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NBCDFW: Twinkies Maker Hostess Going Out of Business, CEO Blames Union Strike

Kilmer17

By Kilmer17
in The Tailgate

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brandymac27

brandymac27

Posted
Posted

Will Twinkies be reborn through new Mexican ownership?

Next week may be Black Friday but sweets lovers across the nation hung their heads in sorrow on a dark Friday yesterday as Hostess announced they would cease making their line of products, which include the iconic Twinkies brand, because of the Bakers Union Strike.

But now as the brand heads towards liquidating and selling off their assets, a Mexican company may be angling to resurrect the golden Twinkies.

According to the Christian Science Monitor, while food producers ConAgra and Flowers Food, the American company behind Nature Valley granola, have expressed interest along with Little Debbie baker McKee Foods, Mexico’s Grupo Bimbo may hold the inside track.

Grupo Bimbo is the world’s largest bread baking firm, which already owns parts of Sara Lee, Entenmann’s and Thomas English Muffins and previously made what was considered a low-ball offer of $580 million a few years ago, Forbes reports. Now Hostess may only be worth $135 million.

Cont'd at link

http://nbclatino.com/2012/11/17/will-twinkies-be-reborn-through-new-mexican-ownership/

Long Live the Twinkie!

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jpyaks3

jpyaks3

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Holy ****, look at what the company was trying to implement

-- An immediate 8 percent wage cut.

-- Shifting 20 percent more of health care costs onto the workers (for some workers, this would mean an increased cost of $240 a month for medical insurance).

-- Eliminating retiree Medigap insurance, which covers gaps in Medicare.

-- Eliminating Pension Supplement to pay health and funeral costs.

-- Closing an undisclosed 10 to 12 plants.

-- Eliminating the eight-hour day, which would mean no time-and-a-half pay after eight hours per day.

In addition, the company illegally froze pension contributions mandated under the contract for all of 2012, in violation of federal law. This is still being contested before the National Labor Relations Board.

And people want to try and blame the union? Ridiculous.

That is ignoring all the financial problems Hostess had before this.

Here is some more fully sourced info

Forbes: Hostess Exited Bankruptcy Because Of "Substantial Concessions By The Two Big Unions." Forbes explained that Hostess was able to exit bankruptcy in 2009 for three reasons, including that "substantial concessions" were made "by the two big unions" -- the Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. Forbes further explained that "annual labor cost savings to the company were about $110 million" and that "thousands of union members lost their jobs." [Forbes, 7/26/12]

Hostess Had Stopped Contributing To Pensions And Wanted To Cut Worker Pay Further. According to The Kansas City Star, union leaders reported that Hostess had stopped contributing to workers' pensions and wanted to cut wages and benefits "by 27 to 32 percent":

The bakery workers union said the contract would cut wages and benefits by 27 to 32 percent, including an immediate 8 percent wage cut.

[...]

Union officials said the company stopped contributing to the workers' pensions last year, and 92 percent of union members voted to reject the contract in September. A bankruptcy court judge allowed the company to force the union to accept the new collective bargaining agreement.

"Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years," said Frank Hurt, international president of the union. [The Kansas City Star, 11/12/12]

Hostess Raised Executive Salary By 35% To 80%. According to The Wall Street Journal, in April Hostess' creditors noted that Hostess had dramatically increased executive pay, including increasing CEO compensation from $750,000 to $2.25 million. According to the Journal, Hostess' creditors called the move "a possible effort to 'sidestep' Bankruptcy Code compensation programs":

Last July, the court documents said, the compensation committee of Hostess's board approved an increase in then-chief executive Brian Driscoll's salary from to $2.55 million from around $750,000. The company had hired restructuring lawyers in March 2011, the creditors said, and filed for bankruptcy protection on Jan. 11.

[...]

Besides Mr. Driscoll, "other executives' salaries were increased by from 35% to 80%," the creditors said. The documents said that Mr. Driscoll subsequently renounced a portion of the increase while "other executives did not appear to have done so." Besides Mr. Driscoll, two other executives who saw their salaries increase have also left the company, according to the spokesman.[The Wall Street Journal, 4/4/12]

http://mediamatters.org/research/2012/11/16/fox-ignores-hostess-array-of-troubles-to-scapeg/191440

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jpyaks3

jpyaks3

Posted
Posted
were they not getting far above the median wage/compensation for bakers?

maybe they can find work in a nice Taqueria now

So this is cool

Hostess Raised Executive Salary By 35% To 80%. According to The Wall Street Journal, in April Hostess' creditors noted that Hostess had dramatically increased executive pay, including increasing CEO compensation from $750,000 to $2.25 million. According to the Journal, Hostess' creditors called the move "a possible effort to 'sidestep' Bankruptcy Code compensation programs":

Last July, the court documents said, the compensation committee of Hostess's board approved an increase in then-chief executive Brian Driscoll's salary from to $2.55 million from around $750,000. The company had hired restructuring lawyers in March 2011, the creditors said, and filed for bankruptcy protection on Jan. 11.

as long as they don't uphold their contracts with their workers and as long as the workers have no recourse against drastic cuts and attacks on their wages and benefits. Gotcha.

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Barney B

Barney B

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Posted
Classic thinking from he Right, as wokers we should just take what our benevolent demigods gift us through their grace while they live in luxury upon Olympus.

Still, Driscoll's original salary (back when everybody was presumably acting in good faith) of $750,000 doesn't sound outrageous for a guy in his position, nor do the salaries of the other executives. :2cents:

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nonniey

nonniey

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Posted
Holy ****, look at what the company was trying to implement

.[/url]

And yet Hostess was offering a contract superior to most companies in the industry (believe the hostess workers would still have made over 20% more than the average baker). Bottomline, you're ignoring what the starting point was for these particular workers. Now they'll make significantly less on unemployment (Which we will pay for), than the average baker.

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deejaydana

deejaydana

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Posted
Classic thinking from he Right, as wokers we should just take what our benevolent demigods gift us through their grace while they live in luxury upon Olympus.

I guess it's easier to think that the "right" believes this then look deeper into the particulars of this story. I feel sorry for the 11K plus people who weren't Union workers @ Hostess who were essentially held hostage during this and eventually lost their jobs. They had no say in how things went down. I'm sure some fault lies on either side but some of the Union rules that Hostess had to abide by were beyond non-competitive. It's increasingly untenable to demand employer consessions (or have leverage) when you're not in a skilled profession and globalization is rapidly leveling the marketplace for jobs well, everywhere (skilled and unskilled). Sorry that these folks are out of work just before the holidays. Some of them just pushed their hand too far and have to learn the hard way.

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twa

twa

Posted
Posted
So this is cool

as long as they don't uphold their contracts with their workers and as long as the workers have no recourse against drastic cuts and attacks on their wages and benefits. Gotcha.

Oh it's real cool to go bankrupt and have a court supervise your business for your creditors that already bailed your over priced employees out once

you do understand contracts are subject to the bankruptcy court....as are wages and benefits for ALL involved?

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NoCalMike

NoCalMike

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It looks like Hostess was headed out of business regardless of the Strike. The Strike may have sped things up anyone from 6-18mos ahead of schedule, but they were piss-poor management company, and because the strike came when things were falling apart anyway, it was a convenient scapegoat for the anti-union folks to latch onto and showcase.

http://www.politicususa.com/romney-vulture-capitalist-style-management-killed-hostess-unions.html

Hostess Brands’ demise is a recurring story that should be well-known after Americans learned the predatory private equity tactics of Bain Capital during Willard Romney’s failed run for the White House. In fact, union president Richard Trumka pointed out that Wall Street investors that own Hostess were disinterested in the company’s success and cited similarities to the situation of Bain Capital and KB Toys in 2000. As a reminder, Bain Capital’s scheme was leveraging companies with crushing debt, cutting workers’ wages and benefits, and when the company can no longer repay their loans they go into bankruptcy, often more than once. Hostess is in bankruptcy for the second time since 2009 and a major factor in their inability to succeed is that over the past eight years, they were owned by Wall Street investors that were restructuring experts, managers from other non-baking food companies, and now a liquidation specialist. There was no plan for Hostess to succeed and it appears that was the objective all along.

Hostess’s failure was compounded by having six CEO’s in 8 years who had no experience in the bread or cake baking industry, and despite their financial woes, the company’s CEO got a 300% salary increase from $750,000 to $2,250,000, and other top executives received raises worth hundreds-of-thousands of dollars; all while the company was struggling. Instead of acknowledging the lack of competent leadership and exorbitant executive salaries as contributing to the company’s decision to close its doors, CEO Gregory Rayburn issued a statement saying, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.” However, Rayburn and Hostess management claimed the strike would be responsible for closing plants even before there was a strike, and they had made plans to close plants whether or not workers accepted the Draconian wage and benefit cuts the company offered, or if they went on strike.

(more at link above)

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Larry

Larry

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^^^^^ You may want to check your math, not that it matters about assigning blame here but Hostess was lousy with leftward leaning Obama supporters at the top of the org chart.

Just out of curiosity, where to you get **** like this?

Is there some web site or some such where right wingers can type a few words into a search engine, and up pops carefully edited reasons why whatever you typed in, is caused by the vast liberal hoards?

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deejaydana

deejaydana

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Just out of curiosity, where to you get **** like this?

Is there some web site or some such where right wingers can type a few words into a search engine, and up pops carefully edited reasons why whatever you typed in, is caused by the vast liberal hoards?

Actually I made the post to specifically upset your delicate sensibilities Larry. I keed of course. Here's one link, I'm sure you'll quickly dismiss of it:

http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles

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D'Pablo

D'Pablo

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Actually I made the post to specifically upset your delicate sensibilities Larry. I keed of course. Here's one link, I'm sure you'll quickly dismiss of it:

http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles

I, for one, take your article and its source material very seriously. It paints a picture of a Democratic financier taking control of a failing company and, with union support, attempting to take it through managed bankruptcy. In the process, the financier's company infused 120 million dollars into the company and gained additional equity from two firms: Monarch and Silver Point. These two firms, as Hostess faced floundering sales, asked for more union concessions.

The story continues:

"The company was going to pieces -- again -- and Hostess filed for Chapter 11 protection -- again -- in January of this year. This time, though, the moneymen were no longer on the same page. As the majority equity holder, Ripplewood [the goofy union loving liberal equity folks] badly wanted to keep Hostess out of bankruptcy. It pleaded with the lenders [Monarch and Silver Point] to show flexibility, but they were not so inclined. They lenders held superior fiscal hands and had less downside if Hostess failed. In the event of a bankruptcy, given all the assets Hostess owned, the lenders would still walk away with millions."

Who are Monarch and Silver Point?

Silver Point: http://www.opensecrets.org/orgs/summary.php?id=D000037584

Monarch: https://www.opensecrets.org/usearch/index.php?q=Monarch+alternative+&searchButt_clean.x=0&searchButt_clean.y=0&searchButt_clean=Submit&cx=010677907462955562473%3Anlldkv0jvam&cof=FORID%3A11

Turns out they're mostly GOP supporters.

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deejaydana

deejaydana

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If the business model is unsustainable it must change or die...it was unsustainable and one union refused to change to benefit the others

the new investors asked for sacrifices just as the old ones did

Exaclty. My point wasn't to call out who's at the top, it's irrelevant playing a blame game. The bottom line is Hostess was no longer competitive. The Union people just helped hasten a likely inevitable demise. And somebody needs to tell the dough heads that are going out and buying Twinkies as some sort of momento that another company will come along and buy that specific brand so we'll likely continue to see them on store aisles for the forseeable future.

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