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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.]
Tallahassee said to be inconsolable.
s/[stupid comments]/[intelligent discourse]/gi
Or bail them out?
When the foot seeks the place of the head, the line is crossed. Know your place. Keep your place. Be a shoe.
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"
Not.
I wonder what these idiots were thinking.
Twinkies are already pretty valuable in the post apocalyptic world.
Now they're rare too? Who needs gold when you got a twinkie warehouse!
The guy who said the election was rigged won the presidency with the second-most votes.
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.
Good people go to bed earlier.
Actually if you read some of the comments from the CEO. He admitted at townhalls with the employees that there was plenty of blame for the company's current circumstances to go all around (including management and the unions.) He was brought in during the bankruptcy to restructure the company and get it back on its feet. It was hemorrhaging money and he laid the case out for everyone. Surprisingly the Teamsters actually agreed to the pay cuts because they understood they'd be without jobs entirely otherwise. The bakers refused to acknowledge that the company was in such dire straights. They seemed to think management was bluffing, well in this case management wasn't.
That being said, I've been on the receiving end of a pay cut before and it sucks. But, it was better for me at that time to have a pay cut and search for another job than to have gone entirely without a paycheck. As much as it would've hurt financially the bakers should've seen reason. 90% of a paycheck is definitely better than no paycheck.
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.
what happens to those pensions? They will be cutted anyway I suppose? Does not sound like the Bakers Union have a clue.
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.
it wasn't Hostess management that did this. it was the Baker's Union. Hostess was in the midst of a managed reorganization to try and save it. Even the Teamsters union was going along with Hostess because they could see that it was this or no more jobs.
The Baker's Union (and possibly you as well) is living in a Marxist fantasy land where behind every "evil proletariat oppressing capitalist" is an endless pile of money that he just won't share. Back in reality the money was gone and it was this, or liquidation. The Baker's union chose liquidation. Not just for themselves (about 5000 people) but for the OTHER 18000 employees (including Management) too! Don't blame management for something they didn't cause.
Hostess will now be entering a court-ordered liquidation, and the brand rights will (if fate has a sense of humor) be sold to a non-union company in a right-to-work state. As it should be.
Official Heretic from the "Church of Global Warming". Proven right thanks to whistle blowers. AGW = Flat Earth Theory
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.
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
It's as if 90,000,000 fat sweaty nerds all cried out at once..... and are still whining.....
Do not look at laser with remaining good eye.
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.
That grocery store was fully stocked. 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.
I made this pic when I heard the news today:
https://i.minus.com/jbbRIi8sgiGgHs.jpg
"When information is power, privacy is freedom" - Jah-Wren Ryel
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...
"Information wants to be expensive" - Stewart Brand, the same guy who said "Information wants to be free"
It creates a market vacuum and a cheap labor influx. Now another company can fill in the diminished market Hostess is out of, with a smaller operation that's not so expensive and lumbering and more fitted to market forces. These employees can get non-union jobs where they'll be offered more than they were making but less than their prior wages, which were garnered for union dues (i.e. $19/hr minus $5/hr = $14/hr, you get $16/hr instead which is $2/hr more), which thus lowers the economic waste spent in wages but increases the salary delivered to the worker, which increases wealth rather than simply shifting it around (and inflated labor costs actually decrease wealth). It increases wealth because after you hire 6 people at $16/hr rather than at $19/hr, what you have is 6 people receiving total $14/hr more, and enough money to hire another worker at $16/hr, and $2/hr left over in the corporate coffers to spend on economic growth to create more jobs.
You'll notice that the initial situation is that there is less demand in this market, so market forces caused shrinkage and poverty. More unemployment. This restructuring as outlined removes the unions and shows an end where less money is spent to produce a product, while workers receive more in pay. The role of the unions here was to erode wealth (via wage inflation, which becomes general inflation); removing them may generate a larger or smaller swing than I've shown (I've seen $50/mo union dues on $5000/mo salaries and I've seen union dues where you make $20/hr and you get $14/hr with the rest going to the union), but it'll always eliminate a waste element no matter how small. There is a short-term cost here now: more unemployed labor. The market is, however, now slightly more flexible and new jobs can grow.
A single incident like this would be just a straight loss. Constant incidents like this are typical of economic shifts. This may or may not require retraining. For example, Hostess cites competition with the current trend toward 'healthy' food. People perceive organic foods as healthy, as well as whole grains. So the bakers may move to small bread shops producing more artisan breads with unbleached, unmodified dough. Such a shift would of course then weaken the major bread mass producers; however they're highly automated and would likely have production scalebacks that resulted in reduced expense and less in reduced staffing. They would get fewer major machines, less maintenance, and thus the machine manufacturers and maintenance staff and management would shift out (in smaller numbers), which then moves the economic changes out of the baker's micro-economy and into pressure on the machinist economy. The machinists will supply wind turbines and other such stuff in the growing renewables economy, and so on.
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And if I understand bankruptcy right, the purchaser could buy the assets, and then hire on who he wants to run them without any union at all. This is the classic instance of the union being so stubborn it's willing to kill the company, lose people their jobs, and lose even its own union dues.
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):
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.
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
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.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
-- 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.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Sometimes I think pensions should be banned. Or, they should be placed in escrowed accounts and be purely defined contribution.
The problem with your logic is that you KNEW there wouldn't be a pension so you negotiated a salary accordingly. That is vastly different than accepting a lower salary in the expectation of receiving a nice pension. Since most defined-benefit pension plans use a formula that amounts to workers putting in time for 20 years and then accruing all their benefits in the last 10 or so, the company has effectively taken the employee's time, but are now denying the opportunity to accrue the benefit.
The way pensions are generally funded is a big sham - and it has the backing of the courts.
Ironic that this was announced earlier today:
http://abcnews.go.com/US/wireStory/retailer-circuit-citys-website-17726152
In one fell swoop you've shown how ignorant Americans can be. Good show old chap, good show.
with the 80% raise that they gave themselves recently?
We're not focused on healthier eating; we're focused on what marketing makes us THINK is healthier eating.
Example: McDonalds got rid of the supersize and added salads, it's totally healthier now. Don't go actually looking at the nutritional facts of those salads, it's salad so it has to be good for you right? Do you want extra dressing with that? Pair it with a Diet Coke and you're practically Richard Simmons!
get their friends to set their salaries like the CEO does? If not, then the hypocrisy is on your side.
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
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.
The truth shall set you free!
Ask yourself why there are no American cruise lines and then go look up the real cause. Unions are a 20th century artifact and no longer serve any purpose except to milk the remaining drops out of a dying cow. Every unionized industry not dependent on public support is either disappearing or already dead. Argue all you want about the noble cause of unions, but this story and a thousand others illustrate the opposite.
It is going to be a long 4 years for a lot of people, not all of whom really deserve it.
Non-governmental unions are weaker because the industries that they took over no longer exist or are a shadow of what they used to be. The cruise ship industry was mandated by a Democratic congress to be unionized and disappeared virtually overnight. Sure, there are still Americans working cruise liners, but they are all foreign owned.
My Grandfather worked his way into management of a steel mill. He used to tell me stories of unionized mobs lynching scabs and harrasing the families of management. It is no wonder that so many unions were infiltrated by organized crime, they weren't that much different to begin with. The steel industry survives, but mostly in the non-unionized south.
Was management taking a pay cut? Not hardly.
Management received a raise before, yes. But this year the top level executives were given a salary of $1/year to help prop up the company.
And it's not like that mattered since the total amount of those salaries pays for perhaps .01% of the total workforce.
So much for your theory...
"There is more worth loving than we have strength to love." - Brian Jay Stanley