LaborPains.org

In summer 2011, the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) union — the same union whose strike killed Hostess — representing workers at American Crystal Sugar rejected a final contract offer and were locked out of their jobs. The union demanded that competitiveness-harming policies like seniority promotion remain in the contract, so despite the company’s agreeing to increase wages by 13 percent over five years, the union rejected the deal.

The lockout lasted 20 months, but finally a depleted group — company officials say 640 locked-out employees resigned or retired — gave in and approved the contract. The union didn’t get the concessions it wanted, so the lost wages were all for nothing.

Union leaders’ conduct during the work stoppage received criticism from many quarters, including former local union officials. We can’t know exactly what the union officers told employees before they rejected the contract, but they badly miscalculated American Crystal’s resolve.

BCTGM officials may also have miscalculated the willingness of Hostess buyers to hire back the employees who lost their jobs when Hostess went bust. At a time when unemployment remains relatively high at over 7 percent, most people are content to hold the job they have. Unfortunately for members, the BCTGM is willing to put their wages and employment at risk for union negotiating power.

According to the federal government’s Bureau of Labor Statistics, the proportion of private-sector employees in unions has tumbled to a 70-year low. Only 6.6 percent of private-sector workers were union members in 2012.

Unions’ failure to represent their members’ interests and overzealous defense of unsustainable benefits has hamstrung the airline, manufacturing, and automotive industries, and their numbers are showing the effects of this poor leadership. The most recent prominent victims of union stubbornness were Hostess employees sent to the unemployment line by a Bakers’ Union (BCTGM) strike.

And many former union members are wiser than the declining unions. The Associated Press reports:

Don McGough lost his job as a union steelworker. He found a new position and a decade later, he voted no when the machinists’ union tried to organize workers at his company, JWF Industries, in Pennsylvania. “There are so many companies that just closed their doors because the union wouldn’t budge,” he says.

Unions hope that by expanding organizing efforts to new industries, they can reverse their decline.

While unions representing U.S. manufacturing might — auto and steel — have become smaller, the emphasis in recruiting new members has shifted to the service sector.

The Service Employees International Union, which represents nurses and lower-wage service employees including janitors, security, hospital, home health and child care workers, has doubled in size since 1996, to 2.1 million workers. It says it has added 50,000 workers annually in the last decade.

But unless unions change their ways, such moves might only lead the new industries to follow the traditional unionized industries into bankruptcy court. Instead of clinging to the same old adversarial model on new turf, they should endorse the accountability reform proposals endorsed by 80 percent of union households contained in the Employee Rights Act. Only by reforming themselves and acting in the interests of their members can unions reassert their relevancy.

For the fourth time, American Crystal Sugar union members rejected the contract proposed by the company. That means the 16-month lockout will continue. This was the closest vote yet, with 55 percent of members rejecting the vote, down from 63 percent in June and at least 90 percent in the two votes prior.

The sticking points have remained the same throughout the dispute. According to the Star Tribune:

While the contract would raise wages by a relatively healthy 13 percent over five years, it would entail significant increases in workers’ health care costs. Also, it would give management more rights in determining key workplace issues. For instance, seniority — a basic union tenet — would lose its importance in worker advancement.

So which union is at the center of this dispute? None other than the Hostess-killing Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM). But unlike Hostess, American Crystal Sugar has found a way to survive: replacement workers. The Associated Press reported in September that the company has been happy with the results, saying they are doing a “fabulous job.” On the other hand, early on in the dispute, BCTGM members were accused of hurling racial slurs at the replacement workers.

The union has claimed that American Crystal Sugar has incurred higher production costs due to the lockout. But undoubtedly, the individual union members are suffering. Besides what the union has presented in its own sympathy campaign, the numbers tell a story as well. Of the 1,300 workers locked out in August of last year, approximately 500 have left, and unemployment benefits have now run out.

The AFL-CIO has called for a boycott of the sugar, but it’s a tough one to enforce, as very little of American Crystal’s sugar is sold under its own brand—the company primarily supplies the commodity as an ingredient to candy and soft drink makers.

Once again, labor leaders at the BCTGM seem to have severely confused members. At Hostess, the union convinced members that another company would swoop in and buy up the entire corporation as-is, keeping the production plants up and running with union workers. But as reality sinks in, it looks like buyers are only interested in the brand names, not the union employees.

Here, labor is more concerned with telling American Crystal how poorly the union thinks the company is doing rather than encouraging members to accept the economic realities of this situation. Replacement workers have been on the job for months, and union employees have no earned income or unemployment benefits. The Star Tribune reports that some union members requested the latest vote. Earlier in the dispute, a former union member said that leaders were misleading members on what would happen at the bargaining table.

BCTGM appears to be doing a great disservice to its members in both of these high-profile disputes. One commentator has even questioned if the union could be violating federal law due to its actions at Hostess.

Meanwhile, BCTGM President Frank Hurt cannot seem to right his sinking ship. His insistence that the union will not “fold” against American Crystal does not work well when it comes to negotiating and getting members back to work. Coupled with his discouraging union members from signing the “piece of crap” contract with Hostess, it is clear that Hurt is more concerned with keeping his power and his job — with a hefty salary and benefits — than he is about members’ struggles.

Twinkie the Kid was known for saving Twinkies from evil-doers in his classic commercials. Unfortunately, the Kid was no match for destructive union leadership. Will someone else come to the rescue?

Fans of Hostess snacks are hoping that other bakers will run to the brand in the same way they had a run on the products this weekend. And there’s plenty of speculation as to the fate of Hostess and its most iconic assets. Chief among those rumors is that Grupo Bimbo, a Mexican food company, will buy the product line.

So does that mean the striking members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) will be back at work soon? Not exactly.

Especially if a Mexican buyer is involved, production may go the way of the Brach’s and Fannie May candy concerns: south of the border. With US sugar tariffs set artificially high to protect Florida sugar-growing concerns, a non-unionized shop with access to lower-priced sugar in Mexico could be the Twinkie lifeline, economists suggest.

On the other hand, if Hostess’ problem is its legacy delivery system, which is what University of Maryland economist Peter Morici suspects, Bimbo may be able to squeeze profits out of the supply chain while still making Twinkies in the US, albeit probably not in union shops.

So much for the white knight that unions still think will ride in to save them. Despite the union’s contention that management should take 100% of the blame for the liquidation, prospective buyers are finding that the union workforce needs to be subtracted out of the equation in order to have a comeback of Ho-Ho’s. It’s the same thing that Hostess told the Teamsters, and why they agreed to work with management.

A new rumor today is that the only chance for the company to survive as one unit would be from the help of a private equity firm. You know, the “Bain-style” people that AFL-CIO President Richard Trumka blames for the bankruptcy.

After engaging in what Bloomberg News called “brinkmanship,” members of the BCTGM really should not be happy with their union leaders. As J. Justin Wilson, Managing Director of the Center for Union Facts, explained on CNBC on Friday, there is little chance that many of these jobs will ever return. He said that “we should feel bad” for the union members who were duped into thinking that their jobs would be saved at the last minute:

Unions are out of touch with workers when it comes to issues like this. This is the worst case scenario—everyone is out of a job, including the CEO of this company. The union is the one that walked over the cliff.

BCTGM seemed to be more concerned with its negotiating power than it was about keeping its members at work just before the holidays.

Even while the union and Hostess were thrown a life raft by the bankruptcy judge on Monday, we learned more about the union’s efforts—or rather, the lack thereof:

“The bakers union did not object to the relief that was sought. I want to repeat that,” [the judge] said, calling its decision to remain silent when Hostess was on the verge of imposing labor cost cuts “somewhat unusual, to say the least, and perhaps illogical.”

So what is the point of the union—to protect its power and its talking points or to protect its workers against losing their jobs? Or as the editorial board of Investor’s Business Daily asks, “When are unions going to start caring about real jobs and real workers?”

This isn’t an argument: it’s a recycled talking point. Blaming the free market for every problem that befalls labor is how unions got into this mess (and will never get out of it). Hostess faced a difficult reality: restructure or cease to exist. Labor costs are a major part of the equation, and because the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) represents the company’s second-largest group of employees, Hostess needs its cooperation. The largest union, the Teamsters, obliged, and even asked the BCTGM to back down from the destructive strike. But BCGTM stayed on the picket lines through yesterday’s deadline, and Hostess announced this morning that it had to liquidate the company.

What the BCTGM did might be “brave” as Trumka claims, but it isn’t smart. And if you don’t think so, consider labor’s response: trashing an unrelated venture capital firm that used to be run by a guy who just lost the presidential election.

But don’t blame Trumka for having nothing constructive to say: there is no good argument for the bakers union strike.

The members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) walked out of many of Hostess’s 36 bakeries on November 9 in protest of the new contract ordered by a bankruptcy court judge. Hostess filed for bankruptcy in January and has tried for several months to restructure. The deal offered to the BCTGM, similar to the one accepted by Hostess’s largest union, the Teamsters, called for wage and pension reductions that were necessary to keep the company afloat.

Because of the strike, even the Teamsters, who agreed to the new deal, will be out of work. In all, Hostess’s liquidation will affect the remaining 33 bakeries, 565 distribution centers, 570 bakery outlet stores, and roughly 5,500 delivery routes. The assets will be put up for auction and sold to the highest bidder.

Unions like to portray themselves as the ones who fight back and balance out the equation between employees and management. But realistically, they are the yin to the company’s yang: employees and employers are interdependent, and one cannot exist without the other.

This lesson is most clear today at Hostess, where 627 employees lost their job after Hostess Brands, Inc. announced on Monday that it is permanently closing three of its 36 bakeries in response to a strike by the bakers union that began on November 9 with a walkout in Kansas. The strikes spread throughout the country, but those working at the bakeries in Cincinnati, St. Louis, and Seattle will be striking against factories that will not reopen.

Yet even with hundreds of workers out of jobs, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) has not called off the strike. It could be that BCTGM smells blood. The strike may bring the company to the brink and force it to liquidate. The maker of Twinkies filed for Chapter 11 bankruptcy in January and has been trying to restructure its debt to stay afloat. Hostess has toyed with a number of resolutions, even offering unions a 25 percent stake in the company. The Teamsters have already decided to accept a new collective bargaining agreement with the company. Because BCTGM didn’t settle with Hostess, a bankruptcy judge allowed the company to cancel its agreement with the union and impose a new contract that included wage and pension cuts.

Although the strike is only a few days old, it has already proved costly for BCTGM workers, but there are no signs that the walkout will cease anytime soon. Hostess’s CEO, Gregory Rayburn, stated what he thinks is on the mind of the BCTGM:

Some employees are apparently under the misimpression that if they force Hostess to liquidate, another company will buy our bakeries and offer them employment… The fact is, the bakery industry already has far too much capacity, and there is a strong risk that many of our facilities may never operate as bakeries again once they are closed. I believe the leadership of the Bakers Union knows this fact, but is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions. [emphasis added]

Some might question this as an empty threat, but business appears to be seriously affected.

This is another case of unions destructive behavior. In October, American Airlines pilots were aggravating the company and thousands of customers by calling in excessive maintenance repairs, causing massive delays, as a form of putting union pressure on the management. This, too, occurred while American Airlines faced, and continues to face, Chapter 11 bankruptcy. This hurt the brand and put it the company at further risk of losing more business.  It now appears that the pilots and the airline are close to a deal, so perhaps the prospect of job losses (and a legal threat over the allegedly illegal job action) came into play.

The Hostess scenario is a repeat of the pilots union experience—except that Hostess is more willing to close up shop than be fiscally irresponsible and give in to union demands. Nevertheless, BCTGM continues to strike despite the very real threat to — and now realized loss of — union employee jobs.

The Teamsters, on the other hand, saw the writing on the wall.

“This was a difficult decision [to approve of Hostess’s offer],” said Teamsters General Secretary-Treasurer Ken Hall in the statement. “Our members are frustrated at being in the position to bail out the company again, but overall we’re willing to accept modifications with the hope that Hostess will recover and be in a better position in the years to come. At the end of the day, our members recognized that they can’t replace their pay and benefits in the nonunion sector.”

Rhetoric aside, the Teamsters recognized that a job with reduced benefits is better than no job at all. For consumers, it might be hard to part with the Twinkie and other Hostess treats (although there are some good recipes out there for making your own small batches at home). But BCTGM members, as well as other union employees, may find themselves out of work in short order.