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Hostess Saves Twinkies By Automating, Fires 94% Of Their Workforce (washingtonpost.com)
An anonymous Slashdot reader writes:
Where Twinkie once employed 22,000 workers in more than 40 bakeries, their workforce is now down to just 1,170, reports the Washington Post, relying mostly on robotic arms and other forms of automation. "This 500-person plant produces more than 1 million Twinkies a day, 400 million a year. That's 80% of Hostess' total output -- output that under the old regime required 14 plants and 9,000 employees."
"We like to think of ourselves as a billion-dollar startup," Hostess chief executive Bill Toler said Tuesday, announcing that Hostess Brands, which had twice filed for bankruptcy, now plans to become a publicly-listed company valued at $2.3 billion.
"We like to think of ourselves as a billion-dollar startup," Hostess chief executive Bill Toler said Tuesday, announcing that Hostess Brands, which had twice filed for bankruptcy, now plans to become a publicly-listed company valued at $2.3 billion.
bloody 'ell mate they taste like cardboard now.
They are all walking my neighborhood playing Pokenmon Go. Every freaking one of them.
But really, 22,000 humans making Twinkies and Ding Dongs is a major waste of humanity. I could justify having like 13,500 making Snowballs, cuzz those rocked.
I get really strange results in 2016 when I Google twinkie, snowball, ding dong, and cupcake. Mom!!!!!
"If you want to improve, be content to be thought foolish and stupid." - Epictetus
They didn't fire everyone because of automation. They fired everyone because the business was grossly inefficient and bankrupt, and it happened over several years. They automated because it was the only way to compete in their market and survive as a company.
Ummm, Jon, aren't you supposed to be dead...? - Otter(3800)
Before Hostess filed for bankruptcy, WSJ reported the delivery of Twinkies alone was controlled by two unions. Their work rules stated: "Drivers can't help with unloading, and products like Wonder Bread and Twinkies are not allowed to ride on the same truck." As a result, a one-man job has to be split into two or more. Now the new Hostess apparently doesn't have this trouble.
The moral is, if you realize you are a dinosaur, evolve now! Otherwise, extinction is guaranteed. Labor unions are so 19 century.
Thanks for the info, i will now boycott all hostess products. Twinkies suck anyways lol haven't eaten one in 20 years.
Go ahead and eat one of those still left in your pantry, 1996 was a good year for twinkies.
You do realise that the computer you're using is mostly made via automated processes, don't you? Are you going to boycott that as well?
If you're going to boycott everything that's made by a machine you're going to find yourself living in a cave and reverting to a hunter scavenger state.
Automation poses a lot of challenges for our society, but employing people just to give them something to do is not the answer. Personally I think we should reduce the standard working week by one hour per year until we reach a 20 hour standard week. That would allow society to adapt to the changes progressively over the period of a couple of decades while ensuring there are enough jobs for those who have been left unemployed due to automation.
Yep, it's better to have 22,000 laid off because they went out of business than it is to have 1,170 employed directly at Hostess, and others indirectly employed at the robot manufacturers, ingredient suppliers, shipping companies, distributors, packaging suppliers, insurance companies, and all the other entities that support a running business.
To be fair, the teamsters were making concessions, while the baker's union was playing hardball. IIRC it got to the point where the teamsters were actually complaining about the other union, which is pretty unusual.
My Other Computer Is A Data General Nova III.
What's passed along is the cost of supporting the thousands of unemployed.
The old company went belly up, so those jobs were gone anyway. This is a new company and new hires, so nobody is "passing along" anything.
Even if that weren't the case and this had been accomplished by restructuring the old company, that's still good. Productivity gains are achieved by getting the same or more output using fewer resources.
While the Automation kick is an interesting angle, lets not forget what actually killed Hostess -- vulture capitalists. These are Mitt Romney style assholes who swooped in, loaded the company up with debt, then pawned it off after leeching all the money out. Somehow though, it's not embezzlement when an investment company does it.
But it gets worse. The unions that took the blame? They were having their workers give upwards of a THIRD of their paychecks just to try and save the company they helped build. And that just caused the vultures to trade the company around more and more.
So yeah, the automation is interesting, but lets not forget what brought us to this point. Vultures bought the company, embezzeled a shitload by loading on bad debt and pawning the company of as well as flat out stealing from the pension fund, and passing the buck to the next leech until they couldn't pass it any further. And now instead of having good quality Wonder Bread and tasty, if not exactly healthy, sweets like the Twinkie, we get mass produced automated crap.
The local Hostess bakery re-branded as a Franz, and the quality is really good. They also have a direct-from-the-baker storefront that you can go in and get bread at a huge discount. Oh, and they're union and pay their workers a good wage -- around $17 an hour starting.
As I said the last time this came up, no American should EVER support Union Busting. Hostess is dead to me, and besides You can clone a twinkie pretty easily, which lets you do stuff like a fresh baked chocolate twinkie with cherry filling.
I'm sure they will fold up overnight due to your boycott.
Only the State obtains its revenue by coercion. - Murray Rothbard
I don't get this attitude that Unions destroy everything, was management sitting on their hands. Looking into shenanigans of management.
The raises management gave themselves right before the bankruptcy
Brian Driscoll, CEO, around $750,000 to $2,550,000
Gary Wandschneider, EVP, $500,000 to $900,000
John Stewart, EVP, $400,000 to $700,000
David Loeser, EVP, $375,000 to $656,256
Kent Magill, EVP, $375,000 to $656,256
Richard Seban, EVP, $375,000 to $656,256
John Akeson, SVP, $300,000 to $480,000
Steven Birgfeld, SVP, $240,000 to $360,000
Martha Ross, SVP, $240,000 to $360,000
Rob Kissick, SVP, $182,000 to $273,008
There'll be a new sub-niche: Vintage Twinkies. Magazines will recommend years to get and which soda to eat them with. New fashionable eateries will pop up with a Twinkie list instead of wine: "Do you have the '96?" "Sorry, sir, we've run out, however I recommend the '01" "How about the '92?" "I'll need a credit card before I can serve you that"
"Wait. Something's happening. It's opening up! My God, it's full of apricots!"
It scares me that people with your level of understanding of economics vote for candidates that regulate the economy.
"How they’d do it? Cherry–picking top assets, modernizing manufacturing and distribution, doubling the shelf life of products...."
How did they manage to double the shelf life? Double the preservatives? Double to toxins?
Let's assume they're all at the max. Total salary for that list is $6,351,508.
Now let's assume a "living wage" for factory workers of $35,000. That gives us $6,351,508 / $35,000 = 181 factory jobs.
You can complain about their salary, but where are you going to get the other $300,000,000 that was going to the 8500 workers who were laid off?
Shorter version: Management is bad and they get huge paychecks -- therefore, anything the union does is flawless and perfectly justified, regardless of the outcome. You can always justify anything by criticizing someone else.
Thanks for letting us know.
What would you prefer? Force the company to rehire 22000 people for 5 minutes before it goes bankrupt again? Force then to raise the price of Twinkees to $10 each so they can make money with 22000 workers? Force us all to buy these $10 Twinkees? Subsidize the company so they can afford to sell Twinkees at a huge loss?
Please let us know what the best choice is.
>"The productivity gain is 18 times given the reduction in the number of employees given. I do not suppose that the current employees earn 18 times what the old employees earned. So who did get the benefit of the 18 fold increase in productivity? Answer me that you thieving bastards."
I don't think the actual numbers are 18 fold. It is far more complicated than that. But in any case, say it was a 9 fold increase overall.... the reason the company failed is they priced themselves out of the market. They couldn't afford to operate [the way they were] on what they were able to charge for what they marketed. Now, apparently they can. That is a good thing. And they can now afford to charge less to stimulate demand and re-establish a market. So that is lost revenue. Plus there is a great risk, they NEED to make a lot more money to pay for all the new machinery and setup. They can build reserves, invest in themselves, and spend on researching and creating new products to be diversified so they can continue to survive in the long term.
Simple capitalism.
There is absolutely nothing wrong with them making lots more profit than before. That should be the goal of ALL companies. If a competitor comes along (which should happen if there is enough demand in an elastic market), it will force the prices down.
I do not suppose that the current employees earn 18 times what the old employees earned.
Of course not. Productivity gains don't stay concentrated in one company, they are spread through society. Overall, American productivity has improved by a factor of 20 since the late 1800s. So has the average worker seen their standard of living improved by that much? Yes, mostly they have. Improvements in productivity not only improve living standards, they are the ONLY thing that improves living standards.
If you really feel otherwise, then you can go live in a country that has not seen productivity improvements. Somalia, Ethiopia, Congo, and Afghanistan are good choices. None of those have greedy rich people suppressing the workers by investing in capital to make them more productive.
So it's society's responsibility when it's a matter of deference to business friendliness, but it's the fault of individual when they can't second-guess the desires of employers?
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Less than that, even. You forgot the 7+% for employer's part of FICA and Medicare. You forgot whatever unemployment insurance costs in the states of operation. You forgot whatever the employer's portion of various health insurance or other benefits. Taking the general rule of thumb that employer costs are 1.25 to 1.5 times the salary, That $6.3M is only 120 to 144 jobs at $35k- so significantly fewer than your estimate even.
I think most of the complaints about executive salaries aren't really because that money could be used to pay employees more or pay more employees, because those numbers don't really add up; I think the complaint is more just in order of magnitude - 10 times might be palatable, but someone making 100 times the salary of another means that person earns effectively an entire lifetime of the lower salary in a single year.
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
I think there's sort of a sliding scale thing going on here.
Start with a nice fluffy kind of rich cupcake with light creamy frosting, made with simple ingredients that you would find in your kitchen (flour, sugar, eggs, butter, real vanilla extract, baking powder, etc). If you have time, fairly standard kitchen equipment, and a little bit of skill, you can make these. Or, you can buy them fresh from one of a growing number of fancy shops that specialize in cupcakes (for a price, and you have to get to the right place during their business hours while you want a cupcake -- and if you live in a smallish town, there's nowhere you can buy them). The bakery probably times their batches carefully and tries not to sell anything that wasn't baked that day.
Okay, so you don't have time to make cupcakes (and you only wanted one or two), and you don't have the time/money/access for really great cupcakes. Next option down: local supermarket. They probably make them on-site, but they have probably "value engineered" the ingredients, "streamlined" the process, and increased the shelf-life of their products so that the curve of taste/texture takes a dive at about the three-day mark instead of 12 hours. So most of the dairy fat and some of the eggs go away, and are replaced by a combination of vegetable fat, and some kind of stabilizer/moisturizer combination (guar gum and stuff) that . . . well, it results in a similar texture to the original ingredients (and takes longer to fade after baking), but the flavor isn't quite right. Oh, also they can try to claim that the reduced fat is better for you (even though we're starting to see pretty clearly that replacing fat with sugar & starch is not the right answer). So this cupcake is similar to one you might make yourself or buy at a nice cupcake shop. And it's cheaper and more available.
Hmm. It's late at night, or the end of a tiring day, and what's available is the corner store / gas station / pantry (last stocked a week ago). The desire to eat one of those kinda mediocre grocery store cupcakes (which you're accustomed to by now, because who has time/money for the real thing?) is pretty high. And those Twinkies are sitting there. They're sort of like grocery store cupcakes. They have almost the right texture (despite having been on the shelf for like, two weeks, and who knows how long they spent on a truck, and in some industrial freezer). The cake flavor is . . . based on flour and fat. The frosting is inside, and that kinda makes sense since it wouldn't have survived the ride if it was on the exterior. Frosting's also kind of weird, but that's the stabilizing and texturizing again (can't use butter, it would rot, can't use most fats, they would separate, it's pretty much just whipped sugar and another of those texturizing agents). Well, close enough to quench the craving, probably.
And of course, there are probably another couple layers in there of degradation, because at least according to the comments here (I haven't eaten a Twinkie in 20 years I think), the current Twinkies are actually just reminders of what Twinkies used to be.
So it's probably just a reminder of a reminder . . . of a really good baked good. It's what's available cheaply and easily. And it's kind of representative of a lot of what's wrong with American food.
Animals (including humans) are pretty good at deciding that what's available to eat is what's good to eat. That's good for survival. Unfortunately, it's also apparently easy enough to trick using modern food science.
You can't say that for certain. Running machines requires skilled labor to maintain and program them. Pulling trays out of an oven all day doesn't. Programming and maintenance skills have a higher value, not to mention that the employee generates more revenue per hour than the manual laborer.
"Well, good luck finding a judge that doesn't run a bestiality site."
Another benefit not mentioned:
Now there are less humans stuck in a mundane dehumanizing job. Their Quality of Life will improve as they look for a more fulfilling job.
People are rational in not doing negative/uncertain return activities. Offer something more than blind faith and most will learn.
The wage gap between the educated and the uneducated is wider than ever before, and is growing even wider. It doesn't require "blind faith" to believe that you should study and do your homework, rather than cut class and watch TV.
it was intentionally run into the ground so that they could get out of paying pensions. It was just a bunch of rich assclowns running a scam to steal private pensions. Truckers are next. They'd do it to the army guys if they were afraid they might revolt.
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Different company. This one uses automation. They do not NEED those 22000. Why the fuck should they be forced to hire them?
"Oh my God. This is terrible. This is the end of my Presidency. I'm fucked."; ~ Donald J. Trump
Perhaps the degree in Communications wasn't the best idea for them?
Not all University Grads are created equal. Some of them half-assed and partied their way to an easy degree, which is worth every bit of the effort they put into it.
"Oh my God. This is terrible. This is the end of my Presidency. I'm fucked."; ~ Donald J. Trump
hostess has been dogshit for years. if it really was unions (as opposed to simple consumer preference or mismanagement or whatever) that killed it temporarily, then great. if it's resurrected by robotics, that's also great, but for other reasons.
"They were pure niggers." – Noam Chomsky
They wouldn't have this problem if the baker's union didn't decide to be dickholes back in 2012. The management wasn't bluffing; there was a big consumer craze at the time for weight loss so their sales tanked. Other pastry makers ran into similar problems but they didn't have a union making unreasonable demands that they had no choice but to follow. (Krispy Kreme had to close a lot of their restaurants, Dunkin Donuts has turned more into a coffee shop than a donut shop.)
Remember, the teamster's union saw what was going on with the market in general and chose to accept the terms offered by the management, which was a wise decision because, remember, if you price yourself out of the market, then you won't be in it anymore. But the baker's union leadership really didn't give a fuck about the jobs of their employees, and Frank Hurt, a very rich union boss (with one of those "Cadillac" health insurance plans that Obama granted special exemptions to just because he wanted to favor unions) effectively spun it as "it's all the management's fault" while he could go home still having a job while the people he supposedly represents lost theirs, all because he refused to budge in light of an obviously changing consumer mindset, and the management doesn't have the ability to change that.
People just don't buy twinkies and donuts like they did in the 90's, and it's not likely they ever will again because now people have a lot more access to information than they once did, which means they're going to make different decisions than they once did as well.
This story is nothing more than the natural progression of something that started in the early 20th century. We used to have people who held the title of 'machinist'. Now we have machines called 'CNC's which perform the same job to a better precision and produce identical parts. Being a machinist was an art form. Since the invention of 'machine tools' we have slowly moved away from the art to a repeatable process. Eventually factories will employ no one, or essentially no one. Stock will be dropped off and finished product will be picked up without ever encountering a human being. No lights, no breaks, no vacations, no unions, no variance. Perhaps a team of maintenance workers, but there would be no reason to house them at a single plant. This is the future of manufacturing.
Similarly we are automating the office. I am old enough to remember six-part forms and hallways filled with file cabinets. Now the same information can be housed on a single drive. I remember call centers which employed thousands of agents. Now there is a computer program which can get you through at least the front few interactions. As we continue along this line of reasoning, there are a number of jobs which will fall into oblivion just as the machinist has. The basic premise is if the human being is following a script, or a decision tree, or a detailed process; I don't need a human being for that. Humans are needed for exceptions, not wrote processing.
There is of course an impact to this move towards automation. We don't need unskilled workers who can absorb the necessary training through OJT. This then eliminates the need for a vast number of now middle class workers. They move into the poverty class and the societal divide widens. Not everything intended for good is limited to positive consequences.
If you are a factory worker now, how do you ensure employability? Learn how to repair robots.
If you are a low level office employee now what do you do? Learn how to automate your own processes.
For something a little closer to my own profession, if you are a Route/Switch engineer (Networking IT professional) what should you prepare for? Learn how to program. You job is nearly obviated now. It's called 'Software Defined Networking'. The days of troubleshooting OSPF/EIGRP are nearly at a close.
Automation is the natural outflow of specialization and advancement. As you work towards making your job more repeatable and predictive, you work towards ending your employment.
Cutting costs is called technical progress. It's why 30% of the median family's income went to food in 1950 (with 12.2% of America's labor force being farmers) and 11% goes to food today (with under 2% of America's labor force being farmers). The difference goes to suppliers (fertilizer, pesticides, machines, fuel, irrigation, seeds); farmers aim for a 20% profit margin, but typically make under 10%, as do their suppliers.
So we've gone from 12.2%+17.8% to 2%+9%, minus ~10% profits: the chemical industry and the machine industry have eliminated around half of their labor requirements per unit, while farmers have eliminated over 85%.
Up until the 1960s, the labor-force participation rate was between 58% and 60%; we're running in a labor-force bubble right now, with 4.9% (5.6%) unemployment, with 19% of the proportional jobs eliminated compared to an era where less of our population was working. How do you suppose we lost jobs but got more jobs?
Transitional unemployment is a real thing. The cost of producing goes down as you eliminate wages from the equation: 1/3 as many people means 1/3 the cost, and a bigger profit margin is made even as consumers only pay 1/3 the price. Prices don't rise as quickly as inflation (it's logically and mathematically impossible for prices to rise as quickly as inflation), and the remaining money can buy new goods. These new goods require new labor: even if everyone just bought twice as many Twinkies, we'd need *another* Twinkie factory, staffed with another 500 people, and supported by the energy, machine, steel, and transportation industry to keep those machines up and running; plus the logistics, transportation, and retail to decide which Wal-Mart to send those Twinkies to, move them there, and sell them to consumers. If you buy different goods (e.g. better healthcare, more video games, bigger TVs), the same applies.
This even works with globalization. As we've moved manufacture jobs and other such out to China and Mexico, costs have come down. Everything made in China is backed by logistics, shipping, and retail here, and those loads are fixed: each truck carries the same amount of goods, and more goods means more trucks; and retail centers close down when they don't sell product (Best Buy, Circuit City, CompUSA, K-Mart). If we shut down all our trade with China and brought manufacture back to America--all of it; the nuclear option--minimum-wage factory workers would nearly triple the actual manufacture cost of things like clothing, books, kitchen wares, the like. With the consumer base not actually having more money (because it comes from spending the money the consumers have; money does not trickle down and isn't created by employment), the number of goods bought shrinks. That means less to ship and less to sell, meaning literally more than 65% of truckers and retail workers lose their jobs; it'd be in the range of 15-40 million American jobs net lost.
Thanks to continuously creating transitional unemployment through technical progress, our population has expanded; it cannot sustain with earlier, less-efficient means. On the other hand, the reduction in cost has created new jobs through increased consumer buying power (demand-side economics); and the reduction in the costs of goods such as food, clothing, soap, and school supplies has made it easier for poorer families to afford basic needs goods.
Yes, it sucks to be the Child of Omelas; this is why we have welfare systems: for the lower- and middle-class to become more wealthy and for our nation to become stronger, for new technology to become affordable instead of costing $6,000 for a TV and $9,000 for a cell phone, and for us to increase access to health care and education and *food*, technical progress must occur, and that means somebody's job goes away. The new jobs can take months or years to come back around; we carry these people in the mean time, and the new jobs eventually come because the wealth of reduced cost is passed along to the consumer.
If this wasn't true, there would be no jobs anymore.
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The consumer pays wages. If it takes 100 hours at $10/hr to make a product and that product has a 10% profit margin, then you pay $1,100 for that product; if it takes 50 hours at $10/hr and that product makes a 20% profit margin, then you pay $600. What do you do with the extra $500?
With prices coming down like that, you don't *need* as much income to live at the same standard-of-living. Part of this difference goes upwards, creating the growing income gap; the other part stays with the consumer. This is why we $4,000 cell phones in 1983 (over $9,000 in today's dollars) with $250/month service to make 2 hours of phone calls each week (over $550 today) have given way to $350 smart phones with $60/month service providing unlimited voice and text plus a few gigabytes of high-speed data. It's why food, housing, and clothing got cheaper in the past few decades--and continue to get cheaper, aside from a localized fluctuation in house prices due to falling mortgage rates and bad lending practices.
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It sucks to be in the path of progress; that's why we have welfare. Unemployment is transitional, and it sucks to lose your job and wonder if you're going to spend 5 months or 5 years trying to find a new one; at the same time, unemployment tends to stay in the 4%-8% range, and 5% unemployment means either you or someone else is that guy wondering about where you're getting your next paycheck.
The difference is whether you stay in your comfortable seat and we all stay as poor as we are, or you get moved out of your comfortable seat and the other 95% of society enjoys growing wealth. The middle-class get to buy more toys (e.g. computers, cell phones, the things that made your programming job worth $144k/year in the first place); the poor get to eat more frequently, and maybe get access to medical care; you get to look for a new job, and a highly-wealthy society can supply better welfare to keep you from ending up as a beggar on the street with no job and no food while you do that. Probably less-good for you than not losing your job, but a lot better for everyone else at that moment, and better for *everyone* over time.
You would be wearing a loincloth and hunting in the wilderness right now, probably ill, with no healthcare and the constant uncertainty of where your next meal is coming from, if we didn't progress in this way. Your comfortable life today is built on the cycle of technical unemployment.
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That's a ridiculous argument. I make hard economic arguments about technical progress and the growth of wealth in society all the time; I don't say ludicrous shit like "these people are now unemployed and uncertain, so their lives are better because they can find a new job!" The reduction in employment reduces wages paid out by reducing human labor time involved in each unit of product, and that leaves more money in consumer hands as prices fall; that money will buy new things, dictating what new jobs exist--many of which will be mindless, mundane tasks that are just hard to automate.
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This is a larger issue which requires a larger discussion, but essentially as we continually automate, eventually a point will be reached where most people aren't needed for work. It's fine and dandy to say "well, just educate yourself!", but not everyone is smart enough to do that. And you need to deal with those people.
Because, left unchecked, if we end up with a lot of poor unemployed middle intelligence people with not enough food, bad things will happen.
Also, if we end up with social distribution fixing the food part, but still have lots of people unemployed with too much time on their hands, bad things will happen.
I have no solution for this, but I can certainly see it coming.
The average single-family house in 1950 was 983sqft, and the average household spent 28% of their income on it; in 2003, it was 2,300sqft, and the average household spent 33% of their income on it. Roughly half of that expense is the actual rent or mortgage.
Housing prices do not equate to housing cost. The same $120,000 house in a 14% interest rate market is a $350,000 house in a 4.25% market. That is to say: it's a $1,085/month 30-year mortgage. I'm working off what people actually spent per square foot of living space.
Even so, house prices did increase marginally in the past decade and a half. Falling interest rates don't just adjust the price of housing; people were conned into this idea that low interest rates mean a buyer's market, and the willingness to spend a greater proportion of the household income on the same amount of housing increased.
In case you're wondering, here is a chart for the United States median household spending shares. These represent the proportion of income spent on each good, with housing and utilities represented per 1,000 square feet of living space.
Rent-seeking behavior in an area doesn't reflect the national trend, and also isn't sustainable. We also have concepts such as gentrification (we throw all the poor people over there, and bring all the rich people over here, and then jack up all our prices for the same shit).
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