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(71 posts)

the Hostess Story

  1. i kept this in politics because the Wonder liquidation has lately been of interest in the political topics

    for those who want to read beyond the headlines i found this story...

    the news media story line for this liquidation is the strike...

    but Hostess came out of it's last bankruptcy with more debt than it went in..

    it doesn't take a business wizard to figure out that lightening a business's labor obligations isn't enough to bail out a company overloaded with debt...

    but they went back to the same well for their solution and then blamed labor for their demise.

    interesting reading

    Posted 2 years ago #         
  2. how the numbers stack up in this story

    i linked to this article because it was sourced in a poster on facebook that cited these figures for Hostess debt

    $50 mil trade creditors
    $36 mil lease obligations
    $850 mil secured debt
    $75 mil debtor in possession loans (the investors)
    $80 mil accrued employee compensation (pension obligations)

    i should note that i do not remember see the figures for secured debt or lease obligations in the linked article...

    but following the money trail does get pretty interesting... especially when you follow the trail of intention...

    like no treasury department?
    for the uninitiated..
    that means no-one in-house was in charge of watching the money

    Posted 2 years ago #         
  3. Frankly, it's hard to defend the continued existence of Hostess on any grounds. On the one hand, I feel bad for the workers who lost their jobs. On the other, the demise of the Twinkie can only bode well for the physical health of America.

    (Hooper, feel free to chime in here. But be nice about it, please.)

    I just hope that Twinkies don't return in some new incarnation. On the Seattle Times site, a guy was saying that they're going to start shipping them down from Canada, where Hostess is still operating in the black, union and all.

    Posted 2 years ago #         
  4. Sorry, DBP but I think that line of thinking is ridiculous.

    I am a gen x'er who hangs around a LOT of people my age who all grew up with a twinkie or a ding dong in their lunches. Very, very few have weight issues. Everything is about moderation, and that is taught at home, not dictated by the feds (see; marijuana, alcohol, etc).

    In my experience it is the kids whose parents don't allow candy in their homes who are the ravenous ones you have to watch a birthday parties!

    Posted 2 years ago #         
  5. redblack
    Member Profile


    smitty: the fed didn't dictate that hostess go bankrupt. that was the free market working its magic.

    as such, hostess failed. part of it was probably due to increased awareness about the composition of our food stuffs and concentration on better eating habits by consumers. and part of it was probably a push-back against corporate food stuffs in favor of locally-sourced food. both of those are free market decisions.

    for example, top pot is doing well here at home. but what about dunkin donuts?

    anyway, i heard a blurb this morning that PBR is looking at buying hostess' operations.

    <dennis hopper>

    "heineken??! PABST BLUE RIBBON!!"

    </dennis hopper>

    Posted 2 years ago #         
  6. Could the twinkie have been saved?

    and the sugar trail thickens

    Posted 2 years ago #         
  7. "<dennis hopper>

    "heineken??! PABST BLUE RIBBON!!"

    </dennis hopper>"

    Top-10 all-time favs. You made my day.......but forgot the best part of that line!

    I agree on the free market, just taking issue with the comment regarding their part in the physical state of America.

    Posted 2 years ago #         
  8. Smitty..

    here's the problem twinkie was facing...
    when you are counting your carbs and calories
    and you ask yourself...
    twinkie or dark chocolate salted caramel
    dark chocolate salted caramel wins...

    bet you didn't have that choice in your lunch box

    Posted 2 years ago #         
  9. montanapup
    Member Profile

  10. montanapup..

    take a good look at Hostess's bottom line
    it was only a matter of time before liquidation
    the investor/owners said no to more money...

    the workers could have caved..
    but how long would they have kept their jobs in a rapidly failing company?

    and if they gave up rights to their pensions
    i believe even the federal pension guarantee fund wouldn't cover them ...

    you might want to think this one though before you give a knee jerk reaction..

    what would you do?

    Posted 2 years ago #         
  11. montanapup
    Member Profile

    no knee jerk reaction here - just commentary. we can all be arm chair financial quarterbacks on what we would have done - i dont know. again, everyone lost.

    Posted 2 years ago #         
  12. "Either way, everyone lost."

    Everyone except upper management. The CEO and his fellows received 100% to 300% raises in the lead-up to the crisis. Wonder if they saw it coming?

    Here's some testimony from a Hostess employee about what really happened...

    Posted 2 years ago #         
  13. you ever eat bacon? fast food? do you follow a stringent healthy diet? I do not eat Hostess products, although I am a sugar-holic. As one above said, every thing in moderation..

    someone did win..Little Debbie...

    and on the east coast? Tastycakes (one can sometimes get them at Hey Paisan , in Burien or Philadelphia Fevre , Madison and 24th)

    Posted 2 years ago #         
  14. more about the CEO, etc....make sure to read the first comment by Erik Reider...

    Posted 2 years ago #         
  15. EVERYONE saw this coming. This is what, the third time Hostess filed for bankruptcy? I don't believe that the union reps weren't warned about the consequences of a protracted strike.

    Proof? The union is still protesting outside of Seattle factory last I heard.

    I am a union member, and I still think that the management AND the union did EVERYONE a disservice in this incident. The people it will hurt the worse: the line employee, of course.

    Posted 2 years ago #         
  16. Take a minute and read that article I posted from the Hostess employee. He outlines the ways the unions were undermined and shafted by the management.

    Here's one quote...

    "Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.
    It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.
    That $3+ per hour they steal totaled $50 million last year that they never paid us. They sold $2.5 BILLION in product last year. If they can't make this profitable without stealing my money then good riddance."

    Posted 2 years ago #         
  17. Talaki34
    Member Profile


    The problems can be traced back to Continental Baking Company and then Interstate Brands Corporation acquisition of CBC from Ralston Purina. Mix in Charles Sullivan, Frank Coffey, James Elsesser and other company executives. None had any good decision making skills and were loath to listen to those who did.

    Year after year mid-level managers and workers watched helplessly as each bad decision gave birth to more bad decisions. It was almost as if many in upper management were addicted to poor decision making and could not or would not help themselves. Those in the positions of responsibility who were trying to keep the business from imploding either left in frustration or just gave up and waited for the worst to happen and it finally did.

    Posted 2 years ago #         
  18. "bet you didn't have that choice in your lunch box"

    I was a free (hot)lunch kid, believe it or not!

    Back in the day when we had a different color ticket than everyone else. Talk about stigma. But, I got over it.....I think

    Posted 2 years ago #         
  19. The problems can be traced back to Twinkie the Kid's whipped-lard ectoplasm and World Domination Corp's short-sighted decision to dump a half cup of depleted uranium into every batch instead of the full cup recommended by the FDA.

    Year after year, mid-level Ho Ho's and Ding Dongs watched helplessly as each bad batch gave birth to a new army of defective zombie marauders. It was almost as if many in upper management were addicted to the idea of non-biodegradability and could not or would not help themselves.

    Those in the positions of responsibility who were trying in vain to devise a landfill-safe Twinkie finally ate one out of frustration and waited for the end to come.

    But it never did, you see, because that which cannot be digested . . . cannot kill!

    And somewhere there lurks a creature – with the face of a child and the heart of a demon – cackling in demented glee.



    Posted 2 years ago #         
  20. Talaki34
    Member Profile


    Aren’t you just a funny little man.

    Posted 2 years ago #         
  21. This was an inenivitable train wreck.

    There was no hope that Hostess would regain its glory days, when Howdy Doody could get kids to kick a scream at the check out line for cupcakes or Twinkies. Our mom's, not wanting to risk a scene, would comply with the scam Bob Smith had foisted upon them.

    Today's moms have a range of reply, supplied by PCC - "Have a biscoti pretzel bite, darling" says a modern mom. Who could resist?

    Besides, search and search, you will find no Twinkies at PCC.

    This assault on the corporate treasury may amount only to the buzzards cleaning the desert.

    KB Toys, however, I'm not so sure.

    Posted 2 years ago #         
  22. Talaki34
    Member Profile


    You have to know the company history to understand the problems. Hostess would have done just fine if they had listened and had been flexible in the market.

    Posted 2 years ago #         
  23. Talaki34

    "Hostess would have done just fine if they had listened and had been flexible in the market."

    To do so would have required managers who understood they were making a product ...

    Posted 2 years ago #         

    I wonder. Can people get kicked off this blog just for being annoying?

    Oh jeezus . . . I hope not.

    Posted 2 years ago #         
  25. kootchman
    Member Profile

    The union crapped in their own nest.

    Posted 2 years ago #         
  26. waynster
    Member Profile


    Not so fast kman the company did not the union....

    on the lighter side did we kill the twinkie....

    Posted 2 years ago #         
  27. Bostonman
    Member Profile

    The unions responsibility lies in the fact that they accelerated the closing. The company appears to be mismanaged from top to bottom. It is clear from the cash flow statements and the financial statements that there was no real effort made to solidify distributions and eliminate the loss leaders.

    In the end its a combination of mismanagement from the lowest employee to the CEO coupled with an America that is more health conscience than ever and the future wasn't bright for them.

    Posted 2 years ago #         
  28. Bostonman..

    "In the end its a combination of mismanagement from the lowest employee to the CEO"

    so now the lowest employee gets to share the blame when incompetent managers tank the company and generate their bonuses by cutting labor costs and reneging on employee contracts?

    funny you should see it that way.

    Posted 2 years ago #         
  29. montanapup
    Member Profile

    more analysis of both sides.....

    Posted 2 years ago #         
  30. The lowest employees took cuts in pay over the years, and were expected to take yet another one.

    The ceo's pay was increased rather handsomely, per the link in Jan's post #14.

    It's time to stop blaming Labor and the Unions for everything, especially when corporate execs walk away with pocketfuls of money.


    Posted 2 years ago #         
  31. I felt bad for the Teamsters who drove the delivery trucks. They got screwed. I was taking some video over to KING and saw the picket line.

    Since I lost my full time job three years ago, I can understand how many of them who lost or will lose their job will feel.

    I hate to see people lose jobs and I really hate to see companies mismanaged.

    Since the American People didn't hire Romney, maybe he should be the new owner of Hostess. Hmmmm.

    Posted 2 years ago #         
  32. MIWS, remember Uniroyal? Well the eventual owners of that company hosed the rank and file. Why do I care? Because my father and an aunt lost their retirement due to bad business practices.

    Bad Management and Bad Union add up to bad news for the worker.

    Since I do work with some unions and have hiring restrictions based on union rules, I can empathize with these guys. Before you think I am changing, I would gladly get rid of some of the unions, while others have their place and I am glad for it. And they know I am a Republican.

    Posted 2 years ago #         
  33. HMCRich..

    "Since the American People didn't hire Romney, maybe he should be the new owner of Hostess. Hmmmm."

    before suggesting that ...
    you might want to read the links posted here that explore the current investors at Hostess...
    Bain style investors...

    hmmm indeed.

    Posted 2 years ago #         
  34. Rich, how was a "Bad Union" involved in the Uniroyal scenario?


    Posted 2 years ago #         
  35. 365Stairs
    Member Profile


    Having just enjoyed (2) of newer apple spice glazed at The Original Bakery this am...I am not one to interject anything about the health factors of the twinkie...

    Bottom line...(I have a 20/20 vision fo the obvious)...and I don't have to read any link to know how this it's happened before and how it will continue to happen to "big" business.

    You make a product people like...a lot.
    The product is in high demand...
    You grow...borrow tons of cash to Lease Buildings, build conveyors, and higher staff...
    Middle Managers and Sales want to look really good to the Senior Execs...they project solid growth in the near term and persuade Execs for expansion in the long term...They just want to look good...

    The Execs don't look to closely at the projections in the near and long term...they trust their Middle Management - of course...these are the future C-Class...

    The projections are off...the products are not selling in certain rural areas like told. Machines are still running and inventory is piling up all over.

    It's too late...Senior Exec takes annual tour in middle America to see a building or two on a world-wind get out of Corp and pony show is on...Get out the white gloves!

    Fat Cat sees a building with one line stopped...sees another with two lines stopped...all very clean and orderly and impeccable standards being met...employees all line with bleached white coats, hair nets, gloves, glasses...all OSHA approved!

    Inventory room is full! Over full. Shiney Trucks and trailers parked in the lot.

    Local General Manager explains they have been telling the Territory VP for MONTHS about over projecting and over promising...He stopped the lines and began a schedule adjustment and over-all cost cutting measure at his local's saved $10K..."Did I do good sir?"

    Senior Exec. returns to Corporate...tells the COO...COO tells the CEO...All Hell breaks loose...get all the VP's on the horn! Audit this site...that site...

    Stop the machines! Um...the machines are stopped sir...

    Let the non-essestial people go! Keep the middle managers...they're solid...they will help us re-build! get the picture.

    Poor Leadership fails every company...

    Hardest thing to do in business...ensure the people you hire tell you the real deal so you can make a real decision...

    Hostess did not have to end up this would be smaller...but not gone...if the leadership just knew how to manage growth..

    Posted 2 years ago #         
  36. 365stairs

    coming out of the first reorganization bankruptcy with more debt than they went in sort of wiped out the economic gains from the concessions made by labor to keep the company running ;-{

    it makes you wonder who thought that would really work.

    Posted 2 years ago #         
  37. Talaki34
    Member Profile


    This is a bit long, but it gives a peek at what happened. Well worth the read 365Stairs.

    This article will take you to up to the 1st bankruptcy minus the dumping of the stock.

    Posted 2 years ago #         
  38. Thanks for that, Talaki. Interesting read.

    So, basically, it looks like crap, non-innovative, management, and ownership over the years, are what destroyed the company.

    You know, these ceo's and other corporate execs get compensated very well.

    It sure seems for the amount of money spent on them, a few folks with some brains could be hired....


    Posted 2 years ago #         
  39. redblack
    Member Profile


    sorry, mike. people with brains just aren't in the budget.

    neither is your christmas bonus.

    or a lump of coal.

    maybe next year.

    Posted 2 years ago #         
  40. kootchman
    Member Profile

    "coming out of the first reorganization bankruptcy with more debt than they went in sort of wiped out the economic gains from the concessions made by labor to keep the company running ;-{

    Spoken like a person who has never started a business. In fact, one of the ways you make your appeal to the bankruptcy judge is that you CAN obtain credit. You can go into debt. You have investors ready to risk capital. No wonder , no wonder at all why half the country is clueless about running a capital intensive business. One of his jobs was to be able to acquire debt. For someone who condemns debt so much..... why does eternal deficits not bother you..? The government keeps extracting more and more from businesses, insuring less and less capital for modernization ... government debt good, private debt bad? If you can get a return on that debt... do it.

    Hostess hired a turn around specialist. Good track record for the work he does. With that level of risk, and large downside, he can command, and should command a mutli-million dollar contract.

    Part of the strategy was to get 56 distribution centers, 33 bakeries, and 256 stores to synergize. Like, teamsters could combine bread, twinkies, and other products in one truck. Oh, no... not the teamsters. They would not budge from their featherbedding...."we only carry bread".... in the end, MOST unions made the concessions until the company had a chance to execute the strategy. The Bakers union said no. Doors closed. They were told a protracted strike would do it. Sorta reminds ya of the UAW and Steelworkers... now, maybe Hostess couldn't make it.... but 16,000 people don't have the option of going to night school, retraining, look for better opportunity. They are now decimated. Merry Christmas. At some point you can't get more.... Wonder bread won't sell for $5 loaf or Twinkies for $3.00 a pack. Demanding more when there is none... won't work.

    I saw that brain trust in action... the videos on the picket line chanting "close it down", "close it down"!!! Super smart! Well, it's closed.

    Posted 2 years ago #         
  41. Talaki34
    Member Profile



    Did you sit down intentionally write a fairytale or did this kind of evolve as you put your fingers to key? You could not be any further from the truth of why Hostess closed its doors.

    I have to laugh at your imaginative armchair quarterbacking. Just because you own a business does not mean that you have some inside track to anything to do with Hostess. Before you speak to something that you know absolutely and I mean absolutely nothing about, please refrain from writing this nonsense.

    From CBC to the current management, they have been nothing but arrogant. They refused to innovate (IBC), they refused to listen to consumers (CBC on), their own Plant managers, Controllers, workers and worst of all they lied and cheated not only their employees, but their investors and vendors as well!

    I am very conservative by nature and was raised in a household where everyone was held accountable for their mistakes and there was no room for shades of gray when it comes to honor and integrity. The phrase “Mitigating Circumstances” did not exist when it came to doing the right thing. What upper management did at Hostess reeked of recklessness, lack of integrity and just plain dishonesty. They should all be ashamed of themselves, but sadly people like that never are.

    Posted 2 years ago #         
  42. But,'s so much easier to change the story, make up facts, to support our arguments. ;-)

    Posted 2 years ago #         
  43. Talaki34
    Member Profile


    Morning JanS,

    Unfortunately, my form this morning was unkind and just as wrong as Hostesses Management. For that I owe Kootchman an apology. My observations about him were not warranted and they did nothing to help anyone understand what happened. I am very sorry for my harsh words and I hope he accepts my apology.


    “it's so much easier to change the story, make up facts, to support our arguments.”

    You are right, but in fairness and I was not fair; initially the only information that was being presented was the headlines stating that the Bakers Union forced the shutdown and possible liquidation of Hostess. It all sounded plausible so it had to be right. Wrong. Subsequent articles, many those related to business then started to relay the story behind the story that was given by the CEO and his partners, but many opinions were already made and the damage was done.

    We all know from the past political debates that for many the lie told sincerely becomes the truth and truth told without common support becomes a lie. Spin works its magic and everyone loses.

    Posted 2 years ago #         
  44. actually, lest you stress, my comment was not directed at your response...I'm with you on this...the unions at Hostess have taken it in the shorts. Management was inept at best, dishonest for sure, and it seems, self serving.

    Have a great day, Talaki...:)

    Posted 2 years ago #         
  45. Mike, the union that my dad was in had horrible leadership. The union reps did not follow the wishes of the union members. It was a bad situation.

    Posted 2 years ago #         
  46. JoB, you can paint Bain and Romney with your class warfare brush and hope the paint adhere's. Yes, there are corporate raiders who only care about themselves and screw the workers. I know. But some companies do need to reorganize and changes which are harsh need to be made.

    It's appalling when a CEO takes home millions when they screw the workers. But if the company is successful, I don't care how much upper management makes. If you don't like where you work, go find a different place to earn a living. It's not easy but can be done.

    How about if I said Romney should have become the CEO of Solyndra or the other pet 50 companies that failed in alternative energy. I don't hear you complaining about them. At least Hostess is private and my tax dollars aren't being wasted trying to prop up a business model that isn't quite ready for prime time. Soon, but now quite yet.

    I don't mind the government funding R & D on future energy possibilities. But the Ivy leaguers in office in DC don't make wise investments as far as I can tell.

    Posted 2 years ago #         
  47. Happy TDay, is too short to bother with these things today...go have a piece of pie for me :)

    Posted 2 years ago #         
  48. Talaki34
    Member Profile


    I am not stressed and I know you were agreeing with me. :)

    I guess what your statement did was make me rethink how all the information about the closure was originally disseminated to the public and how it wasn't until after the first wave of untruths passed that a closer look into the collapse was made.

    It then made me reconsider my response to kootchman and realized that in was inappropriate. You can only make a correct analysis of a situation if you have all the facts. Since Hostess tried and nearly was successful in keeping them from the public it stands to reason that kootchman's error in his observations came honestly and without malice.

    What I was trying to say and failed...I am very grateful that your opinion allowed me to right a wrong.

    Hope you are feeling better. :)

    Posted 2 years ago #         
  49. kootchman
    Member Profile

    Talaki want to see the videos of the great Baker Brain Trust chanting shit it down, shut it down? Continental DID have access to working capital to shut down over capacity, redundant overhead, and to reorganize.... until the Bakers union pulled the plug and made a reorganization impossible. That's the story. Rayburn was hired to do a turnaround, not a liquidation. The unions wanted a shutdown... the union brain trust couldn't read a balance sheet.

    Oh yea... this came from Rayburn

    "The pay increase was given to Brad Driscoll, Hostess’ former CEO, in July 2011, before the company filed for bankruptcy. The salary was later cut from $2.5 million to $1.5 million, according to a Hostess spokesperson. The new CEO reduced the salaries of four senior executives to $1 until the company emerges from bankruptcy, and four junior executives who received raises had their salaries reduced to pre-raise levels, the spokesperson said."

    He asked for time and concessions. That's the end of that story.

    Posted 2 years ago #         
  50. Rayburn Musical Instruments? Sam Rayburn? Ralph Rayburn Law? CJ Rayburn race cars? Gene Rayburn?
    AC Rayburn? Which Rayburn are we talking about?

    Posted 2 years ago #         

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