...Hostess relieved of pension obligation
(From Page 3)
Can you imagine the bankruptcy judge
ordering Cargill to sell its flour to Host-
ess at a 27 percent discount? Yet that’s
what Drain, a former Wall Street
lawyer, did to union workers Oct. 3 in
an order allowing Hostess to unilater-
ally impose changes to the BCTGM’s
collective bargaining agreements.
Weeks of brinksmanship followed.
BCTGM warned that members would
strike if Hostess imposed its terms, and
Hostess warned that if they struck, the
company would ask the court for per-
mission to close permanently and liq-
uidate assets.
Hostess imposed the new terms first
on three bakeries that it planned to
close anyway — St. Louis, Cincinnati,
and Seattle. Union members held off
striking, knowing it would give the
company an excuse to close those
plants.
But when Hostess then moved to
impose terms company-wide, workers
struck Nov. 9 at 24 production facili-
ties.
“[Members] are not willing to take
draconian wage and benefit cuts on top
of the significant concessions they
made in 2004 and give up their pension
so that the Wall Street vulture capital-
ists in control of this company can walk
away with millions of dollars,” Hurt de-
clared in a Nov. 12 statement explain-
ing the strike.
As one Hostess worker wrote in the
online magazine Daily Kos: “It will be
hard to replace the job I had, but it will
be easy to replace the job they were try-
ing to give me.”
Hostess announced it would move
to liquidation if employees did not re-
turn to work by 5 p.m. Nov. 15. On
Nov. 16, it announced closure. It’s the
end of an 85-year-old bakery business
with 33 bakeries, 565 distribution cen-
ters, 570 bakery outlet stores, and ap-
proximately 5,500 delivery routes —
and the loss of 18,500 jobs, including
those of 15,000 union members.
Seventeen of those jobs are Team-
sters drivers in Portland.
On Nov. 21, Judge Drain approved
the liquidation plan, and on Nov. 29, he
granted a request by Hostess for $1.75
million in bonuses to 19 officers and
high-level managers who are needed to
facilitate the sale of the company’s as-
sets.
Drain also relieved Hostess of its
$944.2 million in withdrawal liability
owed to the Bakery & Confectionery
Union & Industry International Pen-
sion Fund — a decision that will harm
Hostess’ unionized competitors and
tens of thousands of their employees.
That’s because Hostess was the biggest
employer in the union’s multi-em-
ployer pension plan. Under federal law,
multi-employer pension plans are still
responsible for workers’ pensions when
an employer goes out of business or
otherwise withdraws. The federal gov-
ernment’s Pension Benefit Guaranty
Corporation doesn’t step in with multi-
employer plans unless they’re nearly
insolvent. Hostess’ collapse means the
Bakery Pension Fund has to trim extra
benefits for 53,000 retirees and an
equivalent number of active members.
And it means that still-existing em-
ployers (like Franz and Kroger in the
Portland area) are stuck paying a sur-
charge to make up for Hostess’ with-
drawal. The Bakery Pension Fund was
at healthy funding levels — despite the
2008 stock market downturn — until
Hostess halted contributions last Au-
gust. Now, under a pension rehabilita-
tion plan that went into effect in No-
vember, employers are paying a 5
percent surcharge, which will double
Jan. 1. For an employer like Franz Bak-
eries, the 10 percent surcharge equals
57 cents an hour per worker, said
BCTGM Local 114 Financial Secre-
tary Terry Lansing.
As Hostess prepares to liquidate —
selling off trucks and bakeries and the
right to make its famous brands — it’s
revealing what management has cho-
sen to publish on its web site. Hopes for
the swift resurrection of Twinkies un-
der new brand owner? Thanks to cus-
tomers for 85 years of business? No,
Hostess Brands Inc. uses its most valu-
able online real estate to take a parting
shot at the union: “We are sorry to an-
nounce that Hostess Brands, Inc. has
been forced by a Bakers Union strike
to shut down all operations and sell all
company assets.”
“Hostess management wants to
blame our members for the demise of
the company,” says Hurt. “The truth is
that had it not been for the valiant ef-
forts of our members over the last eight
years, including accepting significant
wage and benefit concessions after the
first bankruptcy, this company would
have gone out of business long ago.”
EE
R
F
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PAGE 10
NORTHWEST LABOR PRESS
www.legalshield.com/info/randallnix
DECEMBER 7, 2012