November 16, 2012

“Hostess to Liquidate, Lay Off 18,500 After Crushing Union Fight”

Well, as my childless, well-to-do leftist friend quipped on facebook, this will save generations of people from Type II diabetes! Which is just another way of saying “let them eat arugula!”

Failing to persuade striking employees to return to work, Hostess Brands disclosed plans on Friday to liquidate its assets and lay off most of its 18,500 workers, bringing the 82-year-old maker of Wonder Bread and Twinkies to the end of its line.

The painful decision to wind down the Irving, Texas.-based private company follows a nationwide strike that Hostess said severely constrained its operations.

Hostess said delivery of its products, which include Ding Dongs and CupCakes, will continue and its retail stores will keep their lights on for several days to sell already-baked products.

“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 Rayburn said in a statement.

As a result of the liquidation, Hostess said it will “move promptly” to lay off “most” of its 18,500 employees and focus on “selling its assets to the highest bidders.”

The company will now be forced to close its 33 bakeries, 565 distribution centers, 5,500 delivery routes and 570 bakery outlet stores throughout the U.S.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union pushed back against the Rayburn blaming the liquidation on the unions.

“The truth is that Hostess workers and their Union have absolutely no responsibility for the failure of this company. That responsibility rests squarely  on the shoulders of the company’s decision makers,” Frank Hurt, BCTGM International Union President, said in a separate statement released on Wednesday.

Well, on the plus side, at least he didn’t blame it on Bush.

Also on the plus side? All these economically illiterate progressive bullies threatening to boycott businesses that introduce layoffs as a result of now negligible profit margins (or actually losing money) due to increases in taxes and regulatory burdens, intransigent unions, and ObamaCare, won’t have anything left to boycott, in this case.

But no worries: maybe they can turn that energy to something useful and send out 18,500 “Get Well Soon” cards, along with instructions on how to apply for food stamps.

(h/t Terry H)

Posted by Jeff G. @ 8:55am
109 comments | Trackback

Comments (109)

  1. I’m quite sure Mr. Hurt is pleased with the layoffs, because now the union no longer has to pay strike benefits.

    As an added bonus, more than likely the employee pensions are controlled by the union. Good luck collecting those pensions.

  2. Hopefully, the people who buy the assets will set up shops exclusively in right-to-work states.

  3. The truth is, Murder Inc. has absolutely no responsibility for the burning down of this grocery. That responsibility rests squarely on the shoulders of the grocer.

  4. My leftist friend says he doesn’t like Hostess products anyway, and besides, RJR Nabisco will just buy them all up.

    Leftists like monopolies.

    Of course, should RJR Nabisco fail, the government can step in and nationalize the snack cake industry.

    If you haven’t read Looking Backward, you probably should. Because we’re watching it unfold. Just ignore the implausible ending and replace it with abject misery.

  5. The “let them eat arugula” response is similar to the Murray Energy layoff reaction of “no big deal because coal is passe.” Progressives are quickly getting the utopia they desire. Don’t think it’s going to be as awesome as they expect it will be.
    Also, thanks, baker’s union, for destroying the one kind of bread my son likes (Wonder bread – mmmmm).

  6. One of the more amusing things that happened in my area was the strike threatened by the Albertson’s employee union. (grocery store chain)

    Albertson’s decided they’d were going to get hit with a strike and started advertising for temporary employees. So many people lined up and put in applications the union decided they best settle.

  7. My leftist friend says he doesn’t like Hostess products anyway, and besides, RJR Nabisco will just buy them all up.

    Ask him how he’ll feel when Texas buys up California after its unions finish bankrupting it.

  8. Leftists dance the jig when snack cakes go out of business. But what was their response when Solyndra and other “green” initiatives go under?

    Apparently lefties do not give a crap about actual unemployment

  9. Amtrak to Amsnack. Nationalize the Twinkie industry!

  10. Pingback: Sharp as a Marble - Like pouring molasses in Alaska in December

  11. That stuff is bad for you anyway, so it’s a win-win for Teh Won and Moochele.

  12. Just wait ’til the new tax rates kick in, and all the totebaggers get smacked so hard by the AMT that they can’t afford to support their local organic free-range cruelty-free baby spinach ranchers any more. Then we’ll see who’s laughing!

  13. I’ll really miss Sno-Balls. I usually ate only one or two a year, but it was a complete indulgence.

    The unions have nobody to blame but themselves. The company said “If you continue to strike, we’ll liquidate.” The union continued to strike. The company liquidated. At least somebody kept their work.

  14. I don’t know about their other products, but I don’t think Twinkies are actually baked. I think they’re more extruded like those foam pipe-insulation thingies you buy at the hardware store to try and keep your power bills in check.

    I expected this to happen since I first read about it, Monday or Tuesday of this week. Of course the union and its fellow-travelers are going to call this union-busting even after Hostess is absorbed by a new company, because that company will have its own deals with labor that will almost certainly make the deal that Hostess extended look generous. So, since the union was busted (largely if not completely through its own efforts): union-busting!

    It only works if you don’t care what words really mean, and what things really are.

    I can’t wait to see what the flamingly liberal local newsbeat reporters at the Slantinel will be saying about this.

  15. Twinkies are baked. They’re tiny sponge cakes and baked in forms. The reason I believe you’re thinking they are extruded, is because they are injected with that marshmallow fluff. Turn one over and you’ll see three holes where they pump in the fluff.

    I shop at the Hostess Outlet store about every two months and stock up my freezer with bread and hamburger and hotdog rolls. Not anymore.

  16. Tell your leftist friend that eating Twinkies, or any other sugary food, doesn’t make you develop diabetes. Bankrupting Hostess won’t make a darn bit of difference in that regard.

  17. I think there is good evidence that carbs are a leading cause of diabetes, but that doesn’t mean the government or anyone else should have the right to keep you from deciding on your own quality and quantity of life.

  18. I can’t imagine people will be rushing to hire any of these thuggy thuggy dumbfuck union whores

  19. I think lack of exercise was at least as much the cause for me as eating too many carbs. At least, I was told that cutting carbs and getting more exercise were the ways to get it under control.

  20. Progressives are quickly getting the utopia they desire. Don’t think it’s going to be as awesome as they expect it will be.

    It was never intended to be awesome

    for you.

  21. Chocolate rations increased to 20 grams!

  22. Oh goody! Please Obmama let it be the crumbly tastless kind, and not that godawful stuff they used to make with all that fattening cocoa butter in it!

  23. Our pro-choice friends seem to be all about making our choices for us, in some respects. There’s something off about that; can’t quite put my finger on it.

    A 32-oz Big Gulp might help me along, if I could only obtain one legally.

  24. Since I don’t care for soda, can you still purchase 20 ounce coffees or is that verboten as well?

  25. They’ll be hitting the donut places next.

  26. Of course, your trendily childless left-leaning Facebook friend really doesn’t understand how Type II diabetes is more prevalent among the 47% in large part due to the ready availability of processed, prepared food for cheap. That they cannot simply go into Whole Foods and purchase a raw vegan carob treat for dessert–as your trendily childless left-leaning Facebook friend surely can–is certainly not even in anyone’s orbit of concern who might say something like that. Obviously, the only people who get Type II diabetes are the people who can AFFORD to stuff their maws with fresh, premium food and then choose NOT to use their expensive gym memberships to burn those calories off.

    Granted a friend and I were reminiscing sadly about Wonderbread last night, and she observed that it was too expensive to buy regularly for her family. Which is just as well from my point of view, since it’s overprocessed pap (even if it is tasty) compared to stuff like Orowheat. Which is … also pretty damn expensive.

    Oh well.

  27. I bought some Pepperidge Farm white bread yesterday and determined that it’s probably cheaper for me to start baking bread again.

  28. They’ll be hitting the donut places next.

    Cops will strike if they go there. It’s the final frontier.

  29. “Tell him about the Twinkie.”

    “What about the Twinkie?”

  30. “Cops will strike if they go there. It’s the final frontier.”

    Most of the cops in Austin seem to hang out at WhataBurger.

  31. Our cops here in tiny town hang out at Sonic and DQ.

  32. I would hang out at Whataburger if I lived in Texas. But only at lunch. Maybe dinner.

  33. Leftists like monopolies.

    They’re easier to take over nationalize give back to the people.

  34. “What about the Twinkie?”

    This:

    And here comes the Hostess twist: because Tim Collins of Ripplewood, was a prominent Democrat, a position which allowed him to get involved in the first bankruptcy process in the first place, due to his proximity with the Teamsters’ long-term heartthrob Dick Gephardt (whose consulting group just happens to also be an equity owner of Hostess). In other words, the traditional republican-cum-PE scapegoating strategy here will be a tough one to pull off since the narrative collapses when considering that it was a Democrat who rescued the firm, only to see it implode in a trainwreck that has resulted in the liquidation of a legendary brand, and 18,500 layoffs.

    This is one of those things that you need a flowchart for; it’s that complicated. Or, as OED has recently allowed: omnishambles.

  35. So when’s the last time anyone here bought a box of Twinkies? The answer to that has a lot more to do with why Hostess is going out of business than unions.

  36. So when’s the last time anyone here bought a box of Twinkies?

    today to sell on ebay

  37. I bought a bag of Hostess powdered sugar donuts the other day.
    Ate the whole damn bag with two cups of coffee.
    I’m 5’11” and weigh less than 165 and I’ll do whatever I want…

  38. Decisions, decisions: do I explain to slippery why it is a dumbass or do I just call slippery a dumbass because it’s simpler and, in the long run, less aggravating.

    Slippery, you’re a dumbass.

  39. The answer to that has a lot more to do with why Hostess is going out of business than unions.

    your ignorance is showing

  40. i mean seriously mr slippeyslope when the teamsters think the bakers union are a-holes you got a problem with your understanding of twinkies

  41. Of course, there’s no way they could be going out of business because they make a shitty product that no one wants any more, that none of you even buy regularly.

    It must be the unions. Why, if the unions would negotiate, and Hostess could cut labor costs, everything would be just fine. Because the real problem – the thing that would make all the difference – that would get y’all buying a box of Twinkies per week – is if they could just cut the price by 15% and still make a profit.

  42. Short answer is their costs exceeded their revenue on a regular basis. By quite a lot.

  43. It’s all our fault for not eating enough Twinkies, it seems.

  44. “Of course, there’s no way they could be going out of business because they make a shitty product that no one wants any more, that none of you even buy regularly.”

    Reality based!

  45. Slipperyslope hasn’t yet loaded his business acumen module

  46. It must be the unions.

    it was one union namely the bakers. when the teamsters think you’re stupid pay attention

  47. Correct Slart – when you make a product for which there is very little demand, you fail. This is controversial to you? You think people aren’t buying Twinkies because they’re too expensive?

  48. I other news the GW Bush economy just fell apart because we had enough houses built and bankers wanted to be repaid too much money too soon. MAGIC!

  49. The Teamsters union is not officially honoring the picket lines, but many individual Teamsters are refusing to cross. Teamsters accepted a concessionary contract similar to the one the bakery workers rejected in September–which included a 10.5 percent wage cut and an increase of $76 per week in employee health and welfare payments.

    http://socialistworker.org/2012/11/15/hostess-workers-draw-a-line

  50. So, would you say it was labor, machine capitol, transport, overhead, packaging, or ingredient costs that were too high to continue with a profit? And which of these was easiest to change? And why is 92% of your old pay better than 0% ?

  51. when you make a product for which there is very little demand

    1)go on strike
    2)…….
    3)profits

  52. So, if demand is so low that the market collapsed naturally, then why didn’t competitors like Bluebird or Little Debbie go broke too?

  53. Again, our new friend is making assumptions with no backing. Is there any evidence at all that demand was the problem? If it was, why not simply scale back production?

  54. Part II: if low demand is the problem and not wages and benefits, why go tits-up because of a strike?

  55. machine capitol-> machine capital I am not referring to Trantor here. I am referring to money invested in depreciating production equipment.

  56. Hostess was making and selling just under a million Twinkies a day. So: no demand cliff, there.

  57. Oh well. I’ll have to switch to lady fingers and whipped cream infused with vanilla essence I guess.

  58. I’d better eat them fast due to the reduced shelf life!

  59. No demand?

    2.5 billion in sales … hmmmm …

  60. I can scarcely believe that we’re being chickenhawked over Twinkies. I mean, it’s not as if any of us are saying “eat more twinkies”.

  61. smears are us™ proggtards

  62. Of course, there’s no way they could be going out of business because they make a shitty product that no one wants any more, that none of you even buy regularly.

    That’s not accurate. As I said upthread, I shop at their outlet store every two or three months and buy bread, rolls, bagels and english muffins that I store in our freezer to use as needed. I don’t buy their snack products because no one here eats them anymore, but my kids did when they were younger.

    Hostess is closing its doors as a direct result of union actions. Strikers were on the radio today saying that they went on strike knowing that this was the likely result (losing their jobs), but they had to take that chance. Who thinks like that six weeks before the holidays? Hostess has been fighting a battle royal with the union since January of this year and have been in receivership for over six months.

    The names of Hostess’ snack cakes are trademarked and will undoubtably be sold to another baker, most likely RJR Reynolds or Nabisco. Then again, they may be sold to an overseas concern and those 18,500 jobs will be gone forever.

  63. “I can scarcely believe. . . ”

    Heh, that’s the beauty of the thing Slart: you’ve yet to develop your finely honed sensibilities. The Russians can teach you how.

  64. What you’ll see is “WonderBread” and “Twinkies” living on, sans the crappy Union workers

    “We have analyzed this opportunity very carefully for a few years now,” Metropoulos said in an e-mail. “Shedding the complications of the unions and old plants makes it even more attractive.”

    …as should have happened with GM. Can you imagine how much more robust GM would’ve been today, if it’d been given a chance to reorganize without unions? Why, it’d be able to compete with Nissan and Toyota, Volkswagen and Mercedes, all of which have energetic non-Union plants right here in North America!

  65. Additionally, the particular outlet store that I patronize(d) also sellers entire baker’s racks of bread, rolls, and other items to the nursing homes and residential living facilities in the tri-county area two to three times weekly. The population here is very poor and many people, primarily the elderly, the poor and many Native Americans shop at this store.

    The loss of the saving people emjoyed from shopping at the Hostess Outlet are going to be realized in higher costs to this vulnerable population. All because of union labor’s unreasonable demands.

  66. I really don’t give a shit about Twinkies or Wonder Bread but I’m kinda pissed about the Fruit Pies.

  67. Here you go SS. Just copy and paste and you’re golden with a creamy filling at whatever site you savor today.

  68. If only Hostess had diversified, instead of offering nothing for sale but yellow sponge cakes filled with marshmallow fluff; something other bakers make perhaps.

  69. No demand?

    2.5 billion in sales … hmmmm …

    Sure, they’ve got shelf space in every last grocery and convenience store in America, but really, no one buys any of their stuff.

  70. Solipsism thy name is slipperyslope.

  71. I’m betting on bimbo leigh

  72. Solipsismyslope only knows about the Hostess situation what he hears on MSNBC. Where of course what he hears is that Hostess kept paying all those bakers and teamsters by burning through cash reserves to produce and warehouse product nobody was buying, and that nobody running the company gave any consideration to going through bankruptcy reorganization to keep the assembly lines going — which would also have kept the paychecks flowing.

    No, as far as SS is concerned, Hostess management was stupid to keep trying to sell stuff nobody wanted, while the bakers’ union management was a bunch of super-geniuses for persuading their members they could reject the contract offer and go on strike, and this company that was on the brink of oblivion would give in and pay them bigger wages and provide more benefits. Paid for with the proceeds from stealing underpants, perhaps.

  73. Flowers Foods (Tastycakes new owner), Bimbo Bakeries, and McKee Foods (Little Debbie) are the trifecta of tasty snack cakes.

    Bimbo does have the best name, so I’ll go with that one, too happy.

    Pablo, you forgot vending machines. No one ever buys Twinkies or Donut Gems out of the vending machine. Ever.

  74. Bimbo bought a bunch of bakeries locally that used to be owned by Mrs. Baird’s and ButterKrust. A lot of the Hostess stuff in Austin was made by Bimbo under a license. So yeah I think they’d be likely a candidate to end up with the brands Hostess sells off. They started out as a Mexican company and moved in to service an immigrant market and eventually they started buying weaker bakeries and became part of the mainstream regional grocery store supply chain. Now (I think) I read that about half their business comes from the US.

    Their basic loaf sandwich bread kind of sucks though.

  75. BlueBird makes some decent snack cakes too many of which are clones of the Hostess and Dolly Madison and Little Debbie stuff. So even if we have no twinkies we’ll have creme filled sponge cakes. And of course fried fruit pies are hardly unique to hostess. Fake Snowballs are common. Some of the fake Ding Dongs are better than the real thing (which I thought tasted better and breshed back when they came wrapped in foil instead of sealed mylar pouches) and have a smoother fudge coating.

  76. and breshed -> and fresher

  77. I never liked Hosstess’ snacks too much. Their fruit pies are the bomb, though.

  78. the chockit pies are worth the calories every so often for sure

  79. fattyfeets sounds like beck and pies

  80. That’s mean, nr. No pie for you, mister.

  81. Bluebird’s ice cream sucks walrus dong, though.

  82. I’ve never heard of it. We have Blue Bunny ice cream here, but I never buy it since it’s awful. Braum’s is cheaper even though they are a stand alone store and tastes better. There milk is cheaper than anyone else’s too.

  83. ok sorry but can i call chrischristie a fat bastard?

  84. Slippery, you’re a dumbass.

    It bears repeating.

  85. Yes you may, nr. And often.

  86. Actually,

    I think Slipperyslope is on to something. I’m not trying to get in the way of anybody who has a beef with the guy, but economically speaking, no one wants their product–he is, in other words, entirely correct. Hostess Brands used to be Interstate Bakeries–a perpetual death ward resident–and their financials are nothing if not ugly.

    In 2000, Interstate Bakeries had $3.5 billion in revenue; they now have $2.5 billion. Losing 29% of your revenue when you’re not cash flow positive to begin with is real, real bad. Their financials are a great illustration of what a dying compant looks like.

    The story is definitely complex as its management has varied from friendly old timers in the 70s to Wall Street private equity, where things started to go off the rail (natch), to a series of asset-sales and re-org’s. Suffice to say not a lot of geniuses have led this business.

    Most people waxing nostalgic about Hostess et al. are affecting some sort of ironic nostalgia; they’re not buying the product is for damn sure, no matter what price it’s sold at.

  87. For fuck’s sake.

  88. it makes you wonder what other companies the piggy piggy union thugs are raping to death

  89. Total shit show. Unions, product that’s nightmarishly bad for consumers in volume or over time, PE ownership, no pricing power and debt held by HFs.

    That HB made it to late this year is actually a testament to a certain inventiveness on the company’s part.

  90. Anywhere there is unions you either have a very good situation–near monopoly, public-sector–or brutally narrow margin, low barrier to entry situations. It always ends horribly.

    Only thing worse is the management’s of many of those places.

  91. What nonsense.

    They could have retreated to core brands and had a healthy business. $2.5 B in revenue is not the same thing as “Most people waxing nostalgic about Hostess [...] they’re not buying the product is for damn sure.”

    Going tits up rather than streamlining is all about a union suicide in a core process in the supply chain.

    Btw, what’s this? “Unions, product that’s nightmarishly bad for consumers in volume or over time, PE ownership, no pricing power and debt held by HFs.”

    You want a few dozen counter examples or do you just want to retract your editorial comments?

  92. As long as you’ve motivated me to talk business, I’m also curious as to why the fall-off in business would matter in any sort of ROI calc for a PE firm that only purchased because the operation had contracted and they were able to buy in with that fall-off factored in.

    They obviously saw the value of those brands and those facilities. They just didn’t count on people voting to put themselves out of work.

  93. Because shut up, bh. At least that’s what I’m getting from his commentary.

    I wasted lots of time in business, I’m also reading.

  94. Ehhh, Roddy isn’t a “shut up” sort of guy, leigh. He’s a good sort, in my opinion.

    I think he’s a pre-Reformation John Stossel. We just have to turn him to the dark side.

  95. I like Roddy, bh. He’s just wrong about this, imo.

  96. This…

    Anywhere there is unions you either have a very good situation–near monopoly, public-sector–or brutally narrow margin, low barrier to entry situations. It always ends horribly.

    …is why unions are only succeeding in public-sector environs. Elsewhere, they are as parasites on the body of business; stupid, self-destructive and quickly making themselves obsolete. If it weren’t for the public-sector unions we’d be nearly rid of them already.

  97. Oh. Yeah, it’s Blue Bunny that sucks walrus dong.

    Hey, our trolls have gotten less tenaceous of late. Maybe it’s because no one wants their product.

  98. Serr8d I think gets where Im going. Unions can only be tolerated when there is no realistic threat of competition. They are politically powerful anachronisms.

    BH, The revenue drop dude! They lost ~ 1/3 of their business and they weren’t cash flow positive to begin with. They filed Chap XI in 04 and blamed ATkins diet. The Hostess label, as we both can guess, will likely get picked up in Bankruptcy Court because it is worth something.

    Bread and baked goods are like beer in their own way–undergoing a renaissance, but a specific kind of a one–a craft one. Open a brew pub = money and some prestige. Open another place offering silver bullets and bud lite? Good luck.

    Bread is the same way; people are paying $$ prices for it. But people want craft versions, not MA in Chemistry WonderBread. the age of the white bread, high fructose corn syrup mass market stuff is going away. There will always be a market for it, just not what it was.

    Look at Wonder Bread shelf space at a super market in a middle- to affluent area vs a lower middle or poor area. Big difference.

  99. They lost a third of their business over a dozen years. That’s hardly a sudden shock that you can’t adapt to in time. It’s a slow enough change that you can reduce operating expenses to keep pace with the loss of revenue.

  100. GM was accused of bad making bad management decisions, because GM signed off on overly generous compensation packages for the unions when times were good. I suspect Hostess did the same thing.

    However, when sales and revenues go south and management goes to the union to renegotiate, the union inevitably tells management “tough, you signed, you pay” without recognizing that when times get lean, it’s time to suck it up, and take the hit.

    Unions never want to recognize there are business cycles and renegotiate contracts. Unions would rather see 20 percent of employees laid off versus a 20% cut in wages and benefits. Unions never want to understand that a company generally needs a minimum number of employees in order to make it worth the time to turn on the lights. Drop below that point, and it’s time to close the doors.

  101. Crap.

    “GM was accused of bad making bad management decisions” should be “GM was accused of making bad management decisions”

  102. union piggies nope nothing under the tree for your piglets this year

    Losers.

  103. You guys are making my point exactly. It’s not really so cut and dry. Yes a 30% decline in sales over a dozen years should be enough lead time to react, as is 2 major cultural shifts in food preferences. Somehow management didn’t quite get there though.

    The era of Hostess being a Proctor & Gamble advertiser, iconic brand are over. “I Pick Hostess because it’s fresh!” or whatever the slogan was, no longer cuts it in this day and age.

    The American palate has changed and sharply so. The product is indefensible as a regular snack for 5-10 year olds, but that’s the only way its economics work.

    Their management through the mid 2000s, continued to see their bread/baked goods as nationally rooted brands; they are not, really.

    Their cost structure was too high and food price inflation was a killer. Who is going to regularly pay $2 for a pack of Twinkies?

    Debtholders took a long, hard look and decided that taking another haircut was bad. In their $$ view, selling the pieces was going to lead to a better recovery.

    Lot of things went wrong for this company for a really long time.

  104. still time to put furby on layaway at kmart

    but if you think about it that might not be wise cause you ain’t got no job

  105. Of course, you need to add unions into the equation. They make every situation worse by removing elasticity of wages.

  106. I bought the last 2 10 packs of Twinkies on the shelf at the local Hostess Outlet. Everything is on sale at 1/2 price. The store was packed.

    I’m not big on sweets but i figured i would stock up on Twinkies so when the grandkids are old enough to watch Zombieland they would have a better understanding of the quest.

  107. http://dealbook.nytimes.com/2012/11/19/hostess-and-bakers-union-agree-to-mediation/

    Hold the presses! More judges are apparently going to throw legal shit at the public wall and see if it sticks. Doom is deferred for the moment, probably as means of stacking the decks for upcoming obligatory lawsuits akimbo.

  108. I just saw that on the local news.

    What the hell is there to mediate if the owners have decided to dissolve?

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