Slashdot Mirror
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"
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.
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).
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.
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 were probably thinking about previous concessions they'd made only to see that money go to executive bonuses and attorney's fees instead of the capital improvements that the money was supposed to be spent on. http://www.vendingmarketwatch.com/news/10829363/bctgm-union-responds-to-hostess-facility-closings
They were probably also thinking of the 300% pay raise that the CEO gave himself while preparing for bankruptcy, along with the lesser raises other executives got at the same time.
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!
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.
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 didn't matter either way petteyg. The pensions were dead anyway. They were utterly unaffordable and had already hit the cutting room floor. At this point it was either "save your job and get a 401k" or "lose your job and get jack squat". The Baker's unions chose jack squat for themselves and the other 18000 employees and management at Hostess.
As an example of how bad it was there, the Teamsters Union, probably one of the strongest Unions in the US took the deal Hostess offered them, which was the same as they offered the Bakers union.
The bakers union refused to face reality, and 5000 people in a union sunk a multi-billion dollar company and put 18000 other people out of work.
Who's the effing dimwit now?
Official Heretic from the "Church of Global Warming". Proven right thanks to whistle blowers. AGW = Flat Earth Theory
People in America once dreamed of the liberty to do as they damn well pleased.
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.
hey if the unions have to take a cut, the management should too, but the truth there was they were getting a 80% RAISE. If we want to be 100% honest here, we should drop the anti-union rhetoric because the truth is they had nothing to do with it. Hostess is owned by a group of venture capitalist firms who put their own people in charge of the company and completely tore it up from the inside out. They eliminated their distribution network, and increased profits by dismantling production to the point that it was impossible to go forward, then used the Unions as a scape goat as they go to scrap the whole company. The Unions had nothing to do with what happened as much of this was done before their contract even went up, including the scrapping of 9 of the factories. Anyone saying the Unions did this is buying the PR line and not looking at FCC filings for the last 3 chapter 11s they issued. I mean they had 7 CEOs in TEN YEARS from Christs sake.
"Slashdot, where telling the truth is overrated but lying is insightful."
They were going to be out of a job anyway, so accepting further cuts would just trap them further in wage slavery; then when the axe did fall, their hourly rate would be even lower for when they applied for unemployment. Hostess has been in bankruptcy twice in the last couple years.
Hostess followed the Bain model: private investors load it with debt, taking that money out in fees to themselves; force workers to make crippling concessions so they can take more fees out; liquidate the company to suck the corpse dry.
The Baker's Union decided not to cooperate in their own rape. The surprise here is that the Teamsters rolled over and said "you'll like it better if you can't hear me whimpering because I'm facing away from you."
Anyone who loves or hates any language, platform, or manufacturer, doesn't know what they're talking about.
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."
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.
If they were less profitable than in the past then there would have been changes they could have made, like laying off a percent of their workforce or closing several factories or bakeries. It sounds like the unions didn't want them to do that, though. So they went back and proposed an 8% wage cut for the workers that would gradually scale back up, and the bakers union went on strike. So now they don't get anything. The people running the business will turn out fine though, they will sell the various brands to someone else and give themselves a nice going-away present, while the unions probably won't get anything (which I'm actually fine with).
"Our two-party system is like a bowl of shit looking at itself in a mirror." - Lewis Black
You're just totally wrong on the facts.
All the unions had already made significant concessions in the two prior bankruptcies. No one was asking for more. They'd all taken wage, pension and benefit cuts repeatedly, and management couldn't do anything except give themselves raises.
If you were in that union, you'd have already had two haircuts and been asked for a third. How many times would you let the company bend you over before you said "enough?"
Anyone who loves or hates any language, platform, or manufacturer, doesn't know what they're talking about.
The CEO, Greg Rayburn, cut his and the three other top executives salary cut to $1 this year. How much more of a concession do you want?
As for the private equity firm, Ripplewood Holdings is going to lose most, if not all of the $170 million investment it made in Hostess.
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.
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.
...liquidate the company to suck the corpse dry.
...The Baker's Union decided not to cooperate in their own rape. The surprise here is that the Teamsters rolled over and said "you'll like it better if you can't hear me whimpering because I'm facing away from you."
Not a comment on the accuracy or viewpoint of your post, but instead of 'corpse' and 'rape' analogies; wouldn't it be more appropriate to say, "...sucked the creamy cash filling out of the company..." or "...stuffed the unwilling Teamsters with dark chocolaty pudding..."
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
It's much more than just "a cut"
http://socialistworker.org/2012/11/15/hostess-workers-draw-a-line
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.
It may not benefit them, but they STILL MAKE 7-figure salaries, even when they perform dismally poorly.
So if one regards millions of dollars as sufficient, it really doesn't matter WHAT they do. They could (if they wanted to) simply use their job to carry out a bunch of personal vendettas, or political aims (like utterly destroying a local union). Especially if they don't feel like there is much of a chance to meet a specific performance bonus target, due to long-term structural or economic problems, there seems little incentive for them not to just shrug and move on.
Now this CEO has a reputation as a Union-buster and is likely to be hired again by a company seeking to prevent unions from having control, even if he did nothing his entire tenure but thumb his nose at the unions. Unions at companies he runs in the future will be forced to respect him because he's clearly willing to sack the whole company, close hundreds of facilities and put entire towns into recession to prove a point about corporate economics.
meh... CEOs are totally treated fairly... heh
The workers thought management was bluffing but oddly they really did not have large bags of gold they slept on.
Some of them did:
"Within a month of taking over, Rayburn had to preside over a public-relations fiasco. Some unsecured creditors had informed the court that last summer -- as the company was crumbling -- four top Hostess executives received raises of up to 80%."
"Hostess pays Rayburn $125,000 a month, according to court filings. At the same time Rayburn became CEO, Gephardt's son Matthew, 41, the COO of the Gephardt Group, was put on the Hostess board as a $100,000-a-year independent director"
Source: http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/
And this was going on last year at the same time that the company was headed into bankruptcy again and management was asking for even more deep concessions from workers. From this and other things I have read, I get the impression that Hostess is a typical large company dealing with typical liability and productivity problems that couldn't manage through it.
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