Bye bye twinkies!!!

[marx]

From Forbes, not exactly a lefty rag:

Who Killed Hostess Brands and Twinkies?

I’m sure you have, by now, heard the news. Hostess Brands, the company that gave us such remembered childhood treats as Twinkies, Ding Dongs, Devil Dogs and other baked foodstuffs that have fallen into disfavor in our more gourmand age, announced today that it would be closing for business, effective immediately.


More than a few observers say they know who to blame for the demise of the iconic company: the Bakery, Confectionary, Tobacco Workers and Grain Millers International union, which represents thousands of striking Hostess Brand workers who have refused to accept a new contract that would do everything from slash their salaries to their retirement benefits.

Time for a reality check.

Hostess has been sold at least three times since the 1980s, racking up debt and shedding profitable assets along the way with each successive merger. The company filed for bankruptcy in 2004, and again in 2011. Little thought was given to the line of products, which, frankly, began to seem a bit dated in the age of the gourmet cupcake. (100 calorie Twinkie Bites? When was the last time you entered Magnolia Bakery and asked about the calorie count?)

As if all this were not enough, Hostess Brands’ management gave themselves several raises, all the while complaining that the workers who actually produced the products that made the firm what money it did earn were grossly overpaid relative to the company’s increasingly dismal financial position.



So now an estimated 18,500 workers will join the nation’s unemployment rolls. But while Hostess Brands might soon become a forgotten name from the past, it’s unlikely such a fate awaits such signature products as Twinkies. Company executives have already asked for bankruptcy court permission to begin the process of selling off their famed product lines to other companies.

 

[marx]

Those raises?

The board replaced Driscoll with Greg Rayburn, a restructuring expert Hostess had hired as a consultant only nine days earlier. Rayburn was a serial turnaround specialist who had worked with such high-profile distressed businesses as WorldCom, Muzak Holdings, and New York City Off-Track Betting. He became Hostess’s sixth CEO in a decade. 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%. (Driscoll had also received a pay raise back then.) The Teamsters saw this as more management shenanigans. “Looting” is how Hall described it in TV interviews.

Rayburn announced that the pay of the four top executives would go down to $1 for the year, but that their full salaries would be reinstated no later than Jan. 1. Hostess pays Rayburn $125,000 a month, according to court filings.

So the workers can suck shit, these guys lose their 80% raises for a bit and then are riding high again.

 

[marx]

Amazing what you can find in 30 seconds of googling.

In a desperate attempt to break the solidarity and resolve of striking BCTGM members across the country, Hostess Brands is falsely claiming that its decision to close three of its bakeries -- St. Louis, Cincinnati and Seattle -- is the result of the nationwide strike against the company by BCTGM members.

In fact, according to the company's 1113 filing with the bankruptcy court earlier this year as well as its last/best/final and non-negotiable proposal to its BCTGM-represented workers, the company was planning to close at least nine bakeries as part of its reorganization plan, although the company refused to disclose which bakeries it intended to close. This is in addition to the three bakeries that were to be closed as a result of the company's planned sale of its Merita division.

Moreover, St. Louis Mayor Francis Slay was quoted in a November 13 KMOX-CBS St. Louis article stating, "I was told months ago they were planning on closing the site in St. Louis… And there was no indication at that time it had anything to do with the strike the workers were waging."

BCTGM International Union President Frank Hurt stated, "The recent claim by Hostess CEO Greg Rayburn that our strike is the reason for the closure of the three bakeries is simply not true. That statement is a continuation of a disturbing pattern by the company of issuing public statements that are erroneous at best and disingenuous at worst.

"Our members rejected the company's outrageous proposal by 92 percent in September. Rejection came from every corner of the country. They were being asked to vote on a proposal with massive concessions, knowing that their plant could very well be one of those to be closed.

"Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars."

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO's with no true experience in the wholesale baking business have left this company unable to compete or survive.

A total of 24 Hostess production facilities are on strike or honoring the strike with picket lines established by striking Hostess workers at other BCTGM-represented facilities. Additionally, BCTGM members at one transport facility also are on strike. Company claims that union members are crossing picket lines and maintaining production at striking plants are vastly untrue.

 

[captaincaveman]

From Forbes, not exactly a lefty rag:

Who Killed Hostess Brands and Twinkies?

I’m sure you have, by now, heard the news. Hostess Brands, the company that gave us such remembered childhood treats as Twinkies, Ding Dongs, Devil Dogs and other baked foodstuffs that have fallen into disfavor in our more gourmand age, announced today that it would be closing for business, effective immediately.


More than a few observers say they know who to blame for the demise of the iconic company: the Bakery, Confectionary, Tobacco Workers and Grain Millers International union, which represents thousands of striking Hostess Brand workers who have refused to accept a new contract that would do everything from slash their salaries to their retirement benefits.

Time for a reality check.

Hostess has been sold at least three times since the 1980s, racking up debt and shedding profitable assets along the way with each successive merger. The company filed for bankruptcy in 2004, and again in 2011. Little thought was given to the line of products, which, frankly, began to seem a bit dated in the age of the gourmet cupcake. (100 calorie Twinkie Bites? When was the last time you entered Magnolia Bakery and asked about the calorie count?)

As if all this were not enough, Hostess Brands’ management gave themselves several raises, all the while complaining that the workers who actually produced the products that made the firm what money it did earn were grossly overpaid relative to the company’s increasingly dismal financial position.



So now an estimated 18,500 workers will join the nation’s unemployment rolls. But while Hostess Brands might soon become a forgotten name from the past, it’s unlikely such a fate awaits such signature products as Twinkies. Company executives have already asked for bankruptcy court permission to begin the process of selling off their famed product lines to other companies.

So the unions can get together with the Occupy movement and buy the assets. Since companies start from the bottom up, this should be a no-brainer. All the work and brains are "the people's assets." LOL. If that doesn't work, move to China where each worker is given a fair share of not much. That is better than nothing. Right?

 

[StrongLyfe]

That's greedy management for you, and union leaders are just as bad so combine the two and there's disaster. As the Forbes article had said that Hostess had changed hands at least 3 times and management looted the company each time no wonder why there's no money at all. Blaming the workers for the problem is just a diversion from the real issue: greedy management!

 

[marx]

So the unions can get together with the Occupy movement and buy the assets. Since companies start from the bottom up, this should be a no-brainer. All the work and brains are "the people's assets." LOL. If that doesn't work, move to China where each worker is given a fair share of not much. That is better than nothing. Right?

Seriously bro, you need human assets and physical assets. Machines without worker or workers without machines are of limited value. In any case, there has to be a workforce, that is, people with money to spend, on crap like twinkies, to make the equation work.

 

[MorganKane]

The management got switched from performance based pay to salary.
Its common when you are filing for bankruptcy.
You need the management to stay to finish the job.

The judge did not object to it, just that the amounts was higher then he liked.

The bakers objected to an 8% pay cut and people think thats fine but when the management did not want to take a 70% pay cut then they are greedy.
Strange how that works.

I tell you this, when a union like the Teamsters (in this case the largest one involved) are telling the bakers that they are wrong someone should pay attention.
Also, that many of the bakers crossed the picket lines shows that the bakers might not be so unwilling to negotiate but the union is stopping it from happening.

This is just an extension of the class warfare thats going on.
Blame the rich seems to work fine.

Hostess is not making money.
Cant stay afloat, something got to give.
Companies dont have a magic money tree they must make money.

 

[tommyguns2]

There was an interesting article in the WSJ today that exonerated the bakers' union a bit, and focused more on the Teamsters union. Apparently, the production costs are fairly competitive, but the distribution costs (the Teamsters domain) are terrible due to crazy work rules. Sounded from the article that the bakers' attitude was "screw it" because if the reorganization doesn't fix the f'd distribution problems they were just going to be back in bankruptcy in another couple of years.

If that were true and the bakers' production costs are pretty competitive, then the bakers would rather the assets be liquidated and get bought by somebody that doesn't have the screwed up distribution structure that Hostess presently has and hasn't fixed.

An interesting, different point of view.

 

[BigGameHunter]

The management got switched from performance based pay to salary.
Its common when you are filing for bankruptcy.
You need the management to stay to finish the job.

The judge did not object to it, just that the amounts was higher then he liked.

The bakers objected to an 8% pay cut and people think thats fine but when the management did not want to take a 70% pay cut then they are greedy.
Strange how that works.

I tell you this, when a union like the Teamsters (in this case the largest one involved) are telling the bakers that they are wrong someone should pay attention.
Also, that many of the bakers crossed the picket lines shows that the bakers might not be so unwilling to negotiate but the union is stopping it from happening.

This is just an extension of the class warfare thats going on.
Blame the rich seems to work fine.

Hostess is not making money.
Cant stay afloat, something got to give.
Companies dont have a magic money tree they must make money.

Thats damn right. Whats frustrating to me is that so few people understand this.

This is what happens when your mgmt team is a hired gun with experience in dealing with obsurd demands, instead of a guy or girl that is experienced in making and selling fuckng twinkies. Its not that complicated.

 

[Cheops]

Those raises?

The board replaced Driscoll with Greg Rayburn, a restructuring expert Hostess had hired as a consultant only nine days earlier. Rayburn was a serial turnaround specialist who had worked with such high-profile distressed businesses as WorldCom, Muzak Holdings, and New York City Off-Track Betting. He became Hostess’s sixth CEO in a decade. 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%. (Driscoll had also received a pay raise back then.) The Teamsters saw this as more management shenanigans. “Looting” is how Hall described it in TV interviews.

Rayburn announced that the pay of the four top executives would go down to $1 for the year, but that their full salaries would be reinstated no later than Jan. 1. Hostess pays Rayburn $125,000 a month, according to court filings.

So the workers can suck shit, these guys lose their 80% raises for a bit and then are riding high again.

Here is the information that you used from huffingtonpost that suggests Driscoll received a huge pay raise...

Some creditors question Hostess pay raises approved in late July.

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.


The problem I have with Driscoll's pay raise in July is the fact that he resigned in March.

Posted: 11:11 PM, March 9, 2012

Hostess CEO Brian Driscoll abruptly resigned yesterday, fueling speculation from company insiders that the bankrupt baker might be weighing liquidation

http://www.nypost.com/p/news/business/humble_pie_at_hostess_vEahL6ZJbXfJreTbKpVDVP


Don't believe all the propaganda you read.

 

[BigGameHunter]

Theeee Huffington Post = Reeeal tomato katchup Eddie?

 

[MorganKane]

Bankruptcy judge gives Hostess Brands preliminary OK to shut operations, pending final court hearing next week.

I have the feeling many of them rather take the 8% pay cut then this.