Published Date Written by Timothy GillisAnyone wondering what happened to the Twinkie can discover a labor-oriented back story to the bankrupted Hostess company at a discussion at 7 p.m. Wednesday, April 3, at the University of Southern Maine.
John Jordan, business manager for Bakers Union No. 334, Joe Piccone, business agent for Teamsters Local No. 340, the union representing the delivery drivers at Hostess, and Biddeford City Councilor Richard Rhames will take part in a panel discussion on the closing of the Biddeford baking company with the bankruptcy of Hostess. U.S. Reps. Chellie Pingree and Mike Michaud, D-Maine, have been invited to speak about possible legislation "that can curtail the excesses of venture capitalists who bankrupt companies and eventually ship jobs overseas," according to a press release on the discussion, which will be held in the Wishcamper Center Room.
Mike Hummell, a 14-year Hostess worker from Kansas, will be the keynote speaker. Hummell has been on CNBC to talk about why the union struck and how its owners planned to break the company up when they bought it.
"Hostess is set to make more than $2 billion in the sale of company and its brand-name products," according to a YouTube video starring Hummell. Employees had vacation pay given to them, and then taken back. Workers who were eligible for a retirement pension in six years found that target date moved to 18 years, according to the video called "Inside the Hostess Bankery."
Hostess promised to reinvest employee pension payments into the company, but failed to do so, and death benefit payments promised to retirees were taken back by the company, the movie asserts.
An insult heaped upon the injury was that workers found themselves unable to seek redress from the government, by way of a pension insurance program. Since Hostess never sent money to the pension fund, as far as the government was concerned, it never existed.
Another provision called for workers to contribute $10 a week per employee for infrastructure improvements - money taken from their paychecks after taxes — but those improvements were never made, according to Hummell.
"We agreed to do that ($10 contribution) as part of our concessions," Hummell said. "The idea was that they would reinvest that $14 million. I've been on every truck. I've been on every lot. I've been on every trailer. There has never been a new trailer the whole time I was there. The ovens got so bad they didn't work without an engineer babysitting them. That money ended up in the executives' pockets. They took that money and didn't do anything with it. Then they come to us and steal our pension contributions. They just announced it and said 'good luck.' We actually got a letter saying they would temporarily suspend the payments to the pension fund. Then they go to bankruptcy court and get that waived as a debt. They're not going to send me a check for the money they stole."
Hummell plans to continue to speak in plain language about the Hostess worker strike and bankruptcy, and hopes that such a plan of perseverance will turn the media spotlight from disgruntled workers to the parent companies that purchased Hostess with designs to make money at any cost, even if it meant displacing thousands of workers.
"The media does such a great job of carrying their water," said Hummell about Monarch and Silverpoint, hedge funds that own Hostess.
"They had this model: Buy a bakery and try to turn a profit," Hummell said. "They looked at it and said, 'If we close it, strip them of their pensions, and sell off the brands, we'll make more money that way.'"
Particularly galling for Hummell is the maneuver by Monarch and Silverpoint to loan themselves $200 million with a 10 percent interest. A judge guaranteed that their money would be secured future debt.
"They will get paid back first," Hummell said. "When they sell off all the little pieces, when all of that money is divvied up, the secured debt is all that's getting paid. They loaned themselves something like $400 million dollars (over the course of their involvement). They are in debt to themselves."
Hummell said his own small business could never make a move like that. He has a brewery project on the side. "My attempted business, when it's in trouble — I've got to pay for it. I can't lend money to myself. If my business fails, I lose," he said. "Now that they have been told by the judge that they will get a payback if there's bankruptcy, they've been guaranteed a profit from the day they filed. Anything above the secured debt is just grease in the pocket."
Hummell said that the Hostess cake side of the company is worth $400 million, and that there are reports of an additional $200 million above that for operational profit that owners don't want to talk about.
"They created a financial structure that said they had to file bankruptcy in order to be successful. It was a guarantee for the loss of all those jobs," he said.
Many have criticized the workers first for striking, and then for not accepting a deal when offered. Hummell said there are several other issues involved, including working conditions at the company.
"It's a hot environment for bakers, with rooms reaching 140 degrees from ovens baking thousands of loaves of bread," he said. "They have never fixed the ovens. CEO's got raises and bonuses and then filed bankruptcy."
In his keynote address, Hummell hopes to bring a dire warning to local companies, in any field, about the threat of big money buying them out with the design to cut costs and flip them for a quick profit. He hopes the panel discussion will be a good place to convey this message.
"I think that, with a bunch of different unions at this event, I want to warn them that a) you have to be ready for it and b) be ready for the media. The media will lie. When they push you, you have to push back," Hummell said.
Even well intentioned unions can suffer if their message is masked by one-sided media coverage.
"I really feel our union did a lot of great things behind the scenes for us," Hummell said. "But they didn't do anything in front of the camera. Our union could have done a better job of telling our stories. If we had told this, prior to the bankruptcy proceedings, the media would have had to say this was going on. If it weren't for my blog posts and the CNBC interviews, nobody would know about it."
"The Hostess Debacle: Bakers and Bankers — Who Really Makes the Dough" is co-sponsored by the Southern Maine Labor Council and the University of Southern Maine Department of Economics. The panel discussion will be held on Wednesday, April 3, at USM's Wishcamper Center, Room No. 133, 34 Bedford St. in Portland, at 7 p.m.