11.16.2012

Hostess shutdown images

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Posted by Jim Peet at 11/16/2012 09:50:00 AM

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3 comments:

  1. Jim PeetNovember 16, 2012 at 11:23:00 AM CST

    How Hostess Failed: Hedge Funds vs Unions

    The hedge funds concluded that Hostess isn't worth saving. The unions either bet the hedge funds would blink before putting the company into liquidation or decided that it was better to sacrifice the jobs of Hostess workers than give in to demands for further pension concessions.

    Although it now appears that Hostess is done, this is not the end of the story. The brands Hostess owns retain value. Someone will likely produce Twinkies again. The plants and workers are also valuable and will likely find bidders.

    Comment: And those union workers will work again .. but for less $$ than had they bargained. (Plus they will be out of work for a while)

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  2. Jim PeetNovember 16, 2012 at 1:22:00 PM CST

    Hostess Collapse: A Sour Bite of Reality for Workers:

    A strike is one of the most potent weapons a union has in a dispute with management. But as the Hostess situation illustrates, the risks that a strike will backfire are high – especially when employers can reach for red buttons of their own, such as bankruptcy or shuttering unionized operations.

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  3. Jim PeetNovember 16, 2012 at 9:14:00 PM CST

    WSJ: The Twinkie, a Suicide - Unions kill an American classic, and 18,500 of their own jobs.:

    Perhaps it says something about America—though we're not sure what—that iconic junk foods like Twinkies, Devil Dogs, Ho Hos snack cakes and Wonder bread have endured since the 1930s despite changing consumer health and eating habits. It does say something about institutions that can't—or refuse to—adapt to new economic times that the company behind those products has chosen to go out of business overnight.

    Hostess's owners have decided to liquidate rather than ride out a nationwide strike by one of the largest of its dozen unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. The Texas-based company owned by the private-equity shop Ripplewood Holdings and other hedge funds essentially gave up. On Friday it shut down its 33 bakeries and 565 distribution centers and prepared to fire nearly 18,500 employees en masse and auction off its brand and recipe portfolio.

    Hostess posted sales of $2.5 billion in 2011 but lost $341 million and lacked the cash flow to hold out through the bakers union work stoppage that had only lost a few days of production so far. One reason is a labor-rule burden that by comparison makes Detroit look like Hong Kong.

    The snack giant endured $52 million in workers' comp claims in 2011, according to its bankruptcy filing this January. Hostess's 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012.

    Union work rules usually required cake and bread products to be delivered to a single retail location using two separate trucks. Drivers weren't allowed to load their own vehicles, and the workers who loaded bread weren't allowed to load cake. On most delivery routes, another "pull up" employee moved products from back rooms to shelves.

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