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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"
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?
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.
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
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.
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...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
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.
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.
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.
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