1/12/2012

Unions for Hostess Bakery Brand into Bankruptcy

Unions are problematic. They are particularly problematic when a company has to deal with multiple unions. Each union hopes that the other unions will give in and it won't have to. From the WSJ:

The privately held Irving, Texas, company's move marks the second significant court restructuring in the past several years. In a statement, Hostess said the current cost structure "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." It said it would be able to maintain operations thanks to a $75 million financing commitment from a group of lenders.

In bankruptcy, Hostess said it plans to continue negotiating with 12 unions to modify the collective-bargaining agreements governing the employment of its union workers, who comprise 83% of its approximately 19,000 employees.

"Whether the debtors can achieve long-term viability depends directly and substantially on the debtors' ability to achieve dramatic change to their labor agreements, with a corresponding material reduction in their cost structure and legacy pension and medical obligations, and a restructuring of their capital structure," Hostess said in court papers. "That is the purpose and the focus of these Chapter 11 cases." . . .

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