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Hostess To Close; No More Twinkies 674

Posted by Soulskill
from the a-true-tragedy-of-our-time dept.
RenderSeven writes "In a press release issued today, baker Hostess Brands asked a bankruptcy court for permission to close all of its plants and sell off their assets, immediately laying off 18,500 workers. Citing high labor and rising health care costs, increasing competition and growing consumer awareness of healthy foods, Hostess says it can no longer operate without union concessions. A crippling strike has already shut down operations at all facilities, and while the Teamsters Union has ratified a new contract to keep Hostess in business, the Bakers Union has refused saying they would rather see the company closed than accept pension cuts. The Teamsters union is urging the bakers union to hold a secret ballot on whether to continue striking; citing its financial experts who had access to the company's books, the Teamsters say that Hostess' warning of liquidation is 'not an empty threat or a negotiating tactic' but a certain outcome if workers keep striking. If your late-night programming is fueled by Twinkies, Ding Dongs and Zingers, better stock up now." [Editor's note: A whole bunch of users submitted this news. I worry about our readership's cholesterol levels.]
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Hostess To Close; No More Twinkies

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  • by broginator (1955750) on Friday November 16, 2012 @03:05PM (#42003991)
    Tallahassee said to be inconsolable.
    • It is a conspiracy. This is, obviously, the first step in zombie world domination.

    • That grocery store was fully stocked [youtube.com]. It was odd that they ran out of one particular item. Now, however, it makes perfect sense! Twinkies were discontinued, then zombies showed up, and now Tallahassee can't find any.
  • by alphatel (1450715) * on Friday November 16, 2012 @03:07PM (#42004025)
    Or bail them out [whitehouse.gov]?
  • WTF!?!?!? (Score:5, Insightful)

    by TheCarp (96830) <sjc@carpane[ ]et ['t.n' in gap]> on Friday November 16, 2012 @03:08PM (#42004031) Homepage

    Talk about unexpected events! I would expect the investment to be rolling in with the recent wins for pot legalization. I mean, isn't that the old joke? If pot were ever legalized, Hostess would clean up?

    What will the people of colorado do?

  • GO UNIONS! (Score:3, Insightful)

    by Anonymous Coward on Friday November 16, 2012 @03:08PM (#42004037)

    Not.

    I wonder what these idiots were thinking.

    • Re:GO UNIONS! (Score:5, Insightful)

      by Anonymous Coward on Friday November 16, 2012 @03:12PM (#42004125)

      Probably that the people at the top were getting raises in the millions of dollars while the "idiots" were having pay cuts thrust on them?

      • Re:GO UNIONS! (Score:4, Insightful)

        by tatman (1076111) on Friday November 16, 2012 @04:16PM (#42005149) Homepage
        Have you done the math? Hostess employs 18K people. Assuming they earn minimum wage, which varies between states so lets just assume its $8 hr, thats $148,000 an hour for salary. Or about $1.1 million per day on salary. Even if all of the executives are pulling $100M a year total, cutting the CEO salary to total of $1M total, would only pay the salaries of everyone else for about 3 months. At the end of it all, the total executive salary is a small portion of a multi-billion dollar company. There is a lot more problems than just a few executives making big bucks. I know it doesn't seem fair that one person makes millions and another doesn't. That doesn't mean that's the problem. It was the bakers union that went on strike. Even the other unions [cnn.com] involved were upset with the bakers union for their strike for fear it would cause the company to collapse. So its not like this is just management vs union battle. This was one union making a decision that effected the entire company. This was one union ignoring a lot of other facts about the business.
        • Re:GO UNIONS! (Score:5, Insightful)

          by HeckRuler (1369601) on Friday November 16, 2012 @04:53PM (#42005651)
          Still, the exiting CEO Brian Driscoll taking $1.5 million on his way out, just last March, is kind of a slap in the face when he lead the company to the verge of bankruptcy. Also, executives got raises up to 80% in 2011. What's not fair is that management got raises while simultaneously doing a very poor job, axeing jobs, demanding wage cuts, and screwing over pensioners.

          The union striked, the company folded. That sucks. But the real failure here is with management. All this didn't happen over night. They've been headed here for a long time. And with...what... SEVEN CEO's in the last decade? Do you really think anyone has been steering the boat?

          Hey, sometimes companies fail. But when that line on the chart starts to encroach on the bottom line it shouldn't be just the workers that take the brunt of the hardship to keep it all afloat. Of course, when you ask a professional like a CEO to take a pay cut, they simply leave (with a bonus) and you have to hire another one. And so you have a death spiral as a procession of CEO fuck shit up. Heaven forbid we get a blue collar guy leading the company.

          Hostess also had the problem that they were a declining company that still had the burden of a larger company's pension plan. There's no good solution to that. The pension system doesn't work so well when the size of the company grows and shrinks.
          • Re:GO UNIONS! (Score:5, Insightful)

            by johnlcallaway (165670) on Friday November 16, 2012 @05:17PM (#42006027)
            Really?? So it's OK for the unions to have a contract, but not the CEO??? The unions have their negotiating team, and so does the CEO. Both negotiate to get the best deal they can, based on (perceived) market conditions for their skills. I'm sure if you walked up to your next employer, said you wanted a million bucks a year in salary, and they agreed ... you'd take it too! But you can't because there are thousands, maybe tens of thousands, of people out there with similar skill sets that will do it for less.

            Chastising the CEO for having a contract that is overpriced while support a union contract that is overpriced is a bit hypocritical.
            • I'm not particularly familiar with the bakers union's contract. Do you know if the run of the mill guy has a severance bonus? Why do CEOs get severance pay out of the company coffers while workers get unemployment out of the government's coffers?

              You know how people complain about the welfare queens that learn how to work the system? Jumping from job to job just long enough to collect unemployment. They're bad employees but not bad enough to get canned until they qualify for the benies. Those people are ba
            • Do the workers (Score:5, Insightful)

              by publiclurker (952615) on Friday November 16, 2012 @06:59PM (#42007311)
              get their friends to set their salaries like the CEO does? If not, then the hypocrisy is on your side.
        • by xmundt (415364)

          Hum...according to a quick search, the CEO make $2.5 million/year, and, most of the rest of the upper level management folks are making between $700,000 and $900,00. While that might not keep the company doors open, it would certainly help give the many, near-minimum wage employees a larger separation bonus.
          The fact that management was asking for an 8% pay cut, and a 17% increase in employee contributions to the health plan costs had to hurt most of the workers.

        • If the Teamsters think your union is doing something stupid, it just might be.

    • Re:GO UNIONS! (Score:5, Insightful)

      by ByOhTek (1181381) on Friday November 16, 2012 @03:14PM (#42004161) Journal

      While I'll agree that unions can be quite a thorn in the side of effective business (they once had a lot of benefit, these days though, they seem more of a lamprey), when the company says this...

      Citing high [...] increasing competition and growing consumer awareness of healthy foods [...]

      I have to question if they could have stayed in business anyway. If you can't figure out "Hm... people want healthy food, maybe I should make healthy food" or deal with competition in a mostly capitalistic environment, then you probably shouldn't be in business.

      • Re:GO UNIONS! (Score:4, Insightful)

        by aicrules (819392) on Friday November 16, 2012 @03:23PM (#42004319)
        They could have stayed in business by cutting costs because their product wasn't as in demand. But just like our wonderful country's population, the bakers union would rather lose everything that take a cut.
        • Re:GO UNIONS! (Score:5, Informative)

          by falcon5768 (629591) <Falcon5768.comcast@net> on Friday November 16, 2012 @03:57PM (#42004873) Journal

          They could have stayed in business by cutting costs because their product wasn't as in demand. But just like our wonderful country's population, the bakers union would rather lose everything that take a cut.

          hey if the unions have to take a cut, the management should too, but the truth there was they were getting a 80% RAISE. If we want to be 100% honest here, we should drop the anti-union rhetoric because the truth is they had nothing to do with it. Hostess is owned by a group of venture capitalist firms who put their own people in charge of the company and completely tore it up from the inside out. They eliminated their distribution network, and increased profits by dismantling production to the point that it was impossible to go forward, then used the Unions as a scape goat as they go to scrap the whole company. The Unions had nothing to do with what happened as much of this was done before their contract even went up, including the scrapping of 9 of the factories. Anyone saying the Unions did this is buying the PR line and not looking at FCC filings for the last 3 chapter 11s they issued. I mean they had 7 CEOs in TEN YEARS from Christs sake.

        • Re:GO UNIONS! (Score:5, Informative)

          by royallthefourth (1564389) <royallthefourth@gmail.com> on Friday November 16, 2012 @04:24PM (#42005245)

          It's much more than just "a cut"

          The contract Hostess wants to impose on BCTGM workers includes:

                  -- An immediate 8 percent wage cut.

                  -- Shifting 20 percent more of health care costs onto the workers (for some workers, this would mean an increased cost of $240 a month for medical insurance).

                  -- Eliminating retiree Medigap insurance, which covers gaps in Medicare.

                  -- Eliminating Pension Supplement to pay health and funeral costs.

                  -- Closing an undisclosed 10 to 12 plants.

                  -- Eliminating the eight-hour day, which would mean no time-and-a-half pay after eight hours per day.

          In addition, the company illegally froze pension contributions mandated under the contract for all of 2012, in violation of federal law. This is still being contested before the National Labor Relations Board.

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

          • -- An immediate 100% percent wage cut.

            -- Shifting 500% percent more of health care costs onto the workers (for some workers, this would mean an increased cost of $4000 a month or more for medical insurance).

            -- Eliminating retiree Medigap insurance, which covers gaps in Medicare.

            -- Eliminating Pension altogether

            • by pnutjam (523990)
              Not true, they will receive wages under unemployment insurance and have the time to look for a better job, possibly they will qualify for retraining expenses. In Indiana you can't put your kids on the state's health plan for kids if you get a massive pay cut, because they had and still qualify for existing coverage. However, if you get canned because your company closes your kids will qualify. You might qualify for some health program for adults in some states.

              It's not like the union was unwilling to comp
        • by Rakarra (112805)

          They could have stayed in business by cutting costs because their product wasn't as in demand. But just like our wonderful country's population, the bakers union would rather lose everything that take a cut.

          Maybe they shouldn't take a cut.

          I don't think -any- company is worth sacrificing your family's well being just to keep it afloat, especially if the guys at the top aren't willing to sharply cut their own salaries and bonuses. If the only way to keep a company alive is to give subsistence-or-worse wages and no benefits, then that company shouldn't exist.

          You seem to be under the assumption that the factory workers were living large and can afford to take a big cut.

          Hostess couldn't change with the times. They

      • by skids (119237)

        They had no intention of staying in business. Wall Street entities that were planning on selling Hostess as scrap decided they'd try to milk some PR out of the whole process.

      • Re:GO UNIONS! (Score:5, Informative)

        by amicusNYCL (1538833) on Friday November 16, 2012 @04:03PM (#42004949)

        I have to question if they could have stayed in business anyway. If you can't figure out "Hm... people want healthy food, maybe I should make healthy food" or deal with competition in a mostly capitalistic environment, then you probably shouldn't be in business.

        If they were less profitable than in the past then there would have been changes they could have made, like laying off a percent of their workforce or closing several factories or bakeries. It sounds like the unions didn't want them to do that, though. So they went back and proposed an 8% wage cut for the workers that would gradually scale back up, and the bakers union went on strike. So now they don't get anything. The people running the business will turn out fine though, they will sell the various brands to someone else and give themselves a nice going-away present, while the unions probably won't get anything (which I'm actually fine with).

    • Re:GO UNIONS! (Score:5, Insightful)

      by im_thatoneguy (819432) on Friday November 16, 2012 @03:21PM (#42004289)

      I wonder what these idiots were thinking.

      They were thinking they would rather work with a new company who has a product consumers want to buy instead of going down with a sinking ship that would bleed them dry on the way down.

      If hostess can't properly market and sell products then they should go bankrupt.

      I've seen this happen numerous times: a company starts doing poorly, they ask their employees to take cuts. The employees take cuts. The company keeps doing worse, the employees even sometimes start working for free "don't worry we'll turn this around soon." A few months later the company declares bankruptcy and everybody gets fired anyway and the company refuses back pay.

      Hostess could have sold to another company which wanted to buy them but they said no. As the article mentions, Pringles was doing poorly, it sold off and now it's incredibly successful because it got new management and marketing.

      I haven't eaten a hostess product in years. When I think hostess I think truck stop 10 year old Styrofoam. I can't remember the last time I saw someone eat a Hostess product. Cutting wages isn't going to help. The sooner its property and assets are sold off to someone who can either reinvigorate the brand or put its kitchens to better use the better imo.

      • by roc97007 (608802)

        >> I wonder what these idiots were thinking.

        > They were thinking they would rather work with a new company who has a product consumers want to buy instead of going down with a sinking ship that would bleed them dry on the way down.

        Then why not quit and go work for another company?

        • Because they as individuals own homes, have families, established roots, and don't want to live as wandering gypsies.
          Because they collectivly, the union, work at THESE plants/factories/bakeries? (do they bake twinkies? I thought they were just extruded). Unless you want them to organize some sort of mass exoduse, the bakers union serves the people working at the bakery. Killing the old boss to get a new boss IS how they go work for another company.
    • Re:GO UNIONS! (Score:4, Informative)

      by Fulminata (999320) on Friday November 16, 2012 @03:21PM (#42004295)
      They were probably thinking about previous concessions they'd made only to see that money go to executive bonuses and attorney's fees instead of the capital improvements that the money was supposed to be spent on. http://www.vendingmarketwatch.com/news/10829363/bctgm-union-responds-to-hostess-facility-closings

      They were probably also thinking of the 300% pay raise that the CEO gave himself while preparing for bankruptcy, along with the lesser raises other executives got at the same time.

      I'm still not convinced this was a smart move on the part of the Union, but I can certainly understand what they were thinking!
      • Re:GO UNIONS! (Score:5, Insightful)

        by danpbrowning (149453) on Friday November 16, 2012 @04:03PM (#42004945)

        I'm still not convinced this was a smart move on the part of the Union, but I can certainly understand what they were thinking!

        Management and their crony lawyers could have given up their entire salary and worked pro-bono all year, and it *still* wouldn't have been enough to bring the company out of the red. Employee salaries and pensions, however, are probably at *least* a billion dollars per year (if it's only a third of revenue, which I would guess is on the low end). So making cuts to salaries/pensions would actually do something.

        Your article doesn't have total amounts, but let's be generous and say that management gave themselves and their crony lawyers an extra $10 million per year. Sure, it's an insult and a slap in the face, but it's not enough to really impact the bottom line significantly.

        If $10 million in management excess is the reason the union employees voted the way they did, then they cut off their nose to spite their face.

        • by PhxBlue (562201)

          Management and their crony lawyers could have given up their entire salary and worked pro-bono all year, and it *still* wouldn't have been enough to bring the company out of the red.

          That might be so, but it would have at least shown that management's priorities were in the right place -- trying to take care of their people and their business instead of just lining their wallets.

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      They were thinking that they don't care if they kill a company, because making any concessions at all means that they're in a weaker bargaining position with any other companies.

      The lesson is clear: if you want to run a business, do it in a right-to-work state, or offshore. Hostess would probably be doing fine if they'd moved all production to Mexico ten years ago and trucked the product in.

  • by dywolf (2673597) on Friday November 16, 2012 @03:11PM (#42004095)

    Twinkies are already pretty valuable in the post apocalyptic world.
    Now they're rare too? Who needs gold when you got a twinkie warehouse!

    • by VortexCortex (1117377) <VortexCortex.project-retrograde@com> on Friday November 16, 2012 @03:46PM (#42004707)

      Twinkies are already pretty valuable in the post apocalyptic world. Now they're rare too? Who needs gold when you got a twinkie warehouse!

      That was my first thought too. I wonder if they'll sell off the twinkie MFG recipe / process. Be great if they would open source it. As a DIY guy, I've made my own twinkies, but they wouldn't last for 50+ years...

      I've found an alternative by accident: I "lost" a half eaten loaf of bread behind the stove. I recovered it a year later. While most breads will mold once exposed to air (or even without being exposed), HEB's store-brand bread did not mold. Not Even Mold will eat this stuff! I know what I'm making my Zombie Slaying Helmet out of...

  • And... (Score:5, Informative)

    by nimbius (983462) on Friday November 16, 2012 @03:11PM (#42004103) Homepage
    Bimbo Bakery, a 10 billion dollar Mexican multinational conglomerate baking company, is looking to purchase them (for the second time.) in fact, Bimbo could have easily purchased the entire thing while hostess was on the ropes, as hostess is only worth 2.7 billion in revenue, but hostess (headquartered in texas) declined to do so.
    • Re:And... (Score:4, Interesting)

      by guttentag (313541) on Friday November 16, 2012 @04:36PM (#42005425) Journal
      To put things in perspective... Bimbo is the world's largest baking company you've probably never heard of, but probably buy products from. They've been buying up established regional brands for years. Arnold, Boboli, Entenmann's, Orowheat, Sara Lee, Thomas (the English muffin brand), Wonder and a lot of others.

      They have a lot of bakery outlet shops,where you can buy these brands of baked goods for next to nothing about a week before their expiration date. When I first became aware of them I was a little surprised by the name ("Really? Someone in marketing thought this was a good name for a company that makes bread and cookies?"), but it turns out the word does not have the offensive connotation in Spanish that it does in English. from Wikipedia:

      The name "Bimbo" has no specific meaning in Spanish; thus, the name has not caused significant uproar as it would in the United States, where the word "bimbo" has a negative connotation. The official theory believes that the name Bimbo, coined in 1945 when the company was rebranded from its previous name, Super Pan S.A., is the mixing of the words "bingo" and "Bambi".[4] In addition, the innocent, childlike name went well with the brand image they wanted to build.

  • by Scowler (667000) on Friday November 16, 2012 @03:19PM (#42004267)

    While I have some nostalgia over Twinkies, the fact remains the stuff is utter garbage.

    Honestly, this stuff makes other junk food like Cheetos and Pop Tarts look healthy in comparison.

  • by tramp (68773) on Friday November 16, 2012 @03:21PM (#42004287)
    what happens to those pensions? They will be cutted anyway I suppose? Does not sound like the Bakers Union have a clue.
  • by guises (2423402) on Friday November 16, 2012 @03:23PM (#42004325)
    I know this is being framed as a unions / management story, and that's fine and at least partly true, but really: Hostess is losing money because their products are horribly unhealthy and people are wising up about it. People wonder why Americans are fat, and the reason is always because companies like Hostess haven't gone out of business sooner.

    When people learn about junk like healthy eating, companies like Hostess need to either reform or get replaced. And that's fine. There's nothing wrong with a company being replaced.

    I want to be clear that I don't dislike Hostess, but it appears that they have served their purpose.
    • by matthewd (59896)

      Well that, and I looked at the store snack section last night, and the Hostess products are twice the price of other options available. So, if you want a Twinkie fix and the store brand is just as good (I don't know if that's the case, I don't eat Twinkies) why pay more especially with the economy being so bad right now? Same with the fruit pies, Ho-Ho's et al.

  • Union logic? (Score:3, Insightful)

    by ducomputergeek (595742) on Friday November 16, 2012 @03:37PM (#42004557)

    It's this kind of attitude of unions in the US which makes me say most have outlived their usefulness and something I had to explain when I lived in Germany to the Europeans that the union in the US are nothing like the unions in Europe. Many of the unions in the US are basically racketeers with a bully complex. In Europe if jobs had to be lost, usually the Union would step in and help provide those members with job training to find a new job. If that's what unions did in the US, I'd probably be more supportive.

    What union really thinks that it's better for a company to go out of business and everyone in the union lose their job than to try and save as many as possible? Because a union worker making $0 isn't contributing any dues.

    When the hostess brand gets bought, do the unions think the new owners are going to do? Maybe they'll keep the old benefits, but only hire back half the workers.

    • Re:Union logic? (Score:4, Insightful)

      by timeOday (582209) on Friday November 16, 2012 @03:51PM (#42004779)
      I disagree. Sometimes it really is better to draw a line, say "no," and move on towards something better. If workers continue caving to never-ending demands for lower wages and benefits, then there is no floor. If a company can't make enough money to keep producing what it sells, then it should go out of business. It happens. People haven't stopped needing to eat food and the jobs lost here will be recouped producing some other food, which can't be any worse than twinkies.
  • by Lumpy (12016) on Friday November 16, 2012 @03:38PM (#42004575) Homepage

    It's as if 90,000,000 fat sweaty nerds all cried out at once..... and are still whining.....

  • Victory! (Score:4, Funny)

    by ddt (14627) <ddt@davetaylor.name> on Friday November 16, 2012 @03:43PM (#42004651) Homepage

    Hostess has been a major arms dealer in the war against diabetes in the US. It's great to see them finally fail.

    Next up: McDonalds? Dare we dream?

    The US gov't should be heavily taxing food this unhealthy or subsidizing food that is healthy. Neither of these is happening, and it's fucking ridiculous.

  • by dirk (87083) <dirk@one.net> on Friday November 16, 2012 @03:45PM (#42004695) Homepage

    I fear for what this world has become is a company is so inept that it can't make money selling fat, lard, and chocolate to Americans...

  • After a WHOLE week? (Score:5, Informative)

    by kent.dickey (685796) on Friday November 16, 2012 @04:17PM (#42005161)

    What company has to close if workers are on strike for a WHOLE WEEK? The company doesn't have to pay hourly workers who don't show up to work...

    This looks to me like a corporate version of "suicide by cop"--run your company into the ground (6 CEOs in 10 years, many executives getting big raises, company owned by hedge funds and venture capitalists, company has big debt), and then keep cutting workers pay until they have to say "enough". And then blame the unions.

    If you're a company, which is failing and cannot be saved, and you have union workers, how else do you expect the company to finally close up shop? This is what it looks like--try to blame the unions.

    The union says they already had half their members laid off, have already cut their pay to below industry average, etc. The union website before the strike started said the following (see http://bctgm.org/PDFs/HostessFactSheet.pdf [bctgm.org]):

    Hostess is not and will not be viable: If Hostess emerges from bankruptcy under its present plan,
    it will still have too much debt, too high costs and not enough access to cash to stay in business for
    the long term. It will not be able to invest in its plants, in new products and in new technology.

    ---

    I hope someone buys Drake's.

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