No More Twinkies

Nov 19 2012

Hostess warned the bakers’ union that the bankrupt company couldn’t survive a strike, and if the bakers didn’t return to work by 5 pm Thursday, Hostess would be liquidated. Union bosses should’ve listened. Friday, Hostess Brands, maker of iconic American foods like Twinkies, Cup Cakes, Ding-Dongs, Snowballs and Wonder Bread, announced that it is closing its plants and laying off all its workers. Some people are already offering boxes of Twinkies for sale on eBay for hundreds of dollars. Don’t worry: some other company will surely buy those brands and get them back on grocery shelves. But it will likely be a non-union company. The bakers’ union defied management, but at a cost of 18,500 union jobs. Bet that doesn’t taste so sweet to the workers who were led from the bakery to the slaughterhouse.

It’s hard to put a positive spin on your own stubbornness costing over 18,000 jobs, but the union bosses are giving it a good try. Labor leaders in Maine say the Hostess workers’ refusal to compromise provides inspiration for the fight to preserve union power and is a warning sign for investors who’d seek to squeeze more profits out of the workers. Well, okay, except in this case, they just demonstrated their power to destroy their own employer, which would seem to warn investors not to invest in union shops.

Meanwhile, AFL-CIO leader Richard Trumka apparently couldn’t think of a way to blame the demise of the Twinkie on George W. Bush, so he blamed it Mitt Romney instead. At least, indirectly. He called Hostess’s demise an example of “Bain-style Wall Street vultures making themselves rich” as the workers pay the price. But it’s hard to imagine management popping champagne corks in celebration of being driven out of business. Maybe the investors will get some of their money back when Hostess is liquidated. But I have a feeling they would’ve made a lot more money in the long run if they could have just kept selling Twinkies.

This commentary is from yesterday's Huckabee Report.  What do you think about this? Leave me a comment below.  I read them.

Comments 1-5 of 79

  • Tim Conrad

    11/20/2012 08:58 PM

    The bakers forgot that half a loaf is better than none.

  • Newsfanatic

    11/20/2012 08:25 PM

    Normally Governor I would agree with you. Except I have followed this debacle at Hostess for some time and you omitted the following:

    Hummel, a 35 year employee of Hostess, and a member of the Bakers' union working in Lenexa, Kan., said he was making about $48,000 in 2005 before the company's first trip through bankruptcy. During that reorganization Hostess employees gave over $100 million in concessions and Hummel’s pay dropped to $34,000 a year. “ I didn’t want to take such a hit, but I did it to save my job and other jobs too.” The latest contract demands from Hostess would have cut his pay to about $25,000, with significantly higher out-of-pocket expenses for insurance. “ I have never voted for a strike in 35 years, but I had too this time.” Hummel said.

    "The point is the jobs they're offering us aren't worth saving," he said Friday. "It instantly casts me into poverty. I wouldn't be able to make my house payment. My take-home would be less than unemployment benefits. Being on unemployment while we search for a new job is a better choice. Unfortunately the company has made collecting unemployment the better alternative for us.”
    As Hostess closed it’s doors an investigation continues by the bankruptcy court into executive compensation at the Irving based company. In court papers, obtained by The Wall Street Journal, the creditors say testimony from Hostess's executive vice president of human resources indicates that "in the run-up to bankruptcy"--when Hostess had already hired bankruptcy attorneys in 2011--it was also working to shift its executive compensation structure. Hostess slashed bonuses payable only if certain performance goals were met and, on September 26, 2011 the company's compensation committee signed off on "substantial salary increases for numerous senior executives," the creditors said, calling the jumps "dramatic."
    According to the Journal, the four executives -- John Stewart, Davide Loeser, Gary Wandschneider and Richard Seban – had already received salary increases of 75 to 80 percent in July as well as fully paid health benefits when the company already had hired restructuring lawyers. Hostess’s then-CEO Brian Driscoll, saw his salary rise to $2.55 million from $750,000—a 300% increase.

    Gregory F. Rayburn, who took over as CEO at Hostess just last month, told the Journal that the company's top four executives working under him had agreed to have their salaries cut to $1 a year until Hostess emerged from bankruptcy or Dec. 31, whichever occurs first. Rayburn did not comment when asked if executives would have to return their raises from 2011.

  • Stephen Shelton

    11/20/2012 05:18 PM

    I couldn't agree more...those of us in right-to-work states like North Carolina don't have a problem understanding the economics of how the unions too often squeeze the employers out of business instead of taking a cut in benefits. This is a perfect example of what happens when those with a sense of entitlement by the world are in charge. My county has a 13.5% unemployment rate...we'd love to make Twinkies for them in a non-union plant. And we have a new Republican governor that will welcome them with open arms!

  • Kim D. Anderson

    11/20/2012 04:25 PM

    I could not agree with you more. Having been a General Foreman at GMs Moraine Truck and Bus plant in Dayton,Ohio and after two transfers in one year due to plant closings I saw first hand how ignorant the employees can be.Many times when issues came up the hourlys response was shutter her down.Obamanomics is eventually going to tell the rich ,you can invest and take all the risk but your only going to get a small portion of your investment back, the rest will be given to the workforce. Heck now as a company you can not even liquidate your company without federal approval. Dark days ahead.

  • Stanley Wroblewski

    11/20/2012 01:57 PM

    I heard the federal judge in charge of their bankruptcy will not let them liquidate and the union and managements are re-negotiating a settlement.

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