Stock up on Twinkies while you can...

[Spoo]

Another Union victory!!!

Twinkies Maker Hostess Going Out of Business

Hostess, the makers of Twinkies, Ding Dongs and Wonder Bread, is going out of business after striking workers failed to heed a Thursday deadline to return to work, the company said.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

Hostess Brands Inc. had earlier warned employees that it would file to unwind its business and sell off assets if plant operations didn't return to normal levels by 5 p.m. Thursday. In announcing its decision, Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products. The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year.

A union representative did not immediately return a call from The Associated Press seeking comment on the company's announcement. In an interview with Fox Business, CEO Gregory Rayburn said many workers had already crossed picket lines this week to go back to work despite warnings by union leadership that they'd be fined.

"The problem is we don't have enough crossing those lines to maintain normal production," said Rayburn, who first joined Hostess earlier this year as a restructuring expert.

Hostess said that production at about a dozen of the company's 33 plants had been seriously affected by the strike. Three plants were closed earlier this week.

The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess had argued that workers must make concessions for it to exit bankruptcy and improve its financial position.

The company, founded in 1930, was fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks. If the motion is granted, Hostess would begin closing operations as early as Tuesday.

"Most employees who lose their jobs should be eligible for government-provided unemployment benefits," Hostess said.

Copyright Associated Press / NBC Chicago

[Catbox]

Who is John Galt?

[Royal]

Who is John Galt?

Beat me to it.

[Vertigo]

Don't worry, Hostess will be back after everyone is let go. That or some other corporation will buy the name and recipes and start the brand back up. We'll go without Twinkies, or Ho-Ho's, or Wonderbread for 6-12 months, but I they won't be gone forever... there's value in that brand ($2.5B a year in sales) and someone will snatch it up.

Sucks that the executives let Hostess get into a position that they had to make such demands on the union workers (8% pay cut and 32% reduction in benefits) and conversely the union* didn't compromise.

*all of the other unions involved agreed to the concession... the baker's union was the last hold out.

[Butters]

Sucks that the executives let Hostess get into a position that they had to make such demands on the union workers (8% pay cut and 32% reduction in benefits) and conversely the union* didn't compromise.

Yeah, those stupid executives, electing Obama and all the other Democrats in the Senate, what were they thinking? They should have know Obama care and other Government regulations would hurt their bottom line.

[HeloDude]

Own it.

When businesses do well, their workers are more likely to do well...not the other way around.

My bet is we will see more of this (businesses closing/laying off employees) in the next year with higher taxes and Obamacare taking full effect.

[Spoo]

Don't worry, Hostess will be back after everyone is let go. That or some other corporation will buy the name and recipes and start the brand back up. We'll go without Twinkies, or Ho-Ho's, or Wonderbread for 6-12 months, but I they won't be gone forever... there's value in that brand ($2.5B a year in sales) and someone will snatch it up.

Sucks that the executives let Hostess get into a position that they had to make such demands on the union workers (8% pay cut and 32% reduction in benefits) and conversely the union* didn't compromise.

*all of the other unions involved agreed to the concession... the baker's union was the last hold out.

Down with evil corporations!!!

[Guest]

The brand has immense value. It will likely be purchased. The jobs will be moved elsewhere and they will not be lugging the pension nut. The legacy pension costs alone are often enough to bring a company to its knees.

Not sure why we want to blame the "executives" without seeing the balance sheet and income statement.

I know plants get closed when unions ask for more than the business can afford. Pay cuts and benefit losses/worker share increases are happening in response to normal market pressures.

Capital naturally goes to the highest and best use. That is only untrue when non-market forces interfere, which did not happen in this case.

[disgruntledemployee]

Don't worry, Hostess will be back after everyone is let go. That or some other corporation will buy the name and recipes and start the brand back up. We'll go without Twinkies, or Ho-Ho's, or Wonderbread for 6-12 months, but I they won't be gone forever... there's value in that brand ($2.5B a year in sales) and someone will snatch it up.

Sucks that the executives let Hostess get into a position that they had to make such demands on the union workers (8% pay cut and 32% reduction in benefits) and conversely the union* didn't compromise.

*all of the other unions involved agreed to the concession... the baker's union was the last hold out.

Playing chicken with your livelihood is a blast. I guess all those meany executives showed them, proper f u c k e d.

And I thought the Twinkie was too big to fail.

Out

[Vertigo]

I guess squadron leadership isn't to blame when the squadron is a fuck up.

Down with evil corporations!!!

No, more like down with inept management.

Yeah, those stupid executives, electing Obama and all the other Democrats in the Senate, what were they thinking? They should have know Obama care and other Government regulations would hurt their bottom line.

Interstate Bakeries filed for Chapter 11 protection in 2004 prior to this bankruptcy... I was unaware Obamacare was retroactive to 8 year ago.

[Guest]

Interstate Bakeries filed for Chapter 11 protection in 2004 prior to this bankruptcy... I was unaware Obamacare was retroactive to 8 year ago.

KABONG.

[Danger41]

I guess squadron leadership isn't to blame when the squadron is a fuck up.

Interstate Bakeries filed for Chapter 11 protection in 2004 prior to this bankruptcy... I was unaware Obamacare was retroactive to 8 year ago.

Pretty sure Obamacare is retroactive to the bubonic plague and every problem since.

[SurelySerious]

Pretty sure Obamacare G. W. Bush is retroactive to the bubonic plague and every problem since.

No? I could have sworn I was hearing that for a while.

[Napoleon_Tanerite]

The zombie apocalypse just got a LOT harder

[ExBoneOSO]

Here's a special deal for all you snackos out there..only in America..!

Twinkies on eBay

You are bidding on an opened 10-count partially torn box having exactly 4 golden sponge cakes with creamy filling. The best by date is 12-02-2057?, see picture.

USPS Shipping is included to those living in CONUS, if you live outside of the U.S. not only will I not ship these to you, you should know that you do not deserve to consume these delicious American-made Union-Bankrupted snack cakes. Go eat a mud pie or something, commie.

This is your chance to own a truly special American treat, actually four of them, and a box that will be a family treasure for years. Your great-great grandchirrens will be showing this off on Antique Roadshow in 2082. What will the value of this be then??!

[Vertigo]

Salary Increases at Hostess

Some creditors question Hostess pay raises approved in late July.

• Brian Driscoll, CEO, around $750,000 to $2,550,000
  
• Gary Wandschneider, EVP, $500,000 to $900,000
  
• John Stewart, EVP, $400,000 to $700,000
  
• David Loeser, EVP, $375,000 to $656,256
  
• Kent Magill, EVP, $375,000 to $656,256
  
• Richard Seban, EVP, $375,000 to $656,256
  
• John Akeson, SVP, $300,000 to $480,000
  
• Steven Birgfeld, SVP, $240,000 to $360,000
  
• Martha Ross, SVP, $240,000 to $360,000
  
• Rob Kissick, SVP, $182,000 to $273,008
  

One example of inept management- ask for major concessions from labor while looting the payroll for the executives.

http://online.wsj.co...3512506050.html

A good read on what went on behind the scenes: How Hostess Failed: Hedge Funds vs Unions

Edited November 17, 2012 by Vertigo

[HeloDude]

One example of inept management- ask for major concessions from labor while looting the payroll for the executives.

Sounds like it was their company and thus their choice. The Unions rolled the dice and lost.

Are you against Capitalism? I thought you were a Libertarian? Nobody was forcing these workers to work for the company.

[Techsan]

Little Debbie is better anyway!

[Guest]

Maybe the unions should've bought the distresses debt and run the company.

[Vertigo]

Sounds like it was their company and thus their choice. The Unions rolled the dice and lost.

Are you against Capitalism? I thought you were a Libertarian? Nobody was forcing these workers to work for the company.

See, this is where we differ. You only blame one side for the collapse, whereas I blame all that were involved.

Capitalism isn't looting the payroll to give the CEO a 240% raise while in Chapter 11.

The laborers weren't responsible for flagging sales and outdated products. The laborers didn't mismanage the company. Yet they are to shoulder ALL the blame for the demise of Hostess? They were the straw that broke the camel's back, but there were other strains prior to that straw.

[Royal]

Capital naturally goes to the highest and best use. That is only untrue when non-market forces interfere, which did not happen in this case.

Are there any instances in this day and age where non-market forces don't interfere? Between all the subsidies that exist and all the barriers to entry being so high in seemingly every single sector of the market, the masters of bureaucratic paperwork shuffling have a strong upper hand over the business that has the superior product or service.

You deal with this more than me, so do you find any of that to be true in practice?

[HeloDude]

See, this is where we differ. You only blame one side for the collapse, whereas I blame all that were involved.

Capitalism isn't looting the payroll to give the CEO a 240% raise while in Chapter 11.

The laborers weren't responsible for flagging sales and outdated products. The laborers didn't mismanage the company. Yet they are to shoulder ALL the blame for the demise of Hostess? They were the straw that broke the camel's back, but there were other strains prior to that straw.

I don't care whether they collasped or not--companies will always form and companies will always shut down.

All I'm saying is that in the end it was better financially for the company to not agree with the Union's terms and thus shut down, regardless of what was done previously. A company's #1 goal is to make money for the owners/stockholders--if they can't do that in what is deemed an acceptable manner, then the company should cease. The CEO pay raise is nothing compared to excessive Labor costs.

A job is by-product of a successful business, not the other way around.

[nsplayr]

The CEO pay raise is nothing compared to excessive Labor costs.

I think his point was that increasing executive pay while asking for concessions from labor is bad form at best, and a bad business decision that cost them the company at worst. If you're truly cutting costs to the point where you're proposing potentially fatal concessions from your labor force if they do not agree, do you really need to prioritize executive pay increases at the same time?

[Guest]

You are all correct to some degree.

Unions make things difficult for labor and management to work together. The relationship between the two is rarely enhanced by the presence of an active union, especially when the union becomes adversarial.

The wages are a lessor factor than the pension obligations in this case. Most pensions are under severe strain because they are under funded. The economic difficulties of pension obligations in a recession are real. The underlying return assumptions change and the pensions become strained and ultimately insolvent. People can blame "management" for this but most pensions are co-funded by employees and employers. The prevailing pension capital requirements were based on returns that are impossible today, somewhat as a result of fiscal policy, namely quantitative easing.

In any case, "looting" executive payrolls accounts for an insignificant portion of the problem but it is highly visible and easy to attack. Saying the top ten earners at Hostess should make less is kind of like saying we will solve our deficit problems by increasing taxes on anyone making over $250k.

There is plenty of accountability to be shared in this case.

Joseph Schumpeter would say this is a natural occurrence.

[Royal]

It looks like about 18,000 some odd people are going to be losing their jobs officially. Damn shame.

Due to the product that Hostess manufactures, this'll be a relatively benign loss to most of us, except for the Guard O-5s that survive on the donut and coffee diet. However, it's is an invaluable case study. No industry is immune to such an event occurring, and it should make all of America wary. No one is entitled to any other individual's intellectual capital. A void for any product we take for granted won't necessarily be filled by someone else if the manufacturer decides to pull the plug. Remember Checker Motors?

On such a cheerful note, Happy Thanksgiving.