No more Twinkies? Hostess plans to shut down

[crocoduck_hunter]

If they really were that popular instead of just iconic, would they have gone bankrupt?

[erwins]

For some reason, on long road trips I get a craving for Hostess Crumb Donettes. I always buy a pack at a gas station sometime during the trip. I guess I'll probably just have to go without next time.

[JoeBentley]

Originally Posted by crocoduck_hunter

If they really were that popular instead of just iconic, would they have gone bankrupt?

Maybe. Good product doesn't always equal good business.

[lavender blue]

Made my usual Friday run to the grocery and just happened to look at the Hostess rack. They were sold out of HoHos, Twinkies ... everything but the Donettes, and those were few on the ground. So it looks like if you want one last one for posterity, get them soon.

When I was a kid, whenever my sis and I couldn't decide what to get her for some celebration day, we bought her packs of sno-balls.

[fitz1980]

Facebook and Twitter are already going crazy with people blaming it on unions.

Forget the fact that the company has been in bankruptcy since 2004.
Forget the fact that they have had 6 multi-million dollar CEOs since 2002.
Forget the fact that the union agreed to $100 million in cuts, which were not reinvested in the company.

The company went under because union workers didn't want to be treated like sweatshop workers.

[Xia]

Originally Posted by Sylvanz

Twinkies always made me feel like my teeth had furry little coats on. I do love Ho-Hos though. If Little Debbie gets them I hope they don't make Ho-Hos taste like the Swiss Cake Rolls LD sells. Those things are a travesty.

The regular Swiss Rolls are bad, but I really like the "double chocolate" Swiss Rolls. Instead of white filling they have chocolate filling, and they also have chocolate syrup in the center. I always say they're really quadruple chocolate, since they are chocolate-covered chocolate cake rolls with chocolate filling and chocolate syrup. Unfortunately (or fortunately for my health) they are very hard to find, they don't sell them at all in my area and I can only sporadically find them in the areas I visit where they do seem to have them on the market.

[Singing in the Drizzle]

Union: 'Bain-style' killing of Twinkie

I knew someone would find a way to blame Mitt Romney for part of this some how.

Trumka’s comparing Hostess to Bain comes after an election in which former GOP presidential nominee Mitt Romney was criticized for co-founding Bain Capital.

[fitz1980]

Originally Posted by Singing in the Drizzle

I knew someone would find a way to blame Mitt Romney for part of this some how.

I fail to see how that's 'blaming it on Romney.' They are blaming the company's demise on the same vulcher capitalist tactics that Romney was rightly criticized for when he was running as the 'business candidate' when his entire business model was buy up a struggling company, fire most of the workers, terminate their pensions & sell off whatever is left at a profit for himself. Isn't that exactly what happened to Hostess?

[Jahungo]

Originally Posted by fitz1980

Forget the fact that they have had 6 multi-million dollar CEOs since 2002.

I agree that there are people unfairly blame this on unions, but there are also people unfairly blaming it on CEO salaries, which is equally if not more silly. One person making a few million dollars is absolutely negligible for a multi-billion dollar company.

[Lainie]

Originally Posted by Singing in the Drizzle

I knew someone would find a way to blame Mitt Romney for part of this some how.

That's not blaming, it's drawing a comparison.

[E. Q. Taft]

I suppose we should be grateful that the CEO didn't say he had to shut down because of Obamacare....

[Stephra]

Originally Posted by Jahungo

I agree that there are people unfairly blame this on unions, but there are also people unfairly blaming it on CEO salaries, which is equally if not more silly. One person making a few million dollars is absolutely negligible for a multi-billion dollar company.

If a company is doing well, and growing, then absolutely they should be well compensated. It's not that somebody is making millions that's the problem. The problem is that they've boosted their own executive salaries by huge amounts while the union makes concessions worth $100 million. While in the lead-up to another bankruptcy.

This is from April, so it's well before things unraveled completely, but it suggests that the executives were carving themselves nice packages in anticipation of the end:
http://www.teamster.org/content/dow-...e’-execs

After these nice pay raises, they started defaulting on the pension payments they promised workers... and then they eventually said the workers had to give up another 8%. I've tried to see it any other way, but all I can see is a group of suits who came in, looted the place, and then stuck the workers with the bill. These guys weren't there to make a profit selling iconic snack cakes. They were there to grab whatever they could and then dump the mess on somebody else.

[firefighter_raven]

http://www.csmonitor.com/content/view/full/606749

So far, Big Labor has gotten the brunt of criticism for the demise of Hostess, since the Bakery, Confectionery, Tobacco Workers ,and Grain Millers union refused, despite warnings from fellow union heads, to return from strike at some 20 facilities nationwide. That forced CEO Gregory Rayburn to declare, after two rounds of bankruptcy proceedings, that “it’s over.”

Yet as the political recriminations echo amid news of 18,500 lost jobs in an already sluggish economy, some economists suggest that Americans shift their blame from Big Labor to the role Congress might have played in writing the Twinkies’ obituary.

[A Turtle Named Mack]

f_r, that's a good point that there are other imposed burdens on operations. The government does all sorts of things that deform the markets, from imposing a sugar monopoly, to imposing labor monopolies, to various taxes and regulations. Of course, sometimes businesses would fail even without any such deformations. And some controls allow markets to perform better or address externalities appropriately. However, too often the costs are not adequately addressed, and even when required the cost-benefit analysis is fudged when there is a strong desire to reach a conclusion.

[Wintermute]

Originally Posted by fitz1980

I fail to see how that's 'blaming it on Romney.' They are blaming the company's demise on the same vulcher capitalist tactics that Romney was rightly criticized for when he was running as the 'business candidate' when his entire business model was buy up a struggling company, fire most of the workers, terminate their pensions & sell off whatever is left at a profit for himself. Isn't that exactly what happened to Hostess?

It's not even close to what happened to hostess. If it wasn't for the VC then hostess would have closed years ago. Not all VC are bad.

[Wintermute]

Originally Posted by Jahungo

I agree that there are people unfairly blame this on unions, but there are also people unfairly blaming it on CEO salaries, which is equally if not more silly. One person making a few million dollars is absolutely negligible for a multi-billion dollar company.

As the CEO you shouldn't reward yourself and others unjustly when you're asking everyone else to take cuts. I believe the upper management took an 80% increase in pay while asking the unions for cuts.

The union forced an unprofitable business model but the upper management didn't earn their trust to modify it. It's very telling the union would force liquidation over modifications.

[Lainie]

Originally Posted by Wintermute

It's not even close to what happened to hostess. If it wasn't for the VC then hostess would have closed years ago. Not all VC are bad.

It's still not blaming Romney, though.

Also, Bain Capital is a private equity firm, not a venture capital firm, and probably the same was true of whatever company invested in Hostess.

ETA: Venture capital is also private equity, but it's a subset of private equity. Even if the firm that invested in Hostess also has a VC practice, investing in Hostess was not VC.

[tagurit]

FORTUNE -- Private equity firm Sun Capital Partners wants to buy bankrupt bakery Hostess Brands Inc., Fortune has learned.

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

http://finance.fortune.cnn.com/2012/...out/?hpt=hp_t3

[Wintermute]

Originally Posted by Lainie

It's still not blaming Romney, though.

Also, Bain Capital is a private equity firm, not a venture capital firm, and probably the same was true of whatever company invested in Hostess.

ETA: Venture capital is also private equity, but it's a subset of private equity. Even if the firm that invested in Hostess also has a VC practice, investing in Hostess was not VC.

I never mentioned Romney even once. So I am not sure what you are referencing. I was merely pointing out that not all private money is bad. It's what has kept the running for the past few years.

[Wintermute]

Originally Posted by tagurit

FORTUNE -- Private equity firm Sun Capital Partners wants to buy bankrupt bakery Hostess Brands Inc., Fortune has learned.

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

http://finance.fortune.cnn.com/2012/...out/?hpt=hp_t3

Under the current Union arrangement there is no way to make the company profitable. I am curious though if new management would get the union to negotiate better terms.

One of the biggest issues is the contracts require way to many people to deliver the products compared to the industry standard. So for instance you will have 6 people doing the work of 1 employee at the other companies.

You have 2 people to load the truck. One for bread and one for snack cakes. You have two drivers going to the store one for bread, one for snack cakes then you have two people showing up to stock the items. One for bread, one for snack cakes.

While Bimbo would have the driver load the truck then deliver all items then stock the items. There is also the issue that the workers make 2-3 times the wages of the other companies but that wouldn't be as big of a deal if there wasn't so many of them in the process.

IIRC that is one of the biggest issues with labor and Hostess.