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Hostess To Close; No More Twinkies
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.]
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?
"I opened my eyes, and everything went dark again"
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?
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...
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.
Self proclaimed typo king, and inventor of the bear destroying coffee table (patent not pending).
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.
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.
You couldnt even leave the twinkie post free of your BS????
GIVE IT A REST DUDE!
The guy who said the election was rigged won the presidency with the second-most votes.
People in America once dreamed of the liberty to do as they damn well pleased.
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.
Daniel
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.
--
"It is now safe to switch off your computer."
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 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.
I've always said English was my second language. Had Romeo and Juliet been written in C, I might have understood it.
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 up on bankruptcy. If we're talking about the same thing, it will be easier to have an informed discussion.
-Turkey
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.
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.
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 rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
get their friends to set their salaries like the CEO does? If not, then the hypocrisy is on your side.
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.
Give me Classic Slashdot or give me death!
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.)
-Clio
Karma: Bad (mostly from not giving a fuck)
Blog: http://clintjcl.wordpress.com