No More Twinkies, But Hostess Execs Want Their Cake
I just finished reading the story in our paper about the demise of Hostess foods, and I almost puked. Not because I’d just wolfed down my last stash of Twinkies. No, it was the final paragraph in the article, which quietly stated that “besides liquidation, Hostess has asked for permission to pay bonuses to some executives.”
Are you kidding me? They want a bonus?
Never mind that 18,500 Hostess workers, on Thanksgiving, are now out of work.
Never mind that these executives somehow managed to wreck a business that sells such iconic products as Wonder Bread, Ding-Dongs, and Twinkies, going bankrupt twice in ten years. How do you screw that up?
Seems pretty obvious: Why waste all that money keeping a company going when you can pocket the change and jump, leaving the rest of the crew to crash and burn.
But before you jump, be sure to blame it on the union workers. Those workers who were too greedy to swallow yet another pay cut, this time for eight percent. Or see their pension fund gutted, and their benefits slashed 17 percent. Or take these demands from a CEO who saw his own personal salary triple from $750,000 to roughly $2.5 million.
And then, just icing on the cake, announce that you plan to pay $1.75 million in executive bonuses.
We’ve seen this all before of course. The workers get to go home and tell their families they’ve lost their job and their livelihood, and the corporate suits head for the golf course.
It’s enough to make any honest person puke.
And the worst part is: there doesn’t seem to be anything we can do about it. If we’re lucky enough to still have a job that pays a decent wage, we’re going to keep our heads low and our mouths shut. Not that this will save us.
Do you think Congress or the White House is really going to help us out? With all the money pouring into their coffers from who knows where, those boys may hoot and holler but in the end they’ll sit tight and serve those who’ve bought their services. And if you don’t believe that, then maybe you better get back on the turnip truck.
For a while it was entertaining to watch those shaggy “Occupy Wall Street” kids, shaking their fists at corporate America and providing us with a little amusement on the news. But that’s all it amounted to, like most of the news anymore: entertainment.
On the other side you’ve got the Tea Party supporters, brandishing their swords and demanding free enterprise unfettered by government. In another world that might be a good idea, but apparently nobody’s told them that the corporate-political machine is playing them like puppets on a string. In the end, they’re nothing but bouncers for that top one percent.
Well I do have one idea, and in the past it’s proved pretty effective. I know a guy that raises chickens and he says he can come up with a bunch of feathers. Can anybody out there come up with some hot tar?
George Hunsucker
Northland
7 months agoWorkers elected their union reps. who refused to negotiate a different contract AS THE TEAMSTERS ALREADY HAVE Tim. The baker’s union choose to say NO and the company choose to close the business.
What part of choice don’t you understand? This is just another case of unions causing the destruction of a company by refusing to accept reality.
Mark Hastert
7 months ago“another case of unions causing the destruction of a company by refusing to accept reality.”
Actually GH if you’ll do a little more reading you’ll find that the management of Hostess made a great many selfish moves that contributed to the demise of the enterprise. It seems that they too put self interest before the health of the company. They followed the Bain Capital strategy of paying themselves handsomely after incurring huge debt. The unions aren’t any more responsible than the management.
Steven Fetter
66223
7 months agoOn another front, Mayor Bloomberg is celebrating the demise of this menace to society. Now it is on to Big Cola.
Suzuki Ishikawa
7 months agoMark, I don’t see how it’s any different than GM. Before the great GM crash, GM was giving its executives lavish wages/bonuses. GM had a private airplane to fly these people to DC and allowed them to talk on the House for a bailout.
GM incurred huge debt and eventually went into bankruptcy. But yet no one is arguing that we shouldn’t have bailout GM even though GM did exactly the same thing as bain capital.
There’s no point in blaming Hostess Execs unless you’re willing to blame every major corporation’s exec
George Hunsucker
Northland
7 months agoWhich he is Suzuki…. Businesses are bad, unions are good in the la, la land of libs….
Matt Henry
7 months agoFirst off, why all the hate? I can FEEL the vein throbbing in this dude’s head. They make medication for these hostility problems nowadays….
Second, what a great metaphor for the meatheads clamoring to ‘tax the rich’ as a way out of our fiscal struggles. You can make all the claims you want about mismanagement at this company and whether or not they were worth the compensation that they were getting considering the result, but the blanket hatred and anger over this request of the court is ludicrous. It amounts to a pittance of the total value of the company, it is supposed to be compensation for work that has to take place (the “winding down” of the company) AFTER they are completely out of business (not a “bonus” for work already performed) and when divided by the 18,500 workers that are out of a job we are talking about <$100 or so per person, so rejecting or accepting makes absolutely no difference to anybody, anywhere, especially the union members. To blame "executives" for this mess because of this request for funds from the assets to organize the liquidation for the whole mess at Hostess is, well, just stupid.
Sort of like the “tax the rich” mentality of the left right now. You can blame everything on the greedy rich, about how they are not paying their “fair share” (although they already pay the lion’s share of the taxes) and all the while you can tax them into complete oblivion and barely make a dent into the deficit or the debt. Tax increases at this point are not about clearing up our financial mess; they are about radical egalitarianism. Obama himself said he would sacrifice economic growth for more equality. Well, we are about to see what it is like for ALL of us to have less. Wooopeee!
Until people on the left drop their hostility toward anyone who doesn’t share their ideology and can look at least somewhat objectively at the facts we will continue to slouch toward Gomorrah.
Matt Henry
7 months agoTo be fair, GM never went into bankruptcy. They were bailed out with tax money. Bankruptcy would have been much preferable as GM would have been able to renegotiate all of the contracts that were and continue to crush that company. It now looks like real bankruptcy is not that far behind.
A more apt comparison is to look at the bonuses paid to government-sponsored execs at GM during their bailout period for EXACTLY the same reason that Hostess is seeking them; to manage the transition period into the new “entity”, in this case liquidation. Of course, the gov’t approved their GM exec bailouts. Where was the caterwalling and vein popping then, Tank?
Phil Cardarella
7 months agoActually, Suzi, I am willing to blame any management that cannot … well, manage.
Heres the fact: If you cannot turn a profit selling Twinkies — a market in which you hold a virtual monopoly — you should not be allowed to run a business. You should not be allowed to have a lemonade stand on your curb. At best, you are incompetent. At worst, you are a Bain-wannabe vulture capitalist.
One of the things that the Feds did with GM was FIRE the CEO. Then they were able to negotiate with the workers because the workers trusted them. This is why European corporations havea workers rep on the Board of most corporations.
How about this as a liquidation plan: Turn over the company to the workers. Bet it runs at a profit within two years.
Suzuki Ishikawa
7 months ago@Matt, actually GM did go into bankruptcy. They didn’t liquidate like hostess might be doing under chapter 7 but they did go into restructuring chapter 11 bankruptcy.
http://www.motorsliquidationdocket.com/
The bailout was to pay off some of GM’s debt, used for the government to buy a stake in the corporation, and used as a cash flow for the new GM.
Suzuki Ishikawa
7 months ago@Phil, GM’s new CEO got paid 7.7M last year. So the new CEO is exactly as the old CEO.
A CEO does not “manage”, that’s the CFO. The CFO is the driver of the corporation. The CFO determines the risk and benefit of future actions. A CEO is nothing more than the face of the corporation.
Also you can’t just “turn over the company” to workers during liquidation. Liquidation is when you sell off all your assets and IPs and use the funds to pay off creditors.
If the workers want to take over the corporation, they can buy the corp during liquidation or buy majority share of the corporation and send it to chapter 11.
Matt Henry
7 months agoFair enough. But the way I understand it they certainly didn’t go through the regular process, their bondholders got shafted, and not only did they exit the process still beholden to the unions but in fact now owned in large part by them. Never would have happened in a regular bankruptcy proceeding.
Matt Henry
7 months agoPhil needs to read Atlas Shrugged.
Mark Hastert
7 months ago“I don’t see how it’s any different than GM”
Oh I agree completely. When labor and management have an adversarial relationship they are in a continuous battle to take from each other. A healthy union-management relationship puts the health of the enterprise first so that all prosper commensurate with their contribution. My objection was to GH’s one sided characterization.
Mark Hastert
7 months ago“Phil needs to read Atlas Shrugged.”
It’s no wonder that some conservatives are so unrealistic. Their whole philosophy is based in a fiction. Ever wonder how all those genius ideas in Galt’s Gulch came to fruition? Did John smelt the steel, build the factory and perform all the labor? Did Midas build all those inventions all by himself? Rand conveniently omitted any discussion of the contributory value of labor in her fairy tales.
Matt Henry
7 months agoAS is a great fictionalized account of all that is wrong with the progressive mindset but is far from the “basis” for conservatism. The idea of Phil’s that a corporation can be turned over to “workers” and become magically profitable is ridiculous and well parodied in AS. In fact it this very reason that Galt takes his ideas and disappears. But the “basis” of conservatism is grounded in a belief in individual liberty and enlightened self interest, both of which are ideas that have become anathemas to the left.
Animal Farm might also make a nice parody of Phil’s idea. How long would it be before the union boss pigs were living in the Farmer’s house, wearing his clothes and dining at his table walking on their two legs and declaring how “some are more equal than others.”
No, I’ll tell you what is a fairy tale. The meme that, after 60 years of watching great-society interventionist socialista redistributionist policies making poor communities poorer, more dependent on government goods and services, more illegitimate, less well educated, more likely to be in jail and almost devoid of upward mobility (ad nauseum) that we need MORE of these programs. Or that “rich” people are the problem. Now THAT is a fairy tale that would make the Grimm brothers salivate.
Dan Lauer
7 months agoWhy the sniveling swipe at the Tea Party? Tea Partiers champion limits of our Federal Government as defined in our Constitution, not “free enterprise unfettered by government.” Thats the job of the Libertarians.
Not everyone found the Occupy movement to be pure entertainment. Many Americans incurred real disruption and expense due to Occupy antics. Ask municipalities, police departments and sanitation workers how entertaining they found the Occupiers.
Hostess was burdened with an unsustainable cost structure. Blame management if you want but you can’t sell a Twinkie for $10.00.
George Hunsucker
Northland
7 months agoBankruptcy judged agreed to liquidation today…. Merry Christmas, compliments of the Baker’s union…..
Dan Wood
7 months agoHow is it that Hostess can pay it’s workers less money than other bakeries in the same market, like Bimbo Bakeries, and yet still go under? I suppose that’s the unions fault. It’s also the union’s fault that the execs gave themselves between a 60 and 300% raise increase too. I suppose it’s also the union’s fault that they already made concessions in the first bankruptcy as well as taking a pension and benefits cut.
Anybody in their right mind would have told them to blow. 2 bankruptcies in 7 years? And wanting to cut the pay of your workers both times while giving yourself a pay raise?
Whatever happened to companies wanting to pay their workers a liveable wage and did things that were in everybody’s best interest not just the shareholder’s, CEO’s, CFO’s, COO’s, and the rest of the executives?
Merry Christmas compliments of greedy executives.
Mark Hastert
6 months, 4 weeks ago“enlightened self interest”
.. and therein lies the catch. Enlightened self interest isn’t I’ll get mine by taking from you. As I wrote earlier, the adversarial relationship between management & labor is destructive. A cooperative relationship of MUTUAL enlightened self interest strengthens the enterprise and all stakeholders. The dead-enders on both sides need to reorient their thinking or fail.