Bye bye Hostess

[Stan Silliman]

I'm mourning the loss of one of my favorite old jokes.

[PennyQuilts]

Ugh. I haven 't eaten a twinkie in years - always afraid it would somehow poison me or something.

But that being said, I am just sick for all those families - many - perhaps most - are never going to have as good a job. They must be completely freaked out with good reason. For these bakery union idiots to have done this to about 12,000 other households (including different union households) makes it all the worse. I mean, even the teamsters crossed picket lines for the the love of god - that tells you something. Admittedly, I am tempted to jump on the bandwagon of union bashing because I'm not a big union fan but I do want to give a shout out to the Teamsters who reportedly tried to convince those idiot bakers to see reason with no success. What were they thinking??? I mean, Hostess was in bankruptcy and the market was fading away and the books told no lies. The company actually offered them something that sound reasonable - even generous - under the circumstances. So sad. You can't fix self destructive, sometimes. Thinking of all those families, though, makes me just sick.

[BBatesokc]

I'm pretty anti-union, but, I've seen nothing that shows Hostess wasn't on an irreversible course to closer. Maybe union cooperation would have delayed the inevitable for a few months, but not for long IMO.

[boscorama]

Hostess purchases are rare for me but along the way I discovered Little Debbie has a fresher, tastier product. I don't think they have a Twinkie or Ding Dong counterpart. Her Twinkies, no doubt, would be better than Hostess. The cupcakes are waaaay better, for sure.

[venture]

Ugh. I haven 't eaten a twinkie in years - always afraid it would somehow poison me or something.

But that being said, I am just sick for all those families - many - perhaps most - are never going to have as good a job. They must be completely freaked out with good reason. For these bakery union idiots to have done this to about 12,000 other households (including different union households) makes it all the worse. I mean, even the teamsters crossed picket lines for the the love of god - that tells you something. Admittedly, I am tempted to jump on the bandwagon of union bashing because I'm not a big union fan but I do want to give a shout out to the Teamsters who reportedly tried to convince those idiot bakers to see reason with no success. What were they thinking??? I mean, Hostess was in bankruptcy and the market was fading away and the books told no lies. The company actually offered them something that sound reasonable - even generous - under the circumstances. So sad. You can't fix self destructive, sometimes. Thinking of all those families, though, makes me just sick.

There is probably more going on and like Brian stated, thinks at Hostess were just getting worse. If the union would have agreed to pay cuts, chances are 6-18 months down the road they would have been back in the same position. This is one of the situations where Hostess got greedy, expanded too fast through M&A activity, and forgot to take care of its own house in the process. Stupid management decisions will always lead to failure.

I agree with you that this is horrible for all the families impacted by this so close to the Holidays, but that is SOP for these type of things. End of the year, clearing out the books, usually equals best season for layoffs. I'm hoping we'll see competitors or even new start ups come out of this with the various branded products. Those bakeries of theirs will also provide a good turn key solution for a local/regional start up wanting to jump in. That in turn could help get some of these experienced workers back in, but it will also be difficult to handle bringing in workers with a strong union background and memories of what they have done.

Of course, it all comes down to labor relations at that point. I've had a position before that required union membership to be part of it. The company and labor though had amazing relations and it was never a hint of distrust. It definitely was a showcase for how the relationship can really work. Those stories however tend to be overshadowed by examples being discussed here.

[stick47]

Their products were never very good

Actually the products were excellent 40 years ago but cost cutting steps went into effect in order to meet union bargaining agreements.
FYI it's been reported that one of the union rules was that trucks carrying bread could not carry other baked goods (Snack cakes etc.). Thus Hostess had to have 4,500 delivery routes to deliver their products where that number could have been much less without the union rules.

[bluedogok]

I would still pick up a Twinkie about once a year, Ding Dongs were always my favorite but they have changed over the years and are not as good. I still get the little chocolate donuts at times, I tend to buy the Mrs. Baird's or Bon Appetite Bakery that are much better than what the Hostess ones became.

[kelroy55]

Who Killed Hostess Brands and Twinkies? - Forbes

[bluedogok]

Management, mergers and union wages/benefits put the company on life support, the bakers union gave the fund managers the reason to pull the plug. There is plenty of blame to go around, it isn't just the union contracts and pensions. Who would've thought that the Teamsters would look like the "reasonable" group but the Bakers union made that happen.

[PennyQuilts]

Management, mergers and union wages/benefits put the company on life support, the bakers union gave the fund managers the reason to pull the plug. There is plenty of blame to go around, it isn't just the union contracts and pensions. Who would've thought that the Teamsters would look like the "reasonable" group but the Bakers union made that happen.

Hostess, on the whole, may have been on borrowed time (although even the Forbes article claims some of their products such as Twinkies will be picked up) but if they'd been able to get the Bakery Union to work with them, they might have been able to downsize and keep the favorites as a product or otherwise diversity or modify their business model. Even if they had to fire many of their employees, at least some of the them could have saved their jobs. If the Bakery Union thought Hostess was on its way out of business in the near future, they'd have taken the deal and kept a paycheck for as long as possible. I suppose the teamsters might have simply been trying to keep a paycheck for as long as possible even if it thought the company was on its way down, but that doesn't explain why the bakery union would have done that.

[bluedogok]

I think the bakers union thought they were playing hardball and called managements bluff, not realizing what cards management was holding. It's not the first time the threat of shutting down has been used to try and get concessions out of a union, Homeland did it several times in the early 90's, pretty much every time the UFCW caved in.

[BlackmoreRulz]

Sales are way up, my daughter said that they cleaned the shelves out at her store

[PennyQuilts]

Sales are way up, my daughter said that they cleaned the shelves out at her store

That will help the retailers but probably not Hostess other than to signal to a potential buyer that they still have some life in them. But likely, if not for the Hostess story, people wouldn't be on a snack cake frenzy and if they were, they'd be buying mostly Lil Debbie. I was at the grocery store, yesterday, and the twinkies were sold out. They had alternative snacks stacked up at eye level, everywhere.

It is sort of a shame that Hostess couldn't have held on long enough for the recreational pot laws to kick in. That could turn the whole thing around.

[kevinpate]

A young lady my TX based son knows had posted to her twitter that she was confused by everyone hunting for Twinkies and wondered what she had missed. He filled her in just in case she needed to kick off a search on her own.

[kevinpate]

...
It is sort of a shame that Hostess couldn't have held on long enough for the recreational pot laws to kick in. That could turn the whole thing around.

Sorta makes ya wonder ... did Chester Cheetos pay off dem danged baker union boys?

[WilliamTell]

Hostess Blames Union For Bankruptcy After Tripling CEO’s Pay

By Annie-Rose Strasser on Nov 16, 2012 at 3:50 pm

Today, Hostess Brands inc. — the company famed for its sickly sweet dessert snacks like Twinkies and Sno Balls — announced they’d be shuttering after more than eighty years of production.

But while headlines have been quick to blame unions for the downfall of the company there’s actually more to the story: While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.

At the time, creditors warned that the decision signaled an attempt to “sidestep” bankruptcy rules, potentially as a means for trying to keep the executive at a failing company. The Confectionery, Tobacco Workers & Grain Millers International Union pointed this out in their written reaction to the news that the business is closing:

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Certainly, the company agreed to an out-sized pension debt, but the decision to pay executives more while scorning employee contracts during a bankruptcy reflects a lack of good managerial judgement.

It also follows a trend of rising CEO pay in times of economic difficulty. At the manufacturing company Caterpillar, for example, they froze workers’ pay while boosting their CEO’s pay to $17 million. And at Citigroup, CEO Vikram Pandit received $6.7 million for crashing his company, walking off with $260 million after the business lost 88 percent of its value.

[stick47]

Maybe Hostess is not dead. KOKH FOX 25 :: Top Stories - Could the Twinkie be Saved?

[Plutonic Panda]

Yeah I just saw headlines on CNN that Hostess is in talks with the Unions. Didn't look into detail though.

[venture]

Considering the revenue boost they just got from all the products selling out, they must have found money to stay in business.

[Stew]

I never understand people blaming unions for the demise of any company. The business owners/management (or perhaps an arbitrators) are the only ones with the power to enter into a labor contracts. If a bad labor contract is signed who's fault is that?

Hostess is where it is today because of poor management and vulture capitalist. Labor had nothing to do with it. It's just that simple.

[WilliamTell]

I never understand people blaming unions for the demise of any company. The business owners/management (or perhaps an arbitrators) are the only ones with the power to enter into a labor contracts. If a bad labor contract is signed who's fault is that?

I agree and its sickening. It bothers me how quickly the middle class will throw other fellow hard working Americans under the bus, but they will stand there and scream at the top of their lungs about taxes not being raised on the wealthy when they have no chance of ever being truely wealthy. These workers were standing up for not getting screwed over and management put on a face that they were 'unreasonable union thugs'; unfortunately so many people bit the bait and started the typical anti union nonsense. Wake up.

This is no different than the first American Airlines fiasco in the late 90's early 00's and the recent this year. Management gave themselves millions in bonuses and went to the pilots/flight attendant/mechanics for wage cuts to 'remain competitive' after their 'financial shortfall.' Then this time around American Airlines made the largest purchase of aircraft in the HISTORY OF THE WORLD, then 1 month later went to their workers with benefit and pay cuts because of their 'financial shortfall'. Then almost like clock work the other peasants came out screaming about 'union thugs' . Wake up.

[bluedogok]

I never understand people blaming unions for the demise of any company. The business owners/management (or perhaps an arbitrators) are the only ones with the power to enter into a labor contracts. If a bad labor contract is signed who's fault is that?

Hostess is where it is today because of poor management and vulture capitalist. Labor had nothing to do with it. It's just that simple.

In case of Hostess, labor has plenty of blame but I do think management has the most responsibility in the down fall. It has changed hands too many times, which means too many financiers wanted their cut of the action and every time that happens more debt is loaded onto the balance sheets. Many of the liabilities from union contracts (like pensions) were negotiated long before the current group assumed control of them. I read somewhere that they had something like 1 billion in pension liabilities which seems like a huge number that could put any company in trouble. Many contracts were written and approved when things were good, debt was manageable and credit easy. Just like the old joke that GM was a benefits and retirement company that sold cars to pay for it. Pensions are the biggest anchor around many of these union contracts because they ended up as collateral accounts for both companies and unions and were plums for corporate raider like Pickens to fleece in a takeover. Really Hostess probably should have gone under many years ago before taking over Dolly Madison, Drake's and other companies added more debt to deal with and union contracts with their employees which may have been substantially different.

[Stew]

In case of Hostess, labor has plenty of blame

How so?

[Plutonic Panda]

Don't bite the hand that feeds you. In this economy, if you're working at a packaging plant that makes junk food I don't think it is entirely unseasonable to expect a pay cut. I understand with the CEO getting 3x pay raise is questionable but just dropping out and striking is unprofessional. I think unions serve a good purpose SOMETIMES, but they need to know their place.

[Stew]

Don't bite the hand that feeds you. In this economy, if you're working at a packaging plant that makes junk food I don't think it is entirely unseasonable to expect a pay cut. I understand with the CEO getting 3x pay raise is questionable but just dropping out and striking is unprofessional. I think unions serve a good purpose SOMETIMES, but they need to know their place.

I'm confused who has the hand that shouldn't be bitten. The way I understand it the Hostess company went out of business while the striking employees live on to work again for another company. Like they say I was looking for a job when you offered me this one.

I've never been a member of a union and quite frankly most of what I know about unions comes from right-wing blowhards. So my understanding could be quite naive. The way I see this is the company told its employees hey we're not going to honor our pension promises we made to you previously, we're going to cut your pay and benefits and by the way if you agree with our offer we'll still layoff a good many of you. Well after such a generous offer the employees said eh we think we'll pass. The company said fine then we quit and issued a press release blaming the union for haiving to go out of business which was reported faithfully word for word by the mainstream stenographers.

I can't fault anybody for refusing such a bad one sided deal and it puzzles me why anybody would expect them accept it.