Bye, Hostess

| November 16, 2012 | 83 Comments

I remember I was in Kindergarten when my mom sent me to the store up the block to buy a loaf of bread. The first time I was ever on my own with money in my pocket. I was all grown up when I picked out a loaf of Hostess bread with the little balloons on it and proudly held out my little handful of change and let the checkout lady count out whatever it cost. Then there was the time I thought I could win the Twinkie eating contest at our school’s Winter Fest and I ate so many Twinkies that I quit eating them for years.

But now they’re gone.

[Hostess] had warned employees that it would file a motion in U.S. Bankruptcy Court to unwind its business and sell assets if plant operations didn’t return to normal levels by Thursday evening. The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.

Thanks, unions. That’s what happens when you try to get blood from a stone.

Tman sent us the bad news.

Category: Economy, Unions

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  1. NHSparky says:

    The guy who runs the office coffee mess ran out to the local grocery store and got a few boxes of Twinkies and Zingers. Guess we’re gonna find out if those things really do have enough preservatives in them to last 40 years.

    RIP Hostess, 1930-2012. Good while it lasted.

  2. Green Thumb says:

    Many a fat poser are down and out today…(Round Marine comes to mind as well as “Toughman” Bill Blake)

  3. Nik says:

    Those evil, nasty old corporations are going to take the blame while those paragons of virtue, the union bosses will come out smelling like a rose.

    Sadly, I expect this is the first domino of many.

    Frankly I wouldn’t be surprised to see some sort of extra hinderance to companies folding up shop. Granted, Obama doesn’t have to worry about re-election anymore, but he owes some folks who are going to have a hard time saying “The Unions care about the little guy” while watching more companies fold.

    I hope I’m wrong. I really do. But I don’t see Hostess being the last company to fold, and certainly isn’t the last one to be damaged by Obamacare.

  4. OWB says:

    Between the unions and gubmint interferance in everything they can manage to impede, life is becoming more miserable each day. A buddy just sent me an article where the same clowns are also going after private pensions. Dang! Is there no end to their greed?

  5. Ex-PH2 says:

    Thanks to the unions, another American company — an institution! — bites the dust.

    What’s Archie Bunker gonna do now? He won’t be getting his tomorrow’s lunch Twinkie ever again.

    R.I.P. Twinkies.

  6. SGT Kane says:

    Queue Tallahassee suicide watch in three…two…one

  7. Ex-PH2 says:

    OWB, can you find a way to post that article or a link to it?

  8. Claymore says:

    The geniuses at DU have a few things to say about this…

    http://www.democraticunderground.com/10021830337

  9. PintoNag says:

    Reading the DU comments, it’s easy to see who wants sugar declared a drug and put under the control of the FDA.

  10. Nik says:

    I went to the DU link.

    Their collective denseness is an intellectual black hole that threatens to drain the IQ out of all humanity.

    Seriously, they get in there and I can see how each is trying to out-crazy the last. It’s like some paranoid schizophrenic game of oneupsmanship that is truly tragic to behold.

  11. Claymore says:

    Yeah, it’s a real head scratcher for the DUmbasses…they hate big companies and they’d love to see another sugar peddler taken out, but there’s about 15,000 employees (most of which are union members) now looking for a place to land.

  12. Hondo says:

    Nik: bingo. Although union idiocy/intransigence was the proximate cause, one of the root causes was indeed employee healthcare costs. This left Hostess financially unable to weather a protracted strike; hence the decision to close shop.

  13. Adirondack Patriot says:

    Twinkies are extinct, but marijuana is legal. So, when stoners get high, there are no Twinkies.

    Liberalism has so many bitter ironies.

  14. OWB says:

    @ #7: Need to research it – so far I cannot find exactly when it was poublished. Will deinitely look into it after taking care of a few issues here today.

  15. FltMedic says:

    I read this book. Didn’t turn out to well for the masses. What was the name of it again…Oh yea Atlas Shrugged.

  16. crucible says:

    Lol #13!

  17. Ex-PH2 says:

    Now I will have to go to the gas station and stock up on foods that will never die: Twinkies, Snowballs and those god-awful choco cupcakes with the cream filling. I will make a large pot of hot tea, get a good book and proceed, with a moment of silence for a vanishing breed of classic junk food.

  18. Scouts Out says:

    Relax people, you’ll still be able to get your damned Twinkies. Hostess is going to sell the rights and recipes to all their top brands, then someone else will make them. I’m more of a Ho-Ho man myself, but I’m not worried.

  19. Nik says:

    @18

    Yah, someone will likely buy the rights and recipies. Dirt cheap is my estimation. But, they may very well not produce them. If a competitor to Hostess buys them, they may be doing so in order to ensure their bitter rival, such as the Twinkie, never sees the light of day again.

  20. Joe says:

    Damn Obama and his union flunkies. Of all the insults inflicted upon this great nation, this one takes the, well, cake!

  21. Jonn Lilyea says:

    Warner Todd Huston just wrote; Congratulations Obama. al Qaeda is alive and Twinkies are dead.

  22. Scouts Out says:

    Unless they make their own brand of Twinkie knockoffs that would be an incredibly stupid thing to do. Twinkies are a food icon, no way someone else is going to pass up the chance to make money from them. Ho Hos on the other hand already have so many knockoff that I’ll just have to go with Liytle Debbie Swiss Cake Rolls. Mmmmmm excuse me for a minute…

  23. Whitey_wingnut says:

    They were talking on Fox Business that the companies who buy the rights and recipes would be able to only afford that part. They don’t want to re-open the plants Hostess closes because the unions will think they are part of that package.

    As for that DU thread…I read four post into it and could feel my IQ rapidlly decreasing.

  24. 2-17 Air Cav says:

    What ever happened to half a loaf is better than none? Merry Christmas, kids! That unemplotment check is probably a wee bit smaller than the payroll check was.

  25. Joe says:

    Yeah, who sez Twinkie workers deserve to make a liveable wage and have afordable health care, those presumptious communists!

  26. GoddamContractor says:

    An old buddy of mine is a USAF (Ret.) PA guy and he gave me the inside scoop on this. Apparently, Little Debby and Dolly Madison were having an affair with General Mills. Standby for salacious emails… and more squirrels.

  27. Nik says:

    @25

    Blood from a turnip, Joe.

    Hostess already filed bankruptcy once. Then they were able to start to climb their way out. Now, with the single union of Bakers in their plants, they couldn’t afford to stay afloat.

    They were warned. They chose to strike. Now they reap the consequences.

  28. AW1 Tim says:

    Up here in the People’s Republic of Maine, Hostess has shutdown and about 1500 folks are out of work, just in time for Thanksgiving and Christmas.

    As for Twinkies, you can actually make your own if you need to. The “canoe” pans for forming the sponge cake are readily available, and the filling is dirt simple to make (as is the cake. A little labor intensive, but pretty simple nonetheless. One really good recipe is here:

    http://www.simplemathbakery.com/blog/2010/02/05/homemade-twinkies

  29. NHSparky says:

    Joe, you pompous ass, don’t you have the pee stains of the first-graders to mop up or something?

    They were talking about an 8 percent reduction next year, followed by increases in 2015 and 2016. In return, the union got a 25 percent ownership of the company and 25 percent control of the Board of Directors. That apparently wasn’t enough for them.

    So now, they don’t get shit. Way to cut your nose to spite your face there, dumbass.

  30. Veritas Omnia Vincit says:

    Eras come and go, Twinkies didn’t evolve and adapt thus ending their species.

    When the CEO states in an article for “Baking Business”: “You’ve got to be profitable. You’ve got to make your own money. You’ve got to fund your own livelihood, and you’ve got to fund enough to make up for years of lack of investment.” it is clear there is an issue beyond labor costs that has existed for years if not decades.

    Sales and profits were off in the years prior to the 2004 first bankruptcy claim by IBC, it took 5 years and wage and benefit concessions to get out of that bankruptcy. There was a continued, systemic failure by management to focus and direct this company towards profitability. Union inefficiency did not help this situation but certainly is not the root cause of the business failure either.

    People/investors that are using their companies to line their pockets with no thought to sustaining the business through reinvesting profits are certainly entitled to do so, but it is more than a little disingenuous to later claim that failing to invest profits into the company is the full fault of a striking workforce representing a third of your employees.

    As an aside, the Teamsters make the federal government look lean and efficient ($420 per benefit recipient administrative cost versus $11 by the Social Security Administration–2011 report by Association of Certified Fraud Examiners).

  31. Whitey_wingnut says:

    I just read that Richard Trumka blames Bain for this. Hahahaha best piece of humor I read all day.

  32. Nik says:

    @22

    There’s always been Twinkie knock-offs, Little Debbie’s Cloud Cakes, for example. Weight Watchers even has a whole line of Hostess knock-offs.

  33. Scouts Out says:

    You are of course aware that at least four top executives gave themselves pay increases in the neighborhood of 80% while asking labor to accept that pay cut? You are also aware the Hostess was probably not going to be around in 2015 for the union to get their “good” part of the bargain, right?

  34. MCPO NYC USN (Ret.) says:

    As long as Drake’s remains in the black … I don’t care about Hostess. I love my Devil Dogs!

  35. Nik says:

    @33

    I do know that it has been alleged (though not proven as yet) that what they did was convert performance based bonuses to salaries.

  36. Hondo says:

    VOV: I think you’ve been in the PRM (People’s Republic of Mass) long enough to have been affected by osmosis, amigo.

    Yes, Hostess was in bad shape. Probably past management was to blame.

    However, they’d managed to figure out a way to keep operating from 2004 on. And firms operating in bankruptcy often don’t have a helluva lot of “profits” to “reinvest”. Payments to creditors often take precedence.

    However, the economic downturn of the last 4 years obviously hurt. And they were forced into a 2nd bankruptcy.

    This time the choices were stark, but still allowed a path to survival. And about 2/3 of their workforce saw that.

    Unfortunately, 1/3 of their workforce wanted “to have their cake and eat it, too”. (Yes, the pun was intentional.)

    The net result is that 1/3 of the workforce killed the company. Hostess didn’t have the resources to weather a strike, and told them that up front. Why is a discussion best left to academics.

    Unfortunately, their former workers are left to deal with the what – unemployment.

    I hope the members of the baker’s union have a good time explaining to the teamsters why they all now are out of work.

  37. Nik says:

    @36

    “I hope the members of the baker’s union have a good time explaining to the teamsters why they all now are out of work.”

    That narrative has already begun. “It’s management’s fault.” “It’s the bosses’ fault.” “It’s the 1%er’s fault.”

  38. Dave says:

    @MCPO #34 – according to my wife Drakes is a Hostess brand.

  39. Nik says:

    @38

    According to Wikipedia too:

    “Drake’s is a baking company in Wayne, New Jersey, United States, owned by Hostess Brands,[1] which makes snack cakes such as Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, Funny Bones, and coffee cake.”

  40. MCPO NYC USN (Ret.) says:

    @ 38 and 39 …. NO, NO, NO, NOOOOOOOOOOOOOOOOOOOOO!

  41. Veritas Omnia Vincit says:

    Hondo, osmosis is like Karma a harsh mistress….I’ve been involved in enough struggling companies to know the path out of bankruptcy tends to get ugly…I’ve manage two companies through a structured 11 and made them solvent again. In both cases, and I suspect based on my reading Hostess falls into this, that the 3 years since leaving bankruptcy had reduced or eliminated some debt but did nothing to change the efficiencies or lack thereof in production or the direction management was taking the company. Most companies in structured 11s with success or not don’t eliminate the senior managers that brought them into 11 in the first place. I always find it interesting that investors don’t demand a complete replacement of managers/directors tasked with guiding procedures and policies towards leaner, efficient production. So the same inefficient, relatively incapable management teams are now given a company with less debt, structured repayments and those companies again fail.

    Having walked through it personally twice, peripherally a couple more it probably colors my experience more than these commie b4stards in massachusetts although that might be part of it. When management sucks and isn’t replaced the eventual outcome is inevitable, if the union had conceded based on what I read Hostess would have failed 2-4 years down the road anyway because nothing in the way of capital investments was going to or could be changed to increase efficiency of each worker through greater output. The only way American manufacturing competes with nation’s that pay $4 hour is to increase the output of the workers and decrease the number of workers.

    Since I don’t know the average hourly baking wage after the first round of cuts, I am not certain what an 8% cut would do this time…it would probably affect the bakers differently than the teamsters who are around $22 an hour on average. Figure the bakers to be at around $18 which means dropping the wage to $16.56 which is not bad but the impact might have been an average of 8% with some units taking a larger hit…$16.56 is better than nothing, but it doesn’t take too far down from there to make an unemployment check with no income tax taken out to be almost as good….

    In the PRM unemployment tops out around $500/wk with additional outlays for dependents so your $16.56 is $662 gross for 40 with maybe $120 taken for dues, state, federal taxes….leaving you $542…or if you have a couple of kids more like $550 on unemployment here in the PRM….folks get sh1t on enough and the move is lateral enough maybe they decide f#ck it I lose, they lose, everybody loses…I’m not saying I agree, but I can certainly understand it.

  42. MCPO NYC USN (Ret.) says:

    Oh well, I will resort to my second favorite snack … Dolly Madison Chocolate Zingers … Ice cold milk and Zingers.

  43. Hondo says:

    Not sure about that, Nik. Might be more like this:

    “Hey, what the f**k were you guys in the baker’s union thinking? We signed off on that deal!”

    “Yeah, well, we don’t care. It wasn’t a good enough deal for us.”

    “Huh? What was that you said.”

    “It wasn’t a good enough deal.”

    “What? Hey, what part of Teamsters don’t you get? We tell you it’s a good enough deal, it’s a good enough deal.”

    “No.”

    “What did you say?”

    “We said, No.”

    “Thought so. I think we all need to go have a little talk about that. Last time a guy told us something like that, I think, was 1976. Name was Hoffa, as I recall.”

  44. Twist says:

    @38/39, You guys know that you just crushed MCPO right?

  45. Nik says:

    @43

    Sadly, that’s a distinct possibility. Was the 8% cut a blanket offer for all the unions, or did the Teamsters get a different deal?

    Either way, whether it’s your scenario or mine, the sad reality is…the Union Bosses are going to have great Christmas and Thanksgivings. The line worker that’s now out a job, probably not so much.

  46. Nik says:

    @44

    I like to think of it as warning him about an unpleasant future. It’s…kinda like a public service.

    But crushing him works too. ;)

  47. Hondo says:

    VOV: I think your calculations are a bit off, amigo. And it doesn’t work for the rest of the nation, either.

    MA has the highest UC rates in the nation; the rest of the country doesn’t reach those levels. However, everywhere UC is tied to earnings; even in MA, if I recall correctly only high wage earners get anywhere close to $500/wk. The lower wage guys/gals get substantially less.

    $17/hour ain’t big bucks. It’s a bit less than $36k a year.

    Bottom line: a job paying $17/hour or more is probably quite a bit better deal than UC, even in MA. And there’s no “hit” on future SS and pension benefits if one continues working like there is in being unemployed – assuming, of course, that either SS or pension plans survive the next few years.

  48. Veritas Omnia Vincit says:

    Hondo, sometimes folks just say f#ck it because they can and if that hurts them short term they don’t much think about it. My thought was that maybe in this case after years of no raises and no change in management with no new equipment those performing the actual production might have well had enough and decided to “stick it back” to the company…figuring instead of waiting a couple more years to lose their jobs anyway they could kill the company and everyone loses, not just the employees.

    I don’t believe a management team that puts a company into bankruptcy deserves to stay on, and certainly doesn’t deserve to receive continued bonuses when the company is in the crapper…”gestures” of good faith after years of mismanagement are often not well received by the hourly employees. Hostess was managed poorly as their CEO stated clearly in his statements to the Baking Business article. Consequently, when your own CEO says your management team failed to what was required to prevent the first bankruptcy, thinking the union is the problem is not entirely accurate.

  49. Hondo says:

    VOV: true, the behavior is human. But it’s also irrational and illogical.

    And it doesn’t justify the argument that, “Management screwed up, so we’re justified in screwing over the whole organization to get even.” By the same logic, Benjamin Arnold had justification for his treason.

    I ain’t buying that.

  50. Ex-PH2 says:

    I have been to the gas station. There Zingers, Suzy Qs, Choco and Orange Cupcakes, Donettes, and Snowballs, but no Twinkies. The guy behind the cash register did not believe me when I told him that they will all be gone before long.

    I took home two Snowballs and two Choco Cupcakes (packages), ate one of each, and am holding the others until after supper. I will take a memorial photo before I munch them up. Then I will play a sad song. Then I will munch them up.

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