Tax Fairness, Part 728

From the Washington Examiner, another look at the hard facts about who pays taxes in our economy.  Enjoy.

The demise of the Twinkie: a good case study in what's wrong with union representation

I want to post this for our class to read this semester, but it's behind a paywall.  I'm posting an excerpt, instead of a link.  I tried to keep the important parts.

From Wall Street Journal, Saturday/Sunday Nov. 17-18 2012, page A16.

The Twinkie, a Suicide

"Perhaps it says something about America - though we're not sure what - that iconic junk foods like Twinkies, Devil Dogs, Ho Hos snack cakes and Wonder bread have endured since the 1930s despite changing consumer health and eating habits.  It does say something about institutions that can't - or refuse to - adapt to new economic times that the company behind those products has chosen to go out of business overnight.

Hostess's owners have decided to liquidate rather than ride out a nationwide strike by one of the largest of its dozen unions, the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union.  The Texas-based company owned by the private-equity shop Ripplewood Holdings and other hedge funds essentially gave up.  On Friday it shut down its 33 bakeries and 565 distribution centers and prepared to fire nearly 18,500 employees en masse and auction off its brand and recipe portfolio.

Hostess posted sales of $2.5B in 2011 but lost $341 million and lacked the cash flow to hold out through the bakers union work stoppage that had only lost a few days of production so far.  One reason is a labor-rule burden that by comparison makes Detroit look like Hong Kong.

The snack giant endured $52 million in workers' comp claims in 2011, according to its bankruptcy filing this January.  Hostess's 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012.

Union work rules usually required cake and bread products to be delivered to ... a single retail location using two separate trucks.  Drivers weren't allowed to load their own vehicles, and the workers who loaded bread weren't allowed to load cake.  On most delivery routes, another "pull up" employee moved products from back rooms to shelves.

This year management negotiated concessions from some of the unions, including the Teamsters, but the bakers rejected a last and best offer in September.  Then the courts gave Hostess unilateral authority to modify collective-bargaining contracts, prompting the strike.  So now it will liquidate, instead of attempting to emerge from Chapter 11 intact.

The 18,500 layoffs are equal to about 11% of the net new jobs the entire U.S. economy created in October.  The unions are blaming private equity, or Bain Capital, or capitalism, but the election is over.  And so is Hostess."

Some key numbers:  18,500; 372; 80; 40.  Insane.  Featherbedding.  

Now the assets will be turned over and someone else will hire the most qualified folks and get things rolling again.  The trademarks and intellectual properties will go to the highest bidder.

We'll hear all about how executives got their pay increases, and bonuses, etc. and how private equity is the culprit.  Really?  Does it look like it?

Regardless of who's at fault, the fact is that 18,500 peoples' lives are in limbo today.

UPDATE:  A link to the union web site.  Best prepare your tinfoil hat before digging too deep there.

Because, you know, campuses are all about free speech

Article from the weekend WSJ about how "free speech" has been twisted on college campuses to me "speech we agree with."  It's free so far, but with the WSJ who knows how long it will be? .Enjoy.

Ben Stein's 3 Top Ways to Mess Up your Financial Life

Author, actor and economist Ben Stein gives three good tips for investors, and talks about how much he likes Warren Buffett here.

CNBC talks about the end-of-the-year purge, with massive asset sales before the capital gains tax changes here.