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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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  • WTF!?!?!? (Score:5, Insightful)

    by TheCarp (96830) <sjc&carpanet,net> 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?

  • by Anonymous Coward on Friday November 16, 2012 @03:12PM (#42004127)

    This isn't Reddit. Slashdot users have no comradery or instinct to join together to achieve goals.

  • 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:2, Insightful)

    by MrEricSir (398214) on Friday November 16, 2012 @03:14PM (#42004165) Homepage

    The union was probably thinking "We already made massive consessions, now the CEO needs to take a pay cut and the private equity groups that saddled us with debt should be facing a lawsuit."

    But go ahead, blame the workers. I mean, who needs employees, right?

  • 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.

  • 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.
  • 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.
  • Re:GO UNIONS! (Score:3, Insightful)

    by Applekid (993327) on Friday November 16, 2012 @03:28PM (#42004401)

    The point of striking unions is to twist the arm of the company. Well, in this case, the arm broke off and now none of them will have jobs. The CEO is out of a job, too, after all.

    How does the story about the Golden Goose go again?

  • by Synerg1y (2169962) on Friday November 16, 2012 @03:31PM (#42004441)
    Nope the company will go to auction I believe and somebody more competent (hopefully) will buy it. I do feel bad for the termed employees though, hopefully something can be worked out. I think hostess confused the USA with S. Africa.
  • 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:GO UNIONS! (Score:2, Insightful)

    by Anonymous Coward on Friday November 16, 2012 @03:47PM (#42004721)

    They could have stayed in business by cutting costs because their product wasn't as in demand.

    They "could", but should they? Why should a business that makes something that isn't in demand stay in business?

    But just like our wonderful country's population, the bakers union would rather lose everything that take a cut.

    What are you talking about? The people have been taking cuts in their freedom and rights for many many years. The average American is a spineless coward (and I know cowards, just look at my name) who is too scared to stand up for themselves.

    Say, how many Americans are flying home for Thanksgiving? Give my regards to your TSA agents. I'm sure they can hear you even when you're bent over.

    And the capcha word is "frisked", nice!

  • Re:Zombieland... (Score:5, Insightful)

    by dywolf (2673597) on Friday November 16, 2012 @03:49PM (#42004755)

    You couldnt even leave the twinkie post free of your BS????
    GIVE IT A REST DUDE!

  • 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.
  • Re:GO UNIONS! (Score:3, Insightful)

    by bluefoxlucid (723572) on Friday November 16, 2012 @03:53PM (#42004805) Journal

    If the entire executive board of Ford Motor Co. forfeited all of their salaries and bonuses and stock options for 1 year, they could raise every single Ford employee's salary by 18 cents per year (which is to say zero, because nobody would get a 1/3 penny per paycheck salary boost). I wonder how that works for Hostess with 18,500 workers... $3.5-$4 million seems to be roughly the previous (high-dollar) CEO's total compensation but it was lowered for the new guy in March 2012 ... so if the CEO took zero compensation, he could pay everyone $216.21 more per year, or $8.31 per pay check, 10.3 cents more per hour.

    I have a high deductible healthcare plan that costs me $12 per paycheck twice a month ($24/mo), the cheapest option, and my employer pays the other 75% so per paycheck my health insurance costs $48. The Hostess CEO's salary couldn't pay for my health insurance. If the entire executive board cut all compensation, they might be able to pay for that kind of healthcare. Do note that I'm fiscally responsible--I keep about 50%-80% of my after-taxes salary after my mandatory expenses--so the risk of $1500 deductibles is not a problem for me and there's a $3500 per year limit including deductibles on my plan... it's a good plan if you're only concerned with potential catastrophic events like broken legs, major surgery, etc. and you don't mind paying full price for all prescriptions, doctor's visits, treatments that cost under $1500, etc,

    It's a weak plan if you're a family with maintenance drugs, because you'll wind up paying full costs for everything with a limit of $7000 per annum, which means instead of paying $40 for something like a 2 month's supply of Synthroid you wind up paying $120 per month. $240/year turns into $1480/year. Have a kid and a spouse and you're probably talking about $1000-$2000/year turning into $6000-$7000; though as your healthcare costs start maximizing with nickle-and-dime (i.e. cheap doctor's visits), it starts becoming a minor hit: the deductibles on a normal healthcare plan pile up indefinitely, you wind up spending $6500 on a good healthcare plan (including your insurance premium) and $6800 on a crap catastrophic plan.

    Note that the out-of-pocket maximum (you hit this and you pay $0 for the rest of the year) doesn't include deductibles in a normal plan, but for a high-deductible plan it does include deductibles--your total expenses can exceed your insurance premium plus your out-of-pocket maximum with a regular plan, but cannot exceed those figures with a high-deductible plan. You can also use a health savings account to pay all your healthcare expenses from pre-tax dollars, without taking the risk of a flexible spending account (remaining balance at the end of each year is forfeited in an FSA, but not in an HSA).

    Not a bad plan for me because I'm not bad at managing my money. Even when I dip (I do, right now I'm buying a house and I'm paying off debt, so I'm going to max out my credit cards for maximum capitalization and then buy the house and use remaining money and future salary to pay off the credit card debt), I can get personal loans to the tune of $1500 to afford my medical expenses and I am fully capable of paying down the maximum $3500 within 1 year. Poorer families and those with less fiscal prowess would be better with a solid healthcare plan that minimizes risk at additional, but leveled (I.e. not suddenly $1500 at once, but rather $100 more a month), cost. These are more expensive.

    But yeah think about it. The executives can put a couple more dollars in your pocket every month by giving up 100% of their lavish salaries and bonuses. They sure as hell can't fund your pension that way. Why do people always demand the executives take salary cuts so they can make everything better? Like if these oil companies with multi-hundred-billion-dollars profit and executives making $500M in bonuses a year stopped paying their executives, they could magically solve all the world's problems? They'd have 0.001% as much mo

  • Re:Victory! (Score:5, Insightful)

    by thrillseeker (518224) on Friday November 16, 2012 @03:57PM (#42004859)
    Dare we dream?

    People in America once dreamed of the liberty to do as they damn well pleased.

  • 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.

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

    by TheGratefulNet (143330) on Friday November 16, 2012 @04:03PM (#42004947)

    How does the story about the Golden Goose go again?

    you mean the one where the bosses get the gold and you get goosed?

    that one?

    many of us know THAT one pretty well.

  • 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.
  • by j-turkey (187775) on Friday November 16, 2012 @04:24PM (#42005243) Homepage

    The only reason Hostess decided to close is to use bankruptcy law to attack the unions - and replace them with employer-supported unions such as contract workers from staffing agencies. This usually comes from companies based out of the South where workers are to "know their place" and businesses are to not be questioned.

    Get rid of the provision that voids union contracts on bankruptcy and make Right to Work apply to contractors and part-time labor.

    I was under the impression that Hostess were out of money, no longer profitable, and could no longer afford to pay the earlier negotiated wages and benefits. So you're suggesting that Hostess was doing just fine, but the whole bankruptcy was just a conspiracy to screw the unions?

    Please tell me if I understand what you're saying: Hostess did not offer ALL of their employees a package that would allow them to get credit from the bank and continue operations, without laying off their entire workforce? Hostess didn't offer a package that their (larger-than-the-baker's-union) Teamster union agreed upon? If they had plenty of money and were still profitable, how would a bankruptcy court (and their auditors) grant them the status of chapter 11? Chapter 7? Or...in the case of a legitimate Chapter 7 bankruptcy, how can Hostess replace their former union workers with contract workers from staffing agencies when they are no longer in business?

    I think that we may have different understandings of how bankruptcy works. They are liquidating - Hostess is no longer a company. Their assets (e.g. brands, recipes, factories) will be sold to pay off their debt. This will be overseen by the courts - and Hostess' creditors will likely be paid back a fraction of what they are owed. The private shareholders will be the last to get paid out of the liquidation, and it is very likely that they will get nothing. Am I wrong about this?

    If we have such different understandings of how bankruptcy works, I'm not sure that we will agree on how (or if) it should be reformed. I suggest reading [wikipedia.org] up on [wikipedia.org] bankruptcy [wikipedia.org]. If we're talking about the same thing, it will be easier to have an informed discussion.

  • by SuperKendall (25149) on Friday November 16, 2012 @04:42PM (#42005513)

    This wouldn't have happend if the bakers union had conceeded.
    This wouldn't have happend if Hostess had better management.

    It doesn't matter if you have the best management in the world, if your workers all at once decide to shut you down.

    The workers thought management was bluffing but oddly they really did not have large bags of gold they slept on.

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

    by Art Challenor (2621733) on Friday November 16, 2012 @04:45PM (#42005545)

    so if the CEO took zero compensation, he could pay everyone $216.21 more per year, or $8.31 per pay check, 10.3 cents more per hour.

    I haven't run your numbers, but even if you're correct, assuming that the workers are just making it on current pay checks (probably not) then $216 per year means that the kids can have a Christmas, or you can go to the movies once in a while, or eat pizza or something "luxurious".

    If Hostess was being run as a viable business, instead of being bleed dry by the current owners, there would be money to pay the employees reasonably. It's not the unions, it's the leeches.

    You have the same whining going on at Papa John's where the CEO John Schnatter claims that to "Obamacare" forcing him actually to treat his employees reasonably and provide health insurance will cost $5 to $8 million for insuring more workers would mean 10 to 14 cents a pizza. Assuming that's true, then Schnatter's $2.7 million compensation package personally accounts for about 5 cents per pizza.

    It's not really an issue of money, it's a matter of control. The bosses piss on the workers and that's "free market". The workers organize to try and get some respect and a living wage, that a slave revolt.

  • Re:GO UNIONS! (Score:3, Insightful)

    by tatman (1076111) on Friday November 16, 2012 @04:46PM (#42005571) Homepage
    I disagree. Destroying a company never benefits executives. Their compensation package includes rewards for improving a companyAnd that happens through many different facets of company's business. If your business can't be successful selling 100M twinkies a year because they are not selling, then you have to cut the quantities of twinkies made to what will be purchased by customers. If the company makes worthless crap then the company will not be in 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.
  • by SuperKendall (25149) on Friday November 16, 2012 @05:00PM (#42005749)

    -- 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

                    -- Closing ALL plants.

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

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

    by Samalie (1016193) on Friday November 16, 2012 @05:20PM (#42006067)

    What it comes down to, is you're both right.

    Executive pay has gone fucking apeshit in comparison to worker pay. Its fucking pathetic. BUT...executive pay is NOT really a reason why companies fail. In the overall scheme of things, it amounts to dick/year in expenses.

    BUT - if management was expecting everyone to eat a 20% pay cut, they should eat the same dick too.

    That said, Hostess is a clusterfuck of a company. Their sales are shit, AND they were pillaged by a pair of VC firms to the tune of somewhere around $700 Million. That asspile of debt IS a contributing factor, although bluntly nobody is really buying that processed shit anymore either.

    The union...well, their blame is they ended up with 0% of their original pay instead of 80% of it. I can't say I blame the staff for not wanting to take a pay cut, but I'd also rather have a job.

  • Re:Zombieland... (Score:2, Insightful)

    by medcalf (68293) on Friday November 16, 2012 @05:22PM (#42006097) Homepage
    And Mitt Romney has what to do with this? The PE backers of Hostess are large Dem contributors.
  • by EdIII (1114411) on Friday November 16, 2012 @05:28PM (#42006171)

    First, I would think yogurt is Greek.

    Secondly, damn right Twinkies are American. Nothing is more fitting for the current American image than Twinkies being sold in Walmarts....

  • by sortius_nod (1080919) on Friday November 16, 2012 @05:49PM (#42006453) Homepage

    In one fell swoop you've shown how ignorant Americans can be. Good show old chap, good show.

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

    by Hatta (162192) on Friday November 16, 2012 @07:16PM (#42007555) Journal

    Destroying a company never benefits executives.

    How does shit like this get modded up? Does no one remember SCO? Does "private equity" mean nothing to you? There are plenty of ways that executives can profit by pillaging the companies they are supposed to manage.

  • by Technician (215283) on Friday November 16, 2012 @08:35PM (#42008419)

    Hostess has recently had some of the highest priced snack cakes in the supermarket. Their sales have fallen off. There is competition in the free market. The union wanted a bigger slice of pie from a smaller pie. The company knew it couldn't survive a labor strike. The union was not recognizing the situation. The company cut the losses instead of bleeding to death and is putting the assets on the market.

    Fast forward to the new soak the rich plan Obama has for what 1.6 Trillion Dollars? The pie they plan on bleeding will rapidly vanish. The high income folks will no longer make high income here with the high overhead. Businesses will shutter and the capitol will rapidly move to more friendly to business markets.

    http://theeconomiccollapseblog.com/archives/share-this-massive-list-of-post-election-firings-and-layoffs-with-everyone-you-can [theeconomi...seblog.com]

    Is your employeer leaving town? Why would they stay. Those dependant on the government will stay and sign up for all the bailouts and handouts they can get. Those stuck with the skyrocketing bill will move assets elsewhere.

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

    by ClintJCL (264898) <clintjcl+slashdot@gmai l . c om> on Friday November 16, 2012 @08:37PM (#42008429) Homepage Journal
    Executives don't NEED constant benefit. Once you're rich, getting more rich or not getting any more rich doesn't really matter.

    I realize folks are in a panic over losing Twinkies and Wonder Bread, but just take in for a moment the following tidbit of information: Hostess Executives provided themselves 70% raises last year. Today they announce they're closing the company because their rank-and-file workers refused to take an 8% pay cut. Consider who will be hurt by closing the company. (Hint: it won't be the executives.)

Those who do things in a noble spirit of self-sacrifice are to be avoided at all costs. -- N. Alexander.

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