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No more Twinkies, Hostess belly-up

Posted by purpleinopp 8b AL (My Page) on
Fri, Nov 16, 12 at 9:11

Hostess company has announced that they were unable to reach an agreement between their company and the "bakers' union" that makes their products. The CEO of Hostess said the union was willing to let those jobs go (18,000) to send a message to other companies with which they have contracts.

I'm sure plenty of people would be happy to bake Twinkies for minimum wage, like so many other jobs. What is up with this? Why can't they just hire other workers? What do you think?


Follow-Up Postings:

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RE: No more Twinkies, Hostess belly-up

Oh yeah those damn unions!


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RE: No more Twinkies, Hostess belly-up

I feel sorry for the workers. I wonder if closing this year will cost the company less than if they had waited until 2013.


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RE: No more Twinkies, Hostess belly-up

You have to wade through about 900 stories to find out the Company had already filed for reorganization and was planning to close 9 of it's bakeries before a strike even started.
"Hostess filed for bankruptcy in January, the second time in the last eight years. When the company emerged from bankruptcy the first time, it was able to do so because its union workers agreed to $110 million in concessions and facility closures that cost about half of the unionized workforce their jobs."

SOUND FAMILIAR

After the workers agreed to the concessions, three private equity companies, Ripplewood Holdings, Monarch Alternative Investmenes, and Silver Point Capital, took control of the company and pledged to invest in modernizing the facilities that stayed open and rebranding the company's signature products, Wonder Bread, Twinkies, Hostess Cupcakes, etc.

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.


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RE: No more Twinkies, Hostess belly-up

I think the world will go through a reset. The Greed had taken over the unions were losing ground.

Business moved to China they are starting to realize they are being used and rebelling. Soon there will be no place to run and hide. A reset of how far greed can go before they realize they have to pay a living wage. Everyone cannot be a CEO those are few and far between jobs.

Time for another Norma Rae.


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RE: No more Twinkies, Hostess belly-up

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

Now why does that sound familiar?

Also found this tidbit:

April 4, 2012
DJ Creditors Say Hostess May Have 'Manipulated' Executive Pay

By Rachel Feintzeig
Of DOW JONES DAILY BANKRUPTCY REVIEW

Unsecured creditors suspect that Hostess Brands Inc. may have "manipulated" its executives' pay--sending its former chief executive's salary, in particular, skyrocketing- in the months leading up to its Chapter 11 filing, in an effort to dodge the Bankruptcy Code's compensation requirements, according to a redacted court filing reviewed by Dow Jones.

The official committee representing Hostess's unsecured creditors wants to launch a formal investigation in the bankruptcy case, hoping to dig deeper into the bakery company's senior executive compensation. The information the group has already gathered suggests "the possibility" that the company converted a chunk of its top executives' pay from performance-based bonuses to guaranteed salary, "at least in part to sidestep" rules designed to ensure that companies in bankruptcy aren't enticing their employees to stay on board with the promise of cash.

"As such, the debtors' continued payment of the executives' salaries in these increased amounts may violate the Bankruptcy Code," the unsecured creditors said in documents that were filed with the U.S. Bankruptcy Court in White Plains, N.Y., but largely redacted. Dow Jones was able to view those details because when the papers were saved to a word-processing program, the redactions disappeared.

A spokesman for Hostess dismissed the creditors' allegations.

"We do not believe their theory has any basis in law," he said. "Nevertheless, we are working cooperatively with the committee to address their concerns and expect to resolve this amicably."

In court papers, the creditors say testimony from Hostess's executive vice president of human resources indicates that "in the run-up to bankruptcy"--when Hostess had already hired bankruptcy attorneys--it was also working to shift its compensation structure. Hostess slashed bonuses payable only if certain performance goals were met and, on July 26, the company's compensation committee signed off on "substantial salary increases for numerous senior executives," the creditors said, calling the jumps "dramatic."

Hostess's then-CEO, Brian Driscoll, saw his salary rise to $2.55 million from $750,000--a 300% increase.

"Other executives' salaries were increased by from 35% to 80%," the creditors said.

Here is a link that might be useful: management loots the company, blames union


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RE: No more Twinkies, Hostess belly-up

Twinkies in China?


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RE: No more Twinkies, Hostess belly-up

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

Uh oh.


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RE: No more Twinkies, Hostess belly-up

Esh,

Sounds like the workings of a school levy "after" it's approved for the kids.


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RE: No more Twinkies, Hostess belly-up

It's interesting to me how the failure of a company is always the fault of the unions.

Don't executives run companies any longer?

I've been reading how Hostess has been in decline FOR YEARS now.

Have American's sense of diet changed? What new products has Hostess developed lately? I always think of 'Twinkie Defense' and 'Wonder Bread' when I think of Hostess.

-Ron-


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RE: No more Twinkies, Hostess belly-up

Please don't confuse us with facts.


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RE: No more Twinkies, Hostess belly-up

I think there is an insanely large raft of baked goods out there for people to choose from. I'm not sure if anyone will actually miss Hostess.

I find the instore baked goods of most bakeries to be pretty good when I have a craving for a sweet bread.

If we get cheaper, wrapped baked goods, we'd pick up a Vachon product. Jos Louis or Passion Flakies usually.


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I've never bought the Hostess baked goods or any other similar packaged bake goods BUT I am glad I won't have to miss my Wonder Bread leftover turkey sandwich the day after Thanksgiving or Christmas...both turkey days here.

I'm not sure who has the manufacturing rights for Hostess Potato Chips in Canada but I would miss those....


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RE: No more Twinkies, Hostess belly-up

  • Posted by bboy USDA 8 Sunset 5 WA (My Page) on
    Fri, Nov 16, 12 at 14:06

Do not eat hydrogenated oils. Ever.


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RE: No more Twinkies, Hostess belly-up

bboy...ever is too long for me. Once in a long while I can do.


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Do not eat hydrogenated oils. Ever.

Eat them?

I have the pastries injected directly into my veins.


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RE: No more Twinkies, Hostess belly-up

Hostess potato chips? Never heard of them.


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You're kidding me! Hostess Potato Chips are big here!!! As it turns out they were bought out by Pepsico and Frito Lay but they are still marketed as Hostess

Here is a link that might be useful: Hostess Potato Chips


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RE: No more Twinkies, Hostess belly-up

Our in-store baked goods options are Albertsons and WalMart, both within a ten mile radius.
Both are just terrible bakeries all tastes to me like crisco shortening, and I've seen what goes on behind the bakery counter during our disgusting fly season which tends to last about a month or a bit more.
They can't do anything about it, in truth, but I can't believe people will still buy that nasty fly landed stuff knowing that the flies are crawling on all the baked products before being wrapped up and put out for sale. Same at the meat counter and deli counter.

They just opened a Whole Foods in the city. Next month when the customer hysteria about having a Whole Foods has subsided somewhat, we plan to drive there and check it out, I've heard many good things about the better product quality sold in Whole Foods, but the traffic to get to it would be so terrible all the time (even before Whole Foods was built the traffic was terrible) that it could never become a regular go-to for us.

I don't eat much at *all* in the way of sugar anymore and if DH has a real craving for a sugar cookie (his weakness) I will make up a half batch of dough for the freezer, then break off a piece of dough for baking just a few every time he is "needing" a couple of cookies.
I do miss bread and will sometimes make up a honey oatmeal bread and will smother it with a good butter, especially when I'm carb loading for a few days anyway and plan on making a savory stew or my carb loaded veggie/ chicken soup (my favorite), or lasagna, twice baked spaghetti (sinful) or gumbo.
It seems winter time when it's really cold is when I crave carbs and comfort meals, and tend to indulge more during those times . Mid Spring- late Autumn, though, we eat very very simply (big, busy spinach salad, grilled piece of meat) and it's easy to be and stay very carb and sugar curbed conscience.

To us, Twinkies always tasted like plastic tubes wrapped in plastic tubes, for the taste alone we never had them in the house - nor the hostess stuff or little debbie - all are pretty much the same plastic stuff to me. Like Vegemite for the Aussies, I think kids need to grow up eating this stuff to think it delicious. Same thing with pizza, it tastes not good, processed stuff. We have never been big on pizza but when we want one, it's very easy to make, and we don't make it like it tends to be sold at the fast food franchises - baked on the grill, barely any marinara sauce, lots of spinach, goat cheese, very thin good ham from a leftover spiral ham sometimes, mushrooms, some chopped red pepper topped with just a bit of mozzarella is how we like it.

RE: the twinkie thing - I tasted Vegemite on a cracker once, it was disgustingly salty to me, but my friend had some on a couple of crackers every evening, she was English and loved her Vegemite (or Marmite?) forget which. She grew up on it though, so that explained THAT. ;)
I figure the same thing happens with kids who grow up on the hostess stuff, that is what they know so that is what they think is delicious.


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RE: No more Twinkies, Hostess belly-up

Esh,

You really need to travel more.


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RE: No more Twinkies, Hostess belly-up

I used to belong to a hippy fodder coop that was based in Tuscon, AZ and would drive a semi full of organic food and so on up to Colorado once a month, stopping by at different mini-coops where they'd drop off a pallet or two of stuff.

I always thought it funny that the smaller items were often re-packed in Hostess Twinkie boxes.

The head of the Tuscon coop absconded with the payroll one day, and that was that.


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RE: No more Twinkies, Hostess belly-up

I also never heard of Hostess Potato Chips.

I will not miss twinkies or any of their "baked goods". Haven't had one since I was a kid. I find them to be just gross.

I never understood Wonder Bread. Looks and tastes like white plastic. I grew up on real New York rye bread and hated going to friends houses as a kid when they had that stuff for lunch. Yuck.


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RE: No more Twinkies, Hostess belly-up

Ketchup flavored? WHAT? Unreal.


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Oh Esh, you would love the horseradish flavor chips you can get in Germany. Or the peanut-butter corn curls.


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None of my friend can believe I have never in my life had a Twinkie or any Hostess product. I remember begging my mother to buy Wonder bread when I was little, and she would not. What I loved as a kid and she wouldn't buy either were chocolate Tastycakes , three to a pack for a dime. My mother was the world's best cook and baker, and yet I loved these and would buy them when she wasn't around. I'd buy them for my kids occasionally too when they were little. Tonight over dinner, we were talking of this and daughter said...have you tasted TC's recently, and we both agreed that now they are God awful. We haven't had any in about 10 years but they were nothing like the ones we remember. Tasted like chemicals, if I recall.


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My DH calls them edible oil products


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Or the peanut-butter corn curls.


You have got to be kidding me! I can't imagine those tastes together!


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RE: No more Twinkies, Hostess belly-up

Let us never forget. (although I will never remember since I have never had a twinkie).


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RE: No more Twinkies, Hostess belly-up

  • Posted by momj47 7A..was 6B (My Page) on
    Sat, Nov 17, 12 at 10:26

I know Hostess has been struggling for years. I feel terrible for the employees and their families who are now unemployed, as well as all the collateral businesses affected - and they are legion. It's going to have a terrible effect on the economies of a lot of cities and towns. Hopefully they will be able to sell their brands quickly and put some people back to work.

But......a lot of their food is dreck. The only thing I could ever choke down was a Hostess cupcake, but that was when I was a kid. Other than their rye bread, now I doubt I would eat any of their products.


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RE: No more Twinkies, Hostess belly-up

I think the last time I saw anyone eating a Twinkie was in my high school cafeteria. (LONG time ago, people!)

My mother would buy Wonder Bread before we kids would go to feed the ducks bits of it. (Poor ducks.)

This is just another buy, drain and liquidate corporate move. Non-union employees just quit rather than take another (30%) pay cut. The union struck, thus becoming the 'fall guys' for the already-in-place plan to dump the operation.

Alas, *somebody* WILL continue to manufacture these non-food items.


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RE: No more Twinkies, Hostess belly-up

  • Posted by bboy USDA 8 Sunset 5 WA (My Page) on
    Sat, Nov 17, 12 at 14:40

And continue to manufacture labor culpability for disastrous management decisions.


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RE: No more Twinkies, Hostess belly-up

Photobucket


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Now, Bill, that has got to be one of the funniest photos I've seen~ ;)


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When I was a kid I had a running fantasy about stowing away in the back of the Hostess truck.


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the brands will be sold like many others in the past. twinkies will be back.
hell Pepsi went bust in 1930's and was bought disgruntled coke distributor.

the company was obviously in trouble and possible close to death.
the union just pulled the plug.
in companies' defense it is stupid to strike against company in bankruptcy. since it makes it easy to just shut company down.


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Mmmm -- Esh actually they are totally delicious, and I'm sorry I mentioned them because now I have a mega craving that can't be satisfied in the US. Argh.


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  • Posted by momj47 7A..was 6B (My Page) on
    Thu, Nov 29, 12 at 10:35

Hostess wants to give bonuses to the executives??

What about some help for all the "little guys" who are losing their jobs?

Here is a link that might be useful: Executive bonuses.


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How can they pay bonuses in bankruptcy? (Never mind that they just shouldn't!)

New feature! Your post can now be edited? "He said/She said" will never be the same.

This post was edited by esh_ga on Thu, Nov 29, 12 at 11:33


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RE: No more Twinkies, Hostess belly-up

Aren't they disguised "retention" bonuses to stick with a company, supposedly guiding it through a successful sale/restructuring? Most of the execs would bail if not promised huge rewards. There oughta be a law against retention bonuses and I guess there is but it's ineffective.

I know they argue their meriting bonuses before a bankruptcy judge. The bar is set so low for merit, the worst performances are deemed bonus worthy.


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Here's my two favorite parts of the article:

Hostess, which is privately owned by investment firms

and then this part:
With Hostess out of business that means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States, the company said.

I tried to find the names of the "investment firms". Guess it's private information or something. I couldn't find anything.


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Bain. ;)


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I did notice that the multi-million dollar bonuses to be paid to the company management and executives made the national news.


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David , I think that the bonus thing is being played unfairly in the press.

The bonuses are NOT for past performance. They are being paid to the executives, and others, who have agreed to stay on and unwind the company. Without the incentive the execs would likely be inclined to leave and seek employment elsewhere given their career opportunities just went south!

Unwinding a company is not easy, it's complicated and needs experience to see it through successfully. HR is a huge component of winding down a large corporation and it is important that it be done properly.

It is important to note that the CEO took NO bonus and will stay on and bonuses were also paid to those below the executive level.

Don't construe my opinion as meaning I am generally in favour of huge corporate bonuses, especially in corporations that are under performing, but in cases like this they are needed to retain the appropriate staff until a shut down or sale is successfully completed.


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Thank you for making salient points, Chase, instead of just jumping on the train.


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I'm not a train jumper....never have been.


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RE: No more Twinkies, Hostess belly-up

Good news for other manufacturers, distributors, vendors and resellers.

The spaces in warehouses, stores, convenience stores and vending machines once filled by Hostess products are now filled by lower priced competitors which are as good, if not better.

Donuts were some of their best selling snacks and the competition in that space locally is brutal.

Many manufacturers that sell similar products also have a much larger variety and much more frequent sales and promotions.


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Like I said up thread - nothing but disguised retention bonuses. Federal law is supposed to restrict "retention" bonuses that reward executives for sticking with distressed companies as they spiral into bankruptcy.

Too bad so many bankruptcy courts/judges let these "awards" slide. The only thing it upholds is that doing business badly is a worthy occupation.


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Yes, they aren't mentioning that the bonuses go to the existing execs so they'll stay on and unwind the company.

The press also doesn't mention that the alternative - since these guys haven't done an exactly stellar job to this point - is to fire them just like the rest of the employees and for the court to appoint different folks to handle the wind down.

But in any event, the press has not covered the two leveraged vulture capital buyouts, loading the company down with debt and shoving off the pensions onto the gvt, that lead to the bankruptcy.

"This is the second Hostess bankruptcy since 2004. The BCTGM union took multiple concessions in the first bankruptcy, and offered multiple concessions on wages and benefits this time around. But the contract the company tried to unilaterally impose was so bad, with a 27-32% wage cut and benefit slashes and the elimination of the eight-hour workday, that 92% of workers rejected it. And after the strike initiated, Hostess moved right to shutting down the company rather than working with the union on a resolution.

In fact, Wall Street hedge funds and private equity firms own Hostess brands, and they took massive bonuses and payouts over the past eight years or so. They dumped the company pensions, unilaterally stopped making pension payments that would have totaled $160 million, and plan to pay themselves with the sale of the liquidated assets of the company. Their current CEO’s main credential for the job is his “expertise in corporate liquidations,” according to the union (he’s also seen his pay triple).

This is an object lesson in how management looks at labor relations these days. Workers are expected to take their lumps, and if they protest, management will just blow up the company. And the owners will still make a profit."


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You always have to expect that people will act in their own best interests.

It doesn't do a bit of good to continuously chastise those people who take advantage of dumb laws to their own personal advantage. You're not about to shame them into submission.

The problem is US (actually YOU, (generic YOU), not ME), the dumb people who send dumb people to Washington who enact dumb laws full of opportunities for smart people to take advantage of.

Hay


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RE: No more Twinkies, Hostess belly-up

Where there's a law there's a loophole.


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RE: No more Twinkies, Hostess belly-up

"Where there's a law there's a loophole."

So, if you want fewer loopholes....

The problem with laws, too, is that they're always behind the curve as they say. Solving yesterday's problems.

There's a wonderful econoomic theorem, Coase Theorem that in my wee little brain, I figure, says in effect:

You make a law, people will collude in whatever way it takes to circumvent that law to achieve the optimal economic solution for the parties concerned.

That theorem relies on the ability of the participants to FREELY engage in transactions.

Bottom line....

You want freedom or you want your way? You can't have both.

I come down on the side of freedom.

Hay


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RE: No more Twinkies, Hostess belly-up

  • Posted by bboy USDA 8 Sunset 5 WA (My Page) on
    Sat, Dec 1, 12 at 13:28

How do you figure opening more doors to the henhouse is going to reduce the slaughter?


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RE: No more Twinkies, Hostess belly-up

My husband worked for Hostess years ago...it was a God-send that he got a severience package, and did not work for them now. The People that Work for Hostess ARE the union. He says they want more, more, more and it squeezes a company to death. Greed of the people that are a part of the union that is what killed Hostess. Greed makes the world shut down...(and companies)


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"But in any event, the press has not covered the two leveraged vulture capital buyouts, loading the company down with debt and shoving off the pensions onto the gvt, that lead to the bankruptcy."

Some press OBVIOUSLY covered this. You cited articles, didn't you?


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RE: No more Twinkies, Hostess belly-up

How can unmet demands by a union cause a company to go bankrupt? Seems like a perfect chance for a company to get out from under this more expensive labor force if they can't reach an agreement for renewing the labor contract.


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RE: No more Twinkies, Hostess belly-up

"How can unmet demands by a union cause a company to go bankrupt?"

I'd like to hear about that, too.


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