Commentary Magazine


Topic: labor unions

Irony: Leveraged Buyout Firm May Save Twinkies, Union Jobs

Private equity firm Sun Capital Partners is interested in buying bankrupt Twinkies manufacturer Hostess and reopening negotiations with the labor unions, CNN reports:

The proposal would be to operate Hostess as a going concern, including reopening the shuttered factories and continuing union representation of Hostess workers. 

Sun Capital privately expressed interest in acquiring Hostess earlier this year, but the bakery’s creditors chose for an alternate reorganization plan that ultimately failed. Following Friday’s liquidation, Sun reengaged by contacting Hostess advisor Perella Weinberg Partners. It also plans to contact the relevant labor unions.

“I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week,” says Sun co-CEO Marc Leder, in an interview with Fortune. “We also think that one point the unions have made is that there hasn’t been a great amount of reinvestment in the business. We’ve found that investing new capital into companies like this can be very positive for brand, people and profitability… We would look to invest in newer, more modern, manufacturing assets that would enable the company to become more productive and to innovate.”

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Private equity firm Sun Capital Partners is interested in buying bankrupt Twinkies manufacturer Hostess and reopening negotiations with the labor unions, CNN reports:

The proposal would be to operate Hostess as a going concern, including reopening the shuttered factories and continuing union representation of Hostess workers. 

Sun Capital privately expressed interest in acquiring Hostess earlier this year, but the bakery’s creditors chose for an alternate reorganization plan that ultimately failed. Following Friday’s liquidation, Sun reengaged by contacting Hostess advisor Perella Weinberg Partners. It also plans to contact the relevant labor unions.

“I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week,” says Sun co-CEO Marc Leder, in an interview with Fortune. “We also think that one point the unions have made is that there hasn’t been a great amount of reinvestment in the business. We’ve found that investing new capital into companies like this can be very positive for brand, people and profitability… We would look to invest in newer, more modern, manufacturing assets that would enable the company to become more productive and to innovate.”

Hostess entered its current bankruptcy under another private equity firm, Ripplewood Holdings, which recently warned labor unions that workers would have to accept certain cuts to keep the doors open. The unions assumed this was a bluff, refused the deal, and the company folded. Now the left is blaming the closure on the private equity firm’s unsuccessful business plan (an argument which may have some merit, but completely ignores the union’s rejection of any compromise).

The national labor movement, clearly worried about the impact this will have on its public image, has been trying to shift blame to the public equity industry in general. “What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor,” said AFL-CIO President Richard Trumka on Friday.

Funny that a leveraged buyout firm like Sun Capital Partners may be one of the few options left to save Hostess and its unionized workers.

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DISCLOSE Act Shields Labor Unions

How’s this story for further proof that the real point of the DISCLOSE Act is not transparency, but kneecapping conservative groups while protecting labor unions from disclosure burdens? The Free Beacon’s CJ Ciaramella reports that Senate Democrats dropped a key provision from the DISCLOSE Act requiring political groups to disclose their names in the advertisements they fund:

“The ‘stand by your ad’ provision was dropped in response to objections we’ve heard from folks on the other side of the aisle,” the spokesman said. “It’s now targeted specifically at requiring disclosure.”

However, a senior Republican aide told the Free Beacon the provision was dropped due to union pressure.

The “stand by your ad” provision would have required the CEO or equivalent position of an organization buying electioneering ads—AFL-CIO President Richard Trumka, for example—to endorse them, similar to the endorsements required at the end of ads purchased by political campaigns.

“The Trumkas of the world aren’t exactly the warm, fuzzy personalities you want appearing at the end of your ad,” the aide said.

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How’s this story for further proof that the real point of the DISCLOSE Act is not transparency, but kneecapping conservative groups while protecting labor unions from disclosure burdens? The Free Beacon’s CJ Ciaramella reports that Senate Democrats dropped a key provision from the DISCLOSE Act requiring political groups to disclose their names in the advertisements they fund:

“The ‘stand by your ad’ provision was dropped in response to objections we’ve heard from folks on the other side of the aisle,” the spokesman said. “It’s now targeted specifically at requiring disclosure.”

However, a senior Republican aide told the Free Beacon the provision was dropped due to union pressure.

The “stand by your ad” provision would have required the CEO or equivalent position of an organization buying electioneering ads—AFL-CIO President Richard Trumka, for example—to endorse them, similar to the endorsements required at the end of ads purchased by political campaigns.

“The Trumkas of the world aren’t exactly the warm, fuzzy personalities you want appearing at the end of your ad,” the aide said.

The Senate votes on the DISCLOSE Act today, and the main provision remaining would require political groups to disclose contributions that are more than $10,000. Of course, public sector unions take most of their money in (often mandatory) dues, which means they would largely fly under the radar on that requirement.

Again, the DISCLOSE Act is not about political disclosure and transparency, which are both important and laudable goals. It’s about stifling free speech. The ACLU, not exactly a pro-corporate group, has raised alarms about the legislation for the last few years. In a March letter (via the Free Beacon), the organization urged members of Congress to vote against the DISCLOSE Act:

We acknowledge that the sponsors of the DISCLOSE Act seek the laudable goal of fair and participatory federal elections. We also appreciate the drafters’ efforts to address the ACLU’s concerns with previous campaign disclosure legislation.  And, we do support numerous campaign disclosure and fair election measures that promote and inform the electorate, including disclosures of corporate political spending to shareholders and rules that provide low-cost airtime to all political candidates.

However, we believe this legislation ultimately fails in its attempts to improve the integrity of our campaigns in any substantial way, while significantly harming the speech and associational rights of Americans. We urge you to oppose S. 2219 when it is considered before the committee.

The ACLU is right, for the following reasons:

  1. If you’re fortunate enough to own a newspaper or a television channel, you can use the platform to support or oppose candidates and legislation. Why shouldn’t private citizens who don’t own newspapers be allowed to  do the same by investing in their own media platforms — i.e. TV commercials, films, or print ads?
  2. If this is protected speech, then what right does the government have to limit it?
  3. If this is protected speech, why shouldn’t donors have anonymous speech rights?

Those in the media who support this misguided legislation because it purports to encourage disclosure might want to reconsider. Transparency in elections shouldn’t be bought at the price of free speech.

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Unions Back Israel-Bashing NY Democrat

If you’re unfamiliar with Charles Barron, a Democrat running for Congress in New York, read the Anti-Defamation League’s enlightening dossier. Barron is an extremist, dictator apologist and a passionate Israel-basher, who has railed against the “Jewish lobby,” called Gaza a “death camp” and aligned himself with anti-Semitic hate groups. He’s currently embroiled in a nail-biter primary race against Hakeem Jeffries.

While Barron might actually beat Jeffries on his own, it’s hard to imagine that any mainstream Democratic institution would lend him a hand in the primary. But as BuzzFeed reports, federal labor unions are actually planning to go to bat for him:

Two major city public worker unions, District Councils 37 and 1707 of the giant American Federation of State, County, and Municipal Employees, have already endorsed Barron against Assemblyman Hakeem Jeffries, a relatively moderate legislator who has championed charter schools, a union bugaboo.

And BuzzFeed has learned that their powerful federal parent union, known as AFSCME, is planning to dive into the race on Barron’s behalf. Another key New York State public workers union, the Civil Service Employees Association, meanwhile, blocked an AFL-CIO effort to endorse Barron’s rival.

“We respect the voice of our members,” AFSCME spokesman Chris Policano told BuzzFeed. “With the unanimous endorsement of the three affiliates, there will be money spent in this race.”

If AFSCME is willing to pour money behind a candidate who has praised Qaddafi and has called the Israeli government “the biggest terrorist in the world,” then who would it not support? If an avowed white supremacist ran for Congress on a pro-union platform, could he expect AFSCME’s financial backing as well?

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If you’re unfamiliar with Charles Barron, a Democrat running for Congress in New York, read the Anti-Defamation League’s enlightening dossier. Barron is an extremist, dictator apologist and a passionate Israel-basher, who has railed against the “Jewish lobby,” called Gaza a “death camp” and aligned himself with anti-Semitic hate groups. He’s currently embroiled in a nail-biter primary race against Hakeem Jeffries.

While Barron might actually beat Jeffries on his own, it’s hard to imagine that any mainstream Democratic institution would lend him a hand in the primary. But as BuzzFeed reports, federal labor unions are actually planning to go to bat for him:

Two major city public worker unions, District Councils 37 and 1707 of the giant American Federation of State, County, and Municipal Employees, have already endorsed Barron against Assemblyman Hakeem Jeffries, a relatively moderate legislator who has championed charter schools, a union bugaboo.

And BuzzFeed has learned that their powerful federal parent union, known as AFSCME, is planning to dive into the race on Barron’s behalf. Another key New York State public workers union, the Civil Service Employees Association, meanwhile, blocked an AFL-CIO effort to endorse Barron’s rival.

“We respect the voice of our members,” AFSCME spokesman Chris Policano told BuzzFeed. “With the unanimous endorsement of the three affiliates, there will be money spent in this race.”

If AFSCME is willing to pour money behind a candidate who has praised Qaddafi and has called the Israeli government “the biggest terrorist in the world,” then who would it not support? If an avowed white supremacist ran for Congress on a pro-union platform, could he expect AFSCME’s financial backing as well?

By supporting Barron, AFSCME is also pitting itself against prominent New York Democrats who are actively denouncing the candidate:

Former Mayor Ed Koch, Congressman Jerrold Nadler, Councilman David Greenfield, and Assemblyman Dov Hikind gathered with several other elected officials in front of the Museum of Jewish Heritage in Battery Park this morning for a press conference billed as an effort “ to Denounce Charles Barron as Enemy of the State of Israel” and the Jewish community. The politicos who showed up at the event where longtime councilman Mr. Barron was branded “hateful,” a “scary monster,” “anti-Semite” and “bigot” also expressed their support for his rival in the congressional race, Hakeem Jeffries.

Democrats are rightly terrified about how Barron’s nomination would reflect on their party. The same can’t be said for the labor unions.

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