All Hostess Brands employees will lose their jobs in the coming weeks, some sooner than others, the company announced Friday. The layoffs span nationwide, and represent a deep cut in mid-wage jobs that often came with benefits. The company had operated 33 bakeries, 565 distribution centers and
570 outlet stores across the country. Many production workers earned up to $20 an hour, plus had access to medical benefits, according to Michael O'Brien, a former Hostess employee who had worked at the company for 45 years, in various sales functions, before he was offered a buyout last year.
A recent bakers strike was the final nail in the coffin, the company said.
"Widespread strikes by the Bakers Union forced us to cease operations because we can longer produce or delivery product."
"The industry has overcapacity. We're overcapacity. Our rivals are overcapacity," Hostess CEO Gregory Rayburn said in an interview on CNBC.
Yup. It's definitely the unions' fault that the market for cheap preservative-laden food has dried up and that someone had to go. Damn those unions. Next they'll go and figure out a way to ruin the market for buggy whips.
In this case I think it is parenting peer-pressure. My wife is the secretary at an elementary school. If a kid comes to school with a Twinkie in his lunch box, it is seen by other parents just as if he brought a pack of cigarettes. Kids might have other treats that are only marginally healthier, but for some reason the Hostess stuff became the epitome of junk food that makes kids fat.
The buyers, and they apparently have made their decision a couple years ago. Who knows how long those same twinkies have been sitting on the grocery store shelves, they keep practically forever, you know!
While the unions make a convenient scape goat, from the data record it appears this has been a long term "planned bankruptcy" or in the more colorful argot of the Goodfellas, a "bust out," from the time Interstate Bakeries was purchased out of bankruptcy in 2004 by a consortium of ?private equity? funds.
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It appears Hostess Brands had been preparing for a chapter 7 [liquidation] filing for quite some time, as executives and law firms experienced in liquidation had been hired months ago, and the liquidation was scheduled even if the unions had accepted yet another benefit and wage cut. (Contractually required employer defined benefit pension contributions stopped over a year ago)
At least one sizable loan was obtained by the renamed Hostess Brands, nominally to update and modernize their facilities, but no update appears to have occurred. Rather the loan proceeds appear to have been used to fund a special dividend to the stock holders, which were the private equity funds, and which more than covered their initial investment to purchase Interstate Bakeries, which had already been run into the ground by their previous owner, Data Processing and Financial General which had purchased the corporation in
1975.
There appears to have been several fraudulent loans and the pension fund seems to have been looted. Both of these actions should be crimes, but most likely there will be no prosecutions. Because of unemployment compensation, cost of the social safety net, loss of taxes paid by the company and their employees, tax credits for bad loans/business losses, and expense to cover the pension shortfall through the PBGC, very considerable costs have been externalized to society and the general taxpayers.
I am assuming that the whole point of the strike was to attract some attention to this cooporate looting if the owners did not give workers their share of the Hostess pie as the comapny was ransacked. They knew they would soon be out of work anyway.
It is remarkable how closely this parallels the scenario in the movie Wall Street from 1987 ! It is remarkable that corporate raiders still get away with stuff like this. It is remarkable that people still believe the propaganda that unions are just being stupid and greedy while managment is honest and taken advantage of. In reality, both parties are smart, unscrupulous, and greedy.
They only have a 30 day shelf life, unlike the Urban Myths to the contrary. I have seen them covered in bread mold when someone left them laying around. Not a pretty sight. :(
While there may have been some attempt by the union leadership to attract attention, IMNSHO it was a refusal by the union and its members to play any more games. They could see the writing on the wall, and could follow the looting of their pension funds, and decided to cut it off now. FWIW - the expiration of the Bush era tax cuts, particularly on Capital Gains may have had more to do with liquidation at this time than any union "interagency."
You may find this analysis of interest
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Bain, Elliott, and Ripplewood -- all cut from the same bolt of cloth...
That's open to debate. He does a lot of things that aren't real. Like those 'Jay Walking' segments. If it was 12 years old, id would have dehydrated and turned to dust. I had military rations that were processed in the late '40s, when I was in the Army. They were almost 30 years old. The crackers were dust. Even though they were sealed in a steel tin, they were stale and just turned to dust when you tried to pick them up.
Jay wouldn't be funny, if he didn't lie all the time. That's what second rate comics do for a living. If he was a better liar, he would forecast the weather.
Tell me, George. If you were the HR director of a company and you had the choice between applicants with similar backgrounds would you hire the one from Hostess who refused to go back to work, or another applicant?
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