And So It Goes

The death of a brand.

I have commented previously, probably multiple times, that unions have outlived their usefulness. There was a dark time in our history where unions were vital to the growth of the economy and industry. Unions were able to take us from a time of low wages and unsafe working conditions to an era of prosperity across all levels of employees. But that time ended, and unions have become a problem for the global economy. By fostering a culture of entitlement, and creating pension programs that are not viable we have a house of cards that is on the verge of tumbling down. Governments are bankrupt and not able to support the pension plans on the books. Unions and union workers have forgotten that they are supposed to be working and providing value to their employers. Without the employers there is no need for the employee.

Today Hostess has decided to cease operations as they are unable to come to terms with the Bakers Union. Now, the proposal that Hostess put on the table would have meant a decrease in the base wage levels of the bakers over a five year period, and this is during a time of inflationary pressures. By the same token, Hostess is already in bankruptcy. So it comes to this. Hostess is closing the doors, and selling off the brand and the bakeries. The Baker’s Union, the Teamster’s Union, and all of the other employees (18,500) will be on the street without a job. Some other firm will come along and buy Hostess, either several firms in pieces or as a whole. In the interim, all of the suppliers to Hostess will be cutting their production rates and work force. All of the truck drivers, and other delivery channels that bring in supplies will be idled. Tangential job loss, let’s call it 10% or another 1800 people loosing their jobs on the supply end of the equation. On the retail end of the equation, expect that market share is totally hammered. Retailers will find substitute products and the value of buying the Hostess assets decreases.

But most important of all.

When Zombieland arrives, where will Tallahassee be able to find a Twinkie?


This entry was posted in Economics. Bookmark the permalink.

One Response to And So It Goes

Leave a Reply