Hostess To Liquidate
Nice work, bakers union. You just cost 18,000 people their jobs.
8:08AM EST November 16. 2012 - INDIANAPOLIS—Hostess Brands, maker of Twinkies, Ding Dongs and Wonder Bread said Friday that it has filed a motion in Bankruptcy Court seeking permission to close and sell its assets, including its iconic brands.
The company says it has suspended bakery operations, but deliveries will continue and Hostess retail stores will stay open to sell products already in the pipeline.
Hostess workers remained on picket lines across the country Thursday night, refusing a company ultimatum to return to work or face the liquidation of the national baker.
The company had warned it would file a motion in U.S. Bankruptcy Court to shut operations if enough workers didn’t end their weeklong strike by 5 p.m. ET Thursday.
A shutdown would result in the loss of about 18,000 jobs.
You know it’s bad when the Teamsters are the voice of reason.
The Teamsters union is urging the bakers union to hold a secret ballot on whether to continue striking. Citing its financial experts who had access to the company’s books, the Teamsters say that Hostess’ warning of liquidation is “not an empty threat or a negotiating tactic” but a certain outcome if workers keep striking.
Fortunately the Chinese already produce a fungible alternative for Twinkies.
I wonder if they will buy the naming rights?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0745 hrs
No more Twinkies? I have an unopened box of a dozen that has a shelf life longer than a human’s life expectancy, so I think I’m good. Maybe I need just one more box to be safe, eh?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0824 hrs
Yep, because we know that the workers are 100% at fault.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0824 hrs
What? Santa will not offer any Ho Ho’s this year? Does anyone else hate the word verification below as much as I do.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0829 hrs
“Yep, because we know that the workers are 100% at fault.”
More likely the health-conscious market. When your product has reduced demand, you don’t strike for a raise. I personally manufacture & sell a high-end product. Demand is way down due to the economy. No raise.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0841 hrs
Now they’ll liquidate and the productive pieces can return as something profitable. That’s the way its’ supposed to work.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0851 hrs
“because we know that the workers are 100% at fault”
You seem to assume that the interests of workers will always align with the interests of their unions, but that is not so. The union is a business in its own right, and it has its own, independent interests.
In any case Hostess Brands (created from a merger with Continental Bakeries and others) has been declining for decades, as shoppers have been unwilling to pay premium prices for products such as Wonder Bread, Butternut Bread, HoHos, etc.
There was a time when unions could win good wages and benefits for semi-skilled work, but that time seems to mostly be in the past. And it’s not just because of imports- even when it comes to food products (which are mostly produced in the USA), consumers relentlessly drive down margins.
In the bakery business as in manufacturing, the trend has been away from factories owned by the brands and toward contract manufacturering. It’s not just store-brand and private label goods either- even major brands (e.g., Sara Lee) outsource their production to contract manufacturers. And contract manufacturers are rarely unionized.
It’s a different competitive environment now, and it appears the Bakers Union has been living in the past and Hostess Brands was not bluffing- it truly can’t afford to meet the union’s demands.
And in this case it seems unlikely that the Labor Dept., or some other part of the Obama apparat, will be able to put Humpty Dumpty back together. What’s more likely is that the brand names and the Company’s other assets (e.g., the means of production) will be sold in bankruptcy liquidation, presumably to those who think they can figure out how to use them profitably.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0858 hrs
In true fashion the parasites kill the host or in this case the hostess.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0910 hrs
VAP, are you suggesting that the owners of Hostess are closing the doors because they would still be profitable, just not profitable enough to assuage their greed, so they are closing doors out of spite?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0918 hrs
No, I’m directly combating Owen’s extremely trite and tired comment that the baker’s union is costing hostess jobs. Convenient of him to ignore the two prior bankruptcies they filed, including one THIS YEAR, as well as the numerous CEOs in the last few years, in order to make a cheap and moronic Republican political talking point.
Bajaskier, on the other hand, has it exactly right. The health-conscious market can, and should, kill a company that produces a garbage food product that people don’t want anymore.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0923 hrs
Welcome news for an obese, diabetic nation. Twinkies are nasty….good riddance.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 0944 hrs
Owen fails to bring mention the key—why are the worker’s striking. What are they asking for that Hostess does not want to give them. Blaming the union is a typical right leaning response—especially when there is significant missing info.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1009 hrs
“Bajaskier, on the other hand, has it exactly right. The health-conscious market can, and should, kill a company that produces a garbage food product that people don’t want anymore.”
I did not indicate the public “should kill a company”. I meant lower junk food sales are a result of the free market.
Would I abdicate not purchasing the boating accessory I manufacture because boat exhaust may harm the environment? Hardly. I do acknowledge that high fuel prices, lower octanes, and ethanol (which ruins outboards) have contributed to lower numbers. Again, the free market.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1013 hrs
What’s missing? The left’s “corporate greed” whines?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1014 hrs
VAPolitico is right. This is a company with a history of bad management decisions that tie into its inability to adapt to the changing consumer preferences that bajaskier referenced in #5. It went into bankruptcy once in the mid-00’s, refused buyout offers from a number of major industry players (including the largest, Grupo Bimbo), got bought by Bain-like private equity companies, hired a “restructuring specialist,” doled out a bunch of raises (some upwards of 80%) to senior executives, and THEN sent the company straight into bankruptcy again, less than eight years after the first filing.
These bottom-of-the-totem-pole workers are the last people to blame for this company’s failings. Nothing these workers did in terms of concessions was going to help them or their company long-term; all they’d be doing is making the company a more attractive buyout target, which only helps the private equity companies.
And really, who isn’t getting what they wanted here?
The private equity firms presumably were smart enough to acknowledge there was no saving this company, so they get what they want: strip the company down, sell the facilities, and then sell what was likely the most valuable part of the company anyway: the trademarks.
The bakers give themselves the opportunity to potentially see their factories reopened under different management, which surely can’t be any worse than their present job, reshuffling deck chairs on the Titanic while the captain hands out raises to the senior staff. Even if they end up taking a pay cut, maybe they’ll get to work for a competent management team that has a viable business plan and isn’t threatening their jobs every other month.
The executives have already been handsomely compensated to exit stage right, so there’s nothing left to see there.
Like BVBigBro said, the profitable pieces will be sold and everyone will go on their merry way. But it’s wrong to cast the bakers as the bad guys here for being unwilling to bail out a decade-plus of terrible management decisions that put the company on a course from which it would never recover. They’re just hastening the inevitable.
Posted by Recess Supervisor on November 16, 2012 at 1024 hrs
VAP, Hostess was in bankruptcy. They opened their books to the unions and tried to negotiate with them, but according to the AP version of the story the Bakers’ Union hasn’t responded to them in over 30 days, despite frequent contract attempts.
So we have a company in bankruptcy, other unions urging the bakers to accept the contract, and the bakers union refusing to negotiate. And they didn’t expect the company to actually shut down? No question, the union was incompetent.
On a larger scale, this should be expected. Hostess was saddled with problems due to unrealistic union pension and retirement health benefits negotiated at a time when Hostess was flush with money and business. Now that the business is in decline they’re under stress and can’t renegotiate those benefits. Couple that with the current crop of workers unwilling to accept terms that might have saved the company and you’ve got a recipe for disaster.
What will happen to the union retirement health benefits? Those will now disappear. And the union pension? They’ll be lucky to get 30% of what they were promised by the time the PBGC gets through with them.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1033 hrs
The bakers give themselves the opportunity to potentially see their factories reopened under different management, which surely can’t be any worse than their present job…
Many of those jobs were in Texas. Care to bet how many of them will be unionized this time around? Care to guess what the wages in the next factory will be?
Care to bet what fraction of union promised health and pension benefits will survive Chapter 7?
I doubt those “vultures” you like to quote will come out much ahead this time around. Were the execs well paid? Yep, but getting competent people to go into a troubled company isn’t cheap. If you’re good and the company fails despite all you could do you come out with a blemished reputation and more trouble getting a similar position in the future so you have to demand more money to run into harm’s way (yeah, combat pay, that kind of thing). Will the brands and equipment sales recoup the PE purchase money? Maybe, maybe not.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1046 hrs
13.“Bajaskier, on the other hand, has it exactly right. The health-conscious market can, and should, kill a company that produces a garbage food product that people don’t want anymore.”
What I said was a health-concsious market may have helped kill a particular market, I did say it SHOULD kill a particualr market. Free market.
I make boating accessories. The economy, high fuel prices, low octane, and especially ethanol (not good for outboards) has hurt the boating industry. Free market as well. It’s not like the econuts have chose to “kill” the boating industry because boat emissions may contribute to “global warming”.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1049 hrs
I meant to write “I DID NOT say it SHOULD kill a particualr market”.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1052 hrs
That’s total crap, RS. They could have shut down and sold the pieces a long time ago if that was the goal. Is management partially to blame? Sure, but the whole “corporate raider” meme is getting a bit tired.
Bottom line is many of these jobs will reappear as non-union under different ownership, so how did the union’s hard-line stance help the membership?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1131 hrs
Bottom line is many of these jobs will reappear as non-union under different ownership - so how did the union’s hard-line stance help the membership?”
Did the union learn anything - Most like not - They’ll probably call for a Hostess boycott - fat (pardon the pun) lotta good that’s gonna do.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1140 hrs
I need a scorecard to keep up, but as it stands, my diet needs to consist of: Papa John’s Pizza; Applebee’s; and Hostess pies.
I’m a dead man.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1212 hrs
That’s total crap, RS. They could have shut down and sold the pieces a long time ago if that was the goal.
Nice try, but it’s hardly a meme in this instance. What exactly is a long time to you? The present ownership has only been in place for three years. Are you telling me you think they were too dumb to have a backup plan when they brought a faltering business out of bankruptcy in 2009 with seemingly no plan to diversify its product line or move the company in a direction in which its products would be more in line with market demand?
They kept on selling their Ho-Hos and trying to figure out how much they could wring out of their workers. Now that it hasn’t panned out the way they wanted, they’re throwing in the towel.
Yeah, that’s real effort on the part of ownership to turn a company around all right. Raises all around for management, put the screws to the floor workers, and when they don’t bite, just say f@#$ it and scrap the whole thing altogether.
Posted by Recess Supervisor on November 16, 2012 at 1214 hrs
PP - Don’t forget Denny’s re the ObamaCare surcharge.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1216 hrs
RS, the company lost money 30 out of the last 37 months.
They owe $2.5B in pension and health care contributions and their revenue for the last year was $2B.
The offer on the table was an 8% pay cut this year, followed by 3 years of 3% raises. In other words, a short term hit while restructuring occurred but a return to their present wages quickly.
The PE guys weren’t exactly rolling in the money in this debacle, either. They were so far underwater when they took over that they knew they were looking at bankruptcy and trying to salvage the company from that. And it’s not like they were in bankruptcy a short time since they filed in January, so if the plan was to quickly strip the assets they could have done this long ago.
And they had to know that given the present Administration they’re not likely to get much out of the company assets, either. When you’re staring at pension contributions as large as they owed it’s unlikely they’ll get their money back out.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1319 hrs
“The health-conscious market can, and should, kill a company that produces a garbage food product that people don’t want anymore.”
But the “health-conscious market” isn’t killing the company, the union is. That is what unions do: suck the host for every drop until it is dead.
Posted by Sandi on November 16, 2012 at 1325 hrs
And an 8% pay cut for under a third of their workers was going to be the magic bullet that returned Interstate Brands to prosperity? The workers already took considerably more substantial cuts in the first bankruptcy.
The issue is that in the last 37 months, can anyone identify a improved marketing pitch, new product, anything management did to turn things around other than lean on those at the bottom for additional concessions?
I’m not saying that sometimes cuts aren’t necessary. But companies that cut first and create later almost always die. Sadly, whether it’s the for-profit or non-profit world, bean counters often miss that reality. I’d be curious to know what, if anything, management bothered to show its workers in terms of its turnaround plans. Because absent an aggressive strategy to improve its branding and product line, we’re talking about the Titanic. And it wasn’t the workers who steered the ship into the iceberg.
Posted by Recess Supervisor on November 16, 2012 at 1338 hrs
Jeez people. The parties involved all prefer liquidation to a deal. It’s what they want. Hostess was destroying capital at a fantastic rate. There’s no point sticking more money into the company. This way the creditors get the best deal they’re going to get, everyone’s certain where they stand and a leaner, meaner Twinkie can take the stage. Maybe we’ll get classic twinkie and new school twinkie. Retro twinkie with the banana filling and some variant of a healthy twinkie that’s basically a puffed up powerbar. It shouldn’t be that difficult to concoct a twinkie that meets some sort of Federal lunch guidelines and get the damn things into every lunch room in the nation.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1353 hrs
Oh look at that Sandi, you jump in late to a conversation, skip to the bottom, and shout a talking point that simply isn’t true, or at the very least is dishonestly incomplete, to make yourself feel good about doing your job as a Republican! Woohooooo
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1353 hrs
“The health-conscious market can, and should, kill a company that produces a garbage food product that people don’t want anymore.”
Hostess Brands merged with Continental Baking some time ago. Their products include Wonder Bread, Holsum Bread, Butternut Bread.
These may not be exactly health foods, but they’re not DingDongs either. And while people may not be eating as many Twinkies as they used to, not everyone is eating nothing but artisinal whole grain breads.
The problem is, Wonder Bread is just squishy white bread, and if that’s what you want (and plenty of people still do) you don’t have to pay $2.99 for a loaf of it. And even a DingDong can be less appetizing if it costs $1.50 for a 2-pack.
And why are there cheaper alternatives? Well, in part it’s because competitors have moved their production to lower cost, non-union contract manufacturers.
The business of Hostess Brands is selling branded bakery products. There’s no reason for them to actually make the stuff- and they shouldn’t if they can’t do so cost effectively. Why would a business spend a dollar to make something it could buy for fifty cents (unless a union contract prevented it from outsourcing the work)?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1456 hrs
The bakers union knows that the company will close, in fact it is a foregone conclusion. Their point is to not make a concession that will show a precedent for their unions at other companies.
Posted by Sandi on November 16, 2012 at 1459 hrs
Stating the obvious: Gas (transport) is up, utilities are up, sugar is up, flour is up, labor is up, insurance is up, taxes are up, marketing/advertising is up and therefore retail prices are up. In the market, unemployment is up & the cosnumer prices are up. Twinkies et al are not a neccessity and there is only so much the consumer has and/or is willing to pay for same. Ask the airlines about that the point of no return on pricing. Now add the threat of Obamacare and higher taxes, what would you do?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1509 hrs
On the shelf at Wal-Mart next to each Hostess product is a nearly identical, cheaper knock off.
The union is the one refusing to respond to the market, not management.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1532 hrs
“On the shelf at Wal-Mart next to each Hostess product is a nearly identical, cheaper knock off.”
Hostess probably makes them. The Great Value brands are the same as the original i.e. Great Value “Oreos” are made by the original.Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1557 hrs
Hostess probably makes them. The Great Value brands are the same as the original i.e. Great Value “Oreos” are made by the original.
I believe this is 100% incorrect.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1600 hrs
Actually bajaskier I am 100% incorrect!!!
Looks like you are indeed correct. Very interesting. Not all products but a lot of store brand knockoff are actually produced by the original manufacturer,but may have different tastes than the original due to using cheaper ingredients or a somewhat different recipe.
Thanks for that info tho, my apologies.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1608 hrs
What people fail to have stated here is that they are a nickle-dime seller. Sure, they sell millions of them but they are 2-3 dollar items and not 40K cars. We have seen in the last decade or two is many of the larger players (bakeries) opting out - whether it is due to increased raw material costs, taxes, labor, they are still selling a low cost product with low profit. Sure management could and should have done more to introduce better/more appealing products but that product line was a well-oiled machine not that many years ago. If you had to compete with them say in the vending machine arena, you would know how tough of a competitor they were regardless of the healthiness of the product. They were stable, had great distribution and a product that could hold up to that market demands(temps is factories, excellent product consistency and name recognition that was second to none). If you ever competed with them, they set the bar. It’s hard to see this happen as the bar for a truly nationally consistent product (Hostess) has now been lowered.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1919 hrs
I eat apples, not Twinkies.
I eat bakery breads, not Wonderbread.Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 1921 hrs
Thanks for the dietary info, Dismal. We were all wondering what that smell was.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2002 hrs
Ok as a former employee of IBC. I can shed some light on this. I was making great money, for the LaCrosse area. In the mid 2000s we went in to bankruptcy. The company asked for a small concession, like 35 bucks a weeks, or close to that. We all agreed. Then the company came back to us, asked for 150 bucks a week concessions, to get out of bankruptcy. I asked our union rep, to ask for higher commission rate, to offset the cut, and get us to sell more. He said the company is not going to do that. Seems stupid.
The company said the concession would be given back in the form of profit sharing, at the end of the year.
I knew that was a lie.
The LaCrosse branch all voted no to the concession vote. The company said a no vote would eliminate our job and they would close. I knew that was a lie. They have been in business for decades, someone would buy us.
Shocking the union said we passed the concession vote. Hmmm skeptical since it was a mail in vote. Who counted the vote.
So now that we took the pay cut, wal-mart switched theyre private label business to mostly Sara lee. So i lose twice.
I left the company, went to Kraft foods.
The first year under the concessions the company said they where changing the name of the company from Interstate brands company to hostess brands company. Bye bye profits.
Then when hostess emerged from bankruptcy they pretty much gave bread away. Bread and buns were dirt cheap.
Bottom line is union pensions, run down bakeries, very poor management. Top management still getting bonuses, not being able to adapt to the changing market all drove Hostess back into bankruptcy.
This time the company went to the bakery employees and asked them for concessions. The told Hostess to pound sand. Hence the spot they are in now.
Sorry for the length of this.
Have a great weekend.
be safe if hunting.Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2032 hrs
To the point of the great value line, aka knock off.
Walmart uses either sara lee or wonder to make theyre private label. Great Value.
It is the same recipe, just some tweaking. A touch more water, a touch less water. They alter the recipe. If they are crunched for time. It is the same ingredients, just a different bag.
The dolly madison line at walmart is made at hostess, direct shipped to walmart. Not delivered by the route man anymore.
That was another hit to my paycheck.Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2038 hrs
The thought of asking shareholders to take reduced profits is somehow un American…whereas, folks with the BigDog are expected to give, and give, and give, and when the bottom falls out fellers like Owen blame the unionized workforce.
At what point would Owen and his big bidniz comrades consider that shareholders might give a little to keep the company afloat? Or is it more important that a handful of top exec’s cash in while thousands of regular joe’s get pink slips?
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2058 hrs
The thought of asking shareholders to take reduced profits is somehow un American… At what point would Owen and his big bidniz comrades consider that shareholders might give a little to keep the company afloat?
The shareholders weren’t making any profits, they were losing money while the workers were actually making money. How’s that for supporting the workers?
And yes, the union played a big part in this. They had work rules on who could deliver what causing tons of duplication and higher labor costs than the competition. Not to mention their pensions that now go out the window.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2112 hrs
The issue is that in the last 37 months, can anyone identify a improved marketing pitch, new product, anything management did to turn things around other than lean on those at the bottom for additional concessions?
Actually, the company tried to bring back old lines (like the original banana flavored filling) and several new more healthy snacks. All bombed. So they did try things.
I’m not saying that sometimes cuts aren’t necessary. But companies that cut first and create later almost always die. Sadly, whether it’s the for-profit or non-profit world, bean counters often miss that reality
I agree, cutting first is usually the wrong response, but when you’re losing money it’s usually what you have to do (I’ve been there in companies, too). But it all depends on how bad your situation is, and the situation at Hostess was as bad as it gets for a company. They were at death’s door and only vulture funds would touch the company. When they’re involved that means that most of a company is likely to get gutted just because the situation is so dire.
The problem is that it takes money to develop, test, and market new products. When you are losing money and as bad a credit risk as Hostess was the only way to get money is to cut deep, hard, and fast. Of course, with a union in there that’s not really possible and why when most unionized companies fall on hard times they fall harder than the competition and are less likely to survive.
According to the trade papers those lenders of last resort (the “vulture funds”) dumped at least $350M of their own money into the company and most analysts expect that they’ll wind up losing on this investment. Check out the Forbes report on Hostess from August and you’ll see the story. There was tremendous acrimony between management and the unions, to the point where this outcome was written on the wall last August.
I’m not saying this is all the unions’ fault, but the market has changed in the last 50 years and Hostess and the unions didn’t change fast enough to survive. But given the depth of the hole, the unions had unrealistic expectations on what they’ll get out of the company going under.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2128 hrs
The union goons REFUSED to take an 8% pay cut and now take a 100% pay cut.
Real smart Dummycrats.
Posted by .(JavaScript must be enabled to view this email address) on November 16, 2012 at 2320 hrs
The bakers union knows that the company will close, in fact it is a foregone conclusion. Their point is to not make a concession that will show a precedent for their unions at other companies.
I think that’s probably accurate.
Don’t know if anyone remembers this, but Tyson employees in Jefferson went on strike a few years ago. Tyson ended up moving production to other facilities for a year and the local union ended up getting decertified. The plant reopened as a non-union operation and production resumed.
Same thing will happen for Hostess. The Bakery Workers union decided it was willing to sacrifice the 18,000 Hostess workers in order to hold the line elsewhere.
There are differences between the situations - Tyson obviously wanted to break the union, and in this case it appears the company made an effort to work with them - but the result will be similar.
Posted by .(JavaScript must be enabled to view this email address) on November 17, 2012 at 0820 hrs
The thought of asking shareholders to take reduced profits is somehow un American…
I’m sure profit is anathema to you, but you might want to take a look at your 401(k) plan (or pension of you’re one of the 1%-ers). I bet it’s loaded with companies like Hostess (well, hopefully not Hostess if the fund managers have a brain).
Maybe you’re independently wealthy, but I’m counting on that money to live after I retire (likely at age 87 the way things are going), and I expect the management of those companies to look out for my interests.
Posted by .(JavaScript must be enabled to view this email address) on November 17, 2012 at 0826 hrs
The plant reopened as a non-union operation and production resumed. Same thing will happen for Hostess.
No, it won’t. Look at the size of the hole for the pension contributions. There’s no way the company will survive, so anything that would open up there would have to be a completely different company.
Those jobs are gone from Maine and most everywhere else except in a right to work state, where maybe, just maybe, they’ll reopen the plants with new management and no unions. The plants will shut down, equipment will be sold and moved to new locations and new non-union people will get jobs. Yes, those jobs won’t pay as well, but they’ll pay better than what those who are left behind will make.
Hmmm, maybe this is why Obama and company want $8 gas. When the transportation costs rise high enough then maybe union jobs will come back. But until then, companies that have lower costs and fewer work rules will defeat companies that make the same product but with higher costs. (Not that generic Twinkies are better than the real thing, mind you. It’s just generics are almost as good and a lot cheaper.)
Posted by .(JavaScript must be enabled to view this email address) on November 17, 2012 at 1036 hrs
Yeah, I agree nerdbert. What I meant was Twinkees and HoHos will be made somewhere by a non-union operation, not that the current company would necessarily survive.
Posted by .(JavaScript must be enabled to view this email address) on November 17, 2012 at 1041 hrs
Oh look at that Sandi, you jump in late to a conversation, skip to the bottom, and shout a talking point that simply isn’t true,...
VAP if your mind was as fast as your mouth you would be a genius.
Posted by Sandi on November 17, 2012 at 1200 hrs
VAP if your mind was as fast as your mouth you would be a genius.
I have a hard time believing this.
Posted by .(JavaScript must be enabled to view this email address) on November 17, 2012 at 2225 hrs
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.
http://gawker.com/5961444/dont-worry-hostess-top-executives-still-got-richer-as-company-collapsed
But hey, lets put all the blame on the workers for not taking yet-another pay cut!!
*rolls eyes*
Posted by purplepenquin on November 18, 2012 at 0955 hrs
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.
That’s commonly done as an incentive-to-remain through the BK. Since all the parties knew that there would be no more Hostess, the officers were given severance pay disguised as ‘salary.’
Duh.
Meantime, the original LBO company lost $130 million, and two other private-equity lenders to the Company will probably lose $500 million or so.
Some call that “greed.” Others call it “losing a s*&^load of money.”
Posted by dad29 on November 18, 2012 at 1041 hrs
It’s really known as cronyism and not in the interest of the stockholders to keep the turds that brought the company into bankruptcy.
Posted by .(JavaScript must be enabled to view this email address) on November 18, 2012 at 1147 hrs
You don’t get it. Hostess is NOT publicly held. The only ‘stockholder’ is the equity fund. The equity fund brought on these officers, and they failed to turn it around.
Since these guys will not likely be working for the next several years (failure has its effects), they got ‘severance’ pay.
Posted by dad29 on November 18, 2012 at 1951 hrs
At another site, we have this tidbit:
Actually, it was a conversion of performance bonuses to salary. According to one account I read, it was *required* by the bankruptcy court. Additionally, the CEO was taking a ONE DOLLAR salary and had been since the 2004 bankruptcy.
But please: prove otherwise, RS. You seem to know everything about everything.
Posted by dad29 on November 18, 2012 at 2013 hrs
Good thing the Union bosses will STILL be making 250,000+ a year while their union workers get ZERO.
Yep, sure worked out well for the little guy.
Posted by .(JavaScript must be enabled to view this email address) on November 18, 2012 at 2023 hrs
Nope dad, those $1 salary implementations happened earlier this year when then-CEO Brian Driscoll resigned, and were due to last no longer than the end of the calendar year. This was well covered in both Fortune and in BusinessWeek. There’s a link for you since you seem source-averse.
And those raises? Oh, creditors didn’t take kindly to that money-shuffling, which was designed specifically to skirt federal law. It certainly wasn’t done at the behest of a court, at least according to conservatives’ favorite Murdoch rag, the WSJ.
It’s funny how you insist upon sourcing when the stuff to which I refer has been reported over and over again in multiple media accounts and could practically be taken without specific reference as it’s so well known to anyone who deals in facts. Meanwhile, you’re quoting what, a blog? Nice work.
I don’t know everything about everything. I just know how to obtain facts from actual sources - a lost art among many of you factophobes.
Posted by Recess Supervisor on November 19, 2012 at 0432 hrs
The union demanded that Wonder bread and Twinkies could not be carried on the same truck together and 2) that the person driving the truck could not unload the truck which meant that Hostess had to hire a 2nd person to go on the trucks. Hostess said this would break the bank for them and said they couldn’t accept this demand. The union voted 80% to reject.
Posted by .(JavaScript must be enabled to view this email address) on November 19, 2012 at 0808 hrs
It gets worse…
http://www.foxbusiness.com/investing/2012/11/19/death-twinkies-union-contract-hit/#ixzz2ChBv6izJ
The unions will say management had given itself millions in pay raises while demanding worker cuts. (True, but the raises were barely a rounding error at a company that had lost almost half a billion bucks in two years; and Rayburn rescinded the raises anyway, making the brass work for a dollar a year apiece.)
The unions will blame the company for taking on almost $900 million in debt. (Yet that debt cost Hostess all of $45 million in interest last year, when its total losses swelled up to $340 million).
And here’s what you won’t hear the unions ever talk about:
—Hostess paid out almost $100 million in health benefits for retirees last year, but over half of it covered workers who never had worked at Hostess. The Teamsters’ onerous and antiquated “multi-employer pension plan” foists the pension obligations of a bankrupt company on to the balance sheets of surviving rivals—ensuring a steady death spiral in any declining industry. A similar “MEPP” almost killed YRC, one of the largest trucking companies.
—Union rules forced Hostess to run separate truck fleets for delivering bread vs. sweets. A sweets driver, serving a 7-11 store, was forbidden from restocking shelves with breads already delivered and waiting in the back—he had to call for a bread driver to swing by and handle.
—The union restrictions on the 5,500 distribution routes at Hostess made it unprofitable to serve tiny outlets, yet Hostess was barred from using smaller, sleeker—and non-union—distributors.
—Workers were asked to take an 8% pay cut and pay 17% of their health-care costs instead of zero. Welcome to the club, guys. For this, they would have received 25% ownership of Hostess plus $100 million of Hostess debt to be paid back to the unions.
Read more: http://www.foxbusiness.com/investing/2012/11/19/death-twinkies-union-contract-hit/#ixzz2ChBv6izJ
Posted by .(JavaScript must be enabled to view this email address) on November 19, 2012 at 1248 hrs
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