The Glorious Return of the Twinkie

iggymanz writes "The geek food staple the Twinkie is coming back. The sturdy main component of the foundation to the geek four food groups of sugar, fat, caffeine and bacon — with rumored shelf life on the order of the time span to cool a white dwarf to room temperature — the Twinkie, along with Ding-Dongs, Ho-Ho's and Cupcakes, will be returning 15 July 2013 to the shelves under new management of Apollo Global Management and C. Dean Metropoulous & Co which paid over 400 mega dollars (U.S.) for the brands."

Comments

Not really surprising

[dkleinsc]

The reason that Hostess went under is that management refused to play nice with their unionized workforce, and they decided that they'd rather have no company than a union shop. Now that the union is busted, they've restarted production with a non-unionized workforce, "generously" allowing those workers to return to their old jobs at about 1/3 what they were paid before.

And if you're wondering which side to blame: Before the strike that ended Hostess, there were a couple rounds of the union taking pay and benefit cuts followed by management giving themselves bonuses for convincing the union to accept the cuts. That's why the union didn't buy the "but if you don't take the cuts, the company will go under" argument.

Re:36 million units sold in 2011

[geekoid]

The union took cuts twice, and each time management gave themselves huge bonuses (million +), . SO after that, why would the union cut yet again?

The union stepped up and did their part, and management screwed them, and refused to make an actual management changes.

Re:Union negotiators screwed up

[Anonymous Coward]

Nice rewrite of what actually happened. One of the two major reason that Hostess escaped bankruptcy in 2009 was that the union allowed thousands in job cuts and agreed to benefit cuts to the tune of $110 million. So to act like the unions did nothing is utter nonsense. They only threatened striking after the incompetent management told them that they had to make even deeper concessions

Re:36 million units sold in 2011

[steveha]

The union stepped up and did their part, and management screwed them, and refused to make an actual management changes.

Actually, no.

I followed this story. The way it actually worked:

Hostess went into bankruptcy in 2004. It found investors who bailed it out and it kept going.

http://en.wikipedia.org/wiki/Hostess_Brands#Bankruptcy_.282004.29

Hostess went into bankruptcy again. It found additional investors who bailed it out and it kept going.

http://en.wikipedia.org/wiki/Hostess_Brands#Bankruptcy_and_liquidation_.282012.29

Hostess was running out of money. Management set up a deal that would cut costs by paying workers less. This was not what the workers wanted, but according to management, it was essential to save the jobs.

One thing that riled up the workers: management got paid a lot. In an effort to make the workers happier, the top four guys at Hostess had their salaries lowered to $1 per year for 2012.

http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/

But the major costs at Hostess had to do with worker salaries, particularly with respect to delivery of Hostess products. Union rules required Hostess snack foods and Wonder bread foods to be delivered on different trucks, which had to be loaded by different people. A "Hostess" worker couldn't load a "Wonder" truck, a "Wonder" driver couldn't drive a "Hostess" truck, and the company couldn't contract out delivery. So, if a small town in a distant location wanted to buy Hostess cakes and Wonder bread, two trucks would have to drive out there, not one. Also, there is some complicated stuff I don't really understand about Hostess paying pensions to a whole bunch of workers, many of whom had never worked for Hostess.

http://news.investors.com/ibd-editorials-on-the-right/111912-633985-unions-dont-always-benefit-workers.htm?p=full

http://ohioansforworkplacefreedom.com/how-unions-killed-twinkies-and-wonderbread/

Now, pay attention, because here's the key part: the Teamsters Union had been fighting with Hostess management, and they had seen the accounting numbers, and they believed that (at least on this issue) management was not lying. If Hostess didn't cut labor costs, it was doomed.

I am not an expert on unions, but my impression is that the Teamsters Union is not exactly a shill for management.

It wasn't Teamsters Union workers who went on strike: it was workers of a smaller union called the Bakery, Confectionary, Tobacco and Grain Millers International Union (BCTGM). The Teamsters Union publicly told BCTGM not to strike. Check out this page from the Teamsters Union web site:

http://www.teamster.org/content/teamsters-bakery-workers-should-hold-secret-ballot-vote-hostess

The story gets even crazier. Management publicly told BCTGM that if the strike wasn't over by a specific date, they would shut down Hostess. BCTGM continued to strike. Management shut down the company. Then... a judge ordered both sides into an extra round of negotiations, and I thought to myself, "Here is where BCTGM can back down yet save face. They were unwavering in the face of a threat, they can proudly tell their members that they didn't back down until they were forced to, but they can still save all the jobs." But it was not to be. BCTGM continued to strike and Hostess shut down.

Re:Union negotiators screwed up

[jdev]

Unions had already agreed to $100 million in concessions during the previous bankruptcy. The bakers union was being asked for something like an additional 25% in cuts over 5 years, while there were reports of raises and bonuses for management. On top of all that, management had stopped contributing to the pension fund and there is still a lawsuit over that. Agreeing to the cuts would have taken wages well under the market average could have depressed wages for the entire bakers industry. So let's not try to play this as a one-sided "unions are dumb" argument. There were good reasons for the unions to reject the concessions management proposed.

The management wasn't incompetent

[rsilvergun]

I've got MOD points but I can't let this slide. The management was very, very competent. It's just they were after something other than a successful company. To wit: The Pension Fund. The hard part about stealing a pension fund is doing it legally. It requires enormous skill, business and legal knowledge to do it.

What Hostess' management did wasn't just mismanagement, it was a complete lack of management. The bought the company, paid themselves just well enough to stay within the bounds of legality, and then ignored the company entirely. They put no effort into expanding, into controlling and managing the supply chain, or into anything else. Then they sat back, waiting for the company to die and used the pension to pay back the creditors they'd racked up debt with.

The last part that makes it all nice and legal is when a judge ruled that the creditors get paid before employees do. If you paid your own cash money into your pension while working at Hostess you literally got robbed. As an added bonus they killed a major Union without any bad press.

But nobody talks about that. All they talk about is playing an imaginary game of chicken. FYI: You can't win a game that the other side isn't really playing.