostess workers have already sacrificed for this company», Hall said. «Under management´s one-sided proposal, Hostess workers again are the only ones doing the sacrificing. Executives lie and claim labor costs are to blame. But it is incompetence and greed, pure and simple, that have put this iconic company in the position it is in today».
Hostess executives, after lining their pockets with the big raises, illegally stopped paying into workers´ pensions and demanded that workers take further cuts. Meanwhile, despite their huge pay hikes, executives have failed to return any of the money to the company´s operations. They still continue to blame workers for the company´s troubles.
The Teamsters Union´s proposal comes in advance of a hearing in U.S. Bankruptcy Court in New York this week. The company has declared bankruptcy for the second time, less than three years after emerging from the first filing. Annual labor cost savings made in two rounds of concessions by workers were estimated at 110 million USD. With the proposal, the Teamsters Union, which represents 7’500 workers, has tentatively agreed to concessions totalling yet another 150 million USD per year.
In exchange for the massive savings proposed by the Teamsters Union – including an innovative proposal that addresses the company´s concerns on pensions, the union believes, given the poor track record of Hostess management, that the following key items must be addressed:
- Equal Sacrifice: real accountability to ensure all constituents contribute to the restructuring. The current company proposal is toothless – for example, management´s exorbitant raises could be reinstated or increased without real penalties. The Teamsters´ proposal provides real penalties for failure to comply.
- Governance: proper controls instituted at the board level to ensure the company doesn´t squander concessions like the previous board. (The board included lender insiders Silver Point and Monarch).
- Debt Reduction: meaningful debt reduction that will not hinder a reorganized Hostess upon emergence from bankruptcy. Hostess has more debt on it today than when it first filed bankruptcy in 2004. The company failed to address this, despite dozens of requests and two highly specific Teamster proposals. The company´s stifling debt was a major factor to the second bankruptcy filing, and a key factor in the massive underinvestment in research and development, equipment and marketing.
The comprehensive proposal made by the Teamsters Union also comes on the heels of a publicity stunt by the Hostess executives during the weekend in which the company released its own proposal to the media without providing details to the Teamsters Union until hours later, when it was too late to respond.
«The looting and the games being played by Hostess executives give me zero confidence that they want to join us in saving this company», Hall said. «It does not get more American than Twinkies, yet Twinkies will be no more unless the company gets serious. What is more, the livelihoods of thousands of workers and their families across the country are at stake. This is no time for greed run wild or publicity stunts».
