Long goodbye for Twinkies
Perhaps the most intriguing question regarding the demise of the venerable Twinkie is how it, along with the menu of other products made by Hostess, lasted as long as it did. Twinkies and Hostess Cupcakes may be the stuff of legend, but they seemed anachronistic in a market that put greater stress on healthier foods.
The company’s attempts to introduce new products in tune with the times largely failed. Hostess finally collapsed, brought down by the accumulated weight of problems unresolved.
Hostess traces its origins to a baking company founded in 1927, which over the years bought up competitors — and in the process acquired three dozen plants and more than 370 labor contracts.
Many of those agreements imposed byzantine work rules. Wonder Bread and Twinkies couldn’t be transported on the same truck. Drivers couldn’t help load vehicles. In some cases, shifting inventory from one place to another required a separate worker who had to arrive in a separate vehicle.
It wasn’t the Teamsters that struck and tipped the company into liquidation, however; that union agreed to give-backs. It was the bakers, organized as the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, who walked out.
An attempt at mediation failed, and last week a bankruptcy judge allowed liquidation to proceed. The company said about 15,000 of 18,500 workers would be laid off.
The bakers’ walkout may have been the proximate cause of Hostess’ demise, but labor troubles were only one item on a larger menu of problems, including aging bakeries, massive debt and CEO turnover — a half-dozen in the last 10 years. Hostess spent eight of the last 11 years in bankruptcy.
AFL-CIO President Richard Trumka called it a story of “Bain-style Wall Street vultures” enriching themselves “by making America poor.”
Yes, Hostess boosted management compensation while trying to push through wage and benefit cuts. But the private-equity fund controlling the company was founded by a major Democratic Party donor, Timothy C. Collins, who wanted to save struggling companies with unionized workforces.
His fund — Ripplewood Holdings — invested $130 million in Hostess. Most of that may be lost.
Many of the company’s brands may be bought by other companies. Some of its bakeries — including those in Lenexa, Booneville, Mo., and Emporia, Kan. — may well fire up again. But the bottom line is that in a world of tofu and 10-grain bread, Hostess was unable to change, and a dynamic economy imposed the sad, all-too-familiar penalty.
Johnathon Busby
5 months, 3 weeks agoThey’ll be sold as a piece of intellectual property at the bankruptcy, then produced by whomever bought that right. Twinkies will be back.
William R. Nelson
5 months, 3 weeks agoKrykee doodle!
Frost warnings in h3ll! A KC Star editorial that actually accounts some blame for this company’s demise squarely upon unreasonable union demands!
JR Beillenhouser
5 months, 3 weeks agoYes, twinkies will be back, and having gone through a proper bankruptcy, will give the opportunity for the purchasing company to do well with them.
For all those that kept blaming management, it is very clear in this article that the assortment of rules put on the company by the unions led to it’s demise.
The purchaser will be in a good position to actually make money with these products.
Please keep this in mind when you next see GM ask for more money and go bankrupt again.
http://www.forbes.com/sites/louiswoodhill/2012/08/15/general-motors-is-headed-for-bankruptcy-again/
Phil Cardarella
5 months, 3 weeks agoAh, yes, those evil unions, right?
Here’s the deal: If you cannot make a profit selling Twinkies, you are not a very good capialist.
Unions are not suicidal — but they are distrustful of guys who claim bankruptcy and take bonuses for the Board. Most big European corporations avoid this by having a worker’s rep on the Board — and by paying CEO’s rationall amounts, not pirate booty.
Phil Cardarella
5 months, 3 weeks agoOh, and i doubt it was the Union guys who decided to stick with white bread only.
Duh!