7 ms·

Twinkies Maker to Liquidate, Lay Off 18,500

32 points by codegeek 14y ago

bediger4000 14y ago
Surely a fresher word than "iconic" exists to describe Twinkies. I'd suggest "Beloved", but that sounds only a little better than "iconic" when it's said out loud. "Iconic" is the "robust" of the 2010s, doomed to look and sound dated, like the music and fashion of the 1980s.
- mikeash 14y ago
  I suggest "infamous".
- charonn0 14y ago
  "Culturally Idiomatic"?
- ygmelnikova 14y ago
  'Fresher' & 'Twinkies' is an oxymoron.
deleted 14y ago
[deleted]
gte910h 14y ago
The brand will be bought by yet another company, and the snack cakes will be produced again. This is the umpteenth time they've been sold.
charonn0 14y ago
Twinkies + Liquidation = Best. Milkshake. Ever.
SwellJoe 14y ago
I wish this was simply because demand for food-like substances had disappeared and the market was punishing those companies that make predominantly food-like substances, and instead choosing actual food made with recognizable ingredients. But, it's not. It's mismanagement. I suspect the bankruptcy is simply a method of ending all of the union contracts and moving to factories in right-to-work states in cities without strong unions. It's been done more than a few times in the past few decades by major corporations. That's not to say the unions are all right, just that based on my reading of the situation, they're being used as a convenient scapegoat in a situation caused by long-term mismanagement and incompetence.
- frankc 14y ago
  That is not the case here. In fact, they are already in bankruptcy. The judge had imposed a new contract on the union that didn't accept, so they went on strike. The company claims they cannot whether the strike and instead are completely liquidating all assets of the company. They are closing down, not reorganizing.
  - SwellJoe 14y ago
    I'd bet dollars to donuts (or Twinkies) that there will be a new team, made up of a few members of former management at Hostess, who will raise funds and purchase the most valuable assets of Hostess. That team probably already exists, and the private equity company already has the contracts written. They will then be starting with a clean slate, with only the really valuable assets (the brands, mostly), and none of the baggage of old contracts and agreements. Of course, another company might buy up those assets, since bankruptcy sales have outside oversight (to some degree), and thwart those plans. But, I'm confident those plans are underway, and would be surprised if it doesn't turn out with some of old management heading up the new company that begins producing Twinkies again.
    - deleted 14y ago
      [deleted]
    - gwright 14y ago
      There is a good chance you are right and this would be evidence that the union was holding out for terms that the market had determined were unsustainable. If you can start from scratch and lease/purchase/hire what you need under new terms then it is an existence proof that the union had priced itself out of the market (i.e. there were other workers completely willing to accept the new terms). This is true whether the new management is truely a new group of people or simply a new legal entity for the old group of people.
      - SwellJoe 14y ago
        That's a simplistic interpretation (as is mine). Without studying the numbers, the compensation of executives at various levels, the terms of employees, etc. it's impossible to say this business couldn't have continued to run and honored old contracts and satisfied new demands. It's true that there's often a disconnect in how much unions demand and how much the rest of the labor market demands, and it can lead to businesses preferring to hire in non-union areas (making areas with strong unions suffer economically). I'm not entirely convinced that's the best outcome for everyone (everyone in the city, state, country, world), since it leads to employers holding a disproportionate amount of the power (the corporation becomes the only organized, powerful, force in the negotiation), and employee compensation consistently being pushed downward, while executive compensation often skyrockets. I'm pretty libertarian, so I like market forces, but I think we're seeing evidence that not having some kind of force that opposes corporations having disproportionate power leads to stagnant wages (not keeping pace with inflation), more reliance on government services (when an employer doesn't pay for any benefits, the employees end up relying on various government services for those necessities like healthcare), and a bigger disparity in power. Corporations and states end up having all the power, while individuals (those not lucky enough to have money and influence) end up getting pushed around. If executives are receiving massive pay increases (which is what happened at Hostess; 300% pay raise, apparently), while the ship is sinking, I'd say there's a lot more than mere market forces at work. I think greed plays a role, too. In a company with some folks making millions, while others are asking for a $1/hour raise, I'm not sure I'm willing to call it merely market forces at work.
fragsworth 14y ago
> Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement" It's surprising that the union would actually let the company fall apart. Was there some lapse in communication? Did the unions think the company was bluffing when they said "we're going to go bankrupt"? Also, their downfall probably had more to do with a change in social perception that they couldn't do anything about. Everyone knows that Twinkies are "bad for you". It's almost stereotypical for a fat person to be eating Twinkies, and this makes everyone want to avoid them.
- at-fates-hands 14y ago
  >>>> their downfall probably had more to do with a change in social perception that they couldn't do anything about. Agreed. When I was growing up, I ate a LOT of these snack foods and regularly had twinkies in my bag lunch I brought to school. Nowadays, there's a much better emphasis on nutrition and making sure kids avoid getting obese. Back in 2005, the same thing happened to Krispy Kreme. They flooded our city with stores, but within a few years, they were all gone. There were a victim of the health food craze taking off. As much as I hate to see them go, it's a good sign.
  - dkl 14y ago
    The Krispy Kreme situation is quite different. They had an accounting scandal that actually caused them to contract, in addition to the health craze reasons that many people assume. http://www.nytimes.com/2005/08/11/business/11place.html?_r=0 http://www.nytimes.com/2005/08/11/business/11place.html?_r=0
    - enraged_camel 14y ago
      This is off-topic, but I really hate the term "health craze." People caring about something does not make it a "craze." When people put on their seat-belt, we don't say they have a "safety craze." For the same reason, we should stop using the term "health craze."
binxbolling 14y ago
Blaming this bankruptcy on strikes is so utterly, transparently horseshit. I hope pundits call them out on this.
- cobrausn 14y ago
  If you have details, please share.
- tptacek 14y ago
  Nobody is blaming the bankruptcy on strikes; they were in bankruptcy long before this strike. What's happened as a result of the strike is that their Chapter 11 (restructuring) has changed to Chapter 7 (liquidation), because they are not capable of generating revenue if they can't reliably produce products, and their operational overhead is huge.
  - binxbolling 14y ago
    I think "nobody" is a bit inaccurate: Seattle PI (AP): "The Irving, Texas, company said a nationwide strike crippled its ability to make and deliver its products, which also include Ding Dongs, Ho Ho's and Home Pride bread." http://www.seattlepi.com/news/texas/article/Twinkie-maker-Hostess-reaches-the-end-of-the-line-4043395.php#ixzz2CPcWHJoE http://www.seattlepi.com/news/texas/article/Twinkie-maker-Ho... MSN (Reuters): "Nearly 18,500 workers will lose their jobs as the company succumbs to the crippling effects of a nationwide union strike." http://money.msn.com/top-stocks/post.aspx?post=6d7b095e-e558-4dc4-83e9-1859d177e676&ocid=ansmony11 http://money.msn.com/top-stocks/post.aspx?post=6d7b095e-e558... Read other articles this morning (sorry I don't have them on-hand) that are also pinning this on strikes, mostly because AFAIK Hostess is trying to pin it on the strikes.
    - tptacek 14y ago
      The strike is crippling them. But the strikes themselves aren't the systemic cause of Hostess Brands bankruptcy, which started long before this round of strikes. Demand for Hostess offerings is down, and Hostess' overhead is atypically high for its industry.
muraiki 14y ago
There's a lot more detail on what went on behind the scenes in this article: http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles http://www.zerohedge.com/news/2012-11-16/hostess-liquidation... (I'm not endorsing any particular political viewpoint expressed in it, but merely posting it because it has a lot of info)
- tptacek 14y ago
  It looks like that entire article is blogspammed from this (good) CNNMoney article: http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/ http://management.fortune.cnn.com/2012/07/26/hostess-twinkie...
  - muraiki 14y ago
    Thank you. Had I seen that article first I wouldn't have posted the one I found!
  - ChuckMcM 14y ago
    Wow. So much of Hostess' crisis, and the state of California and its cities hinge on pension obligations. It makes me wonder if it is even possible to create a pension plan that isn't eventually toxic.
    - tptacek 14y ago
      Well, at least a private company can eventually just go bankrupt. Nobody knows what's going to happen in CA and IL.
      - ChuckMcM 14y ago
        Good point. San Jose discharged a lot of its future pension debt with negotiation. But my question wasn't how people get out from under the debt, rather it was how such a program could be designed so that it wouldn't have this issue. For example, could you say "You pay 10% of your salary and we'll match that, into an investment account that buys inflation protected treasuries, then when you reach the age of 55 you have the choice of getting 20%, 50% or 100% of your salary paid out annually until the total of the amount paid in + appreciation over that time reaches zero." Basically once the company/state had matched the 10% they have no further obligation. And if you're genetics were great and you lived to 115 perhaps your 'salary' would run out at 75 long before you died. But what I don't know is how practical this is, it was so much easier when people actually died around 72 than it is now.
politician 14y ago
It takes 18,500 people to make Twinkies?!
- deleted 14y ago
  [deleted]
- tptacek 14y ago
  It takes 18,500 to put Twinkies on the shelves across the entire US.
- sageikosa 14y ago
  And "Ho-Ho"s, but since they are baked goods with a shelf-life measured in days/weeks (not years as is commonly assumed), having them produced close to their markets reduces shipping time, but demands more facilities and therefore more employees.
IanDrake 14y ago
I'm going to buy a few boxes then give them out as Christmas gifts in 10 years.
- forgotAgain 14y ago
  At which time they'll probably still be "fresh".
codegeek 14y ago
I shared this link earlier and had the word "iconic" in it. Simply because growing up in the US, everyone knows what Twinkies are. Whether you like it or not.
Arjuna 14y ago
What's in a Twinkie? http://www.thedailybeast.com/newsweek/2012/05/05/what-s-in-a-twinkie.html http://www.thedailybeast.com/newsweek/2012/05/05/what-s-in-a...
- grecy 14y ago
  Hopefully in 200 years people will look back in shock that we actually used to eat that stuff.
  - kip_ 14y ago
    In 200 years, they can open up a pack of Twinkies from today and still experience them as we do now.
    - grecy 14y ago
      Hopefully people will be smart enough not to.
JimmaDaRustla 14y ago
Anyone else think, Bad Luck Brian's first union job!?
TheAmazingIdiot 14y ago
(I posted this in the other article about hostess that got buried) I will remind people here the following: Indiana is a right-to-work state. This was passed last year. Right to work lowers employer burden why someone is laid off/fired. Along with that, makes it a felony to require union dues to work at a company. However, the union is still required to represent you upon its charter. Hostess also lost a sizable chunk of money with the lawsuit concerning Sachs donuts. Because of things I do not understand, Hostess had to kill all lines of yeast donuts and all "packaged fresh" yeast donuts. And from talking to employees of Hostess in Columbus,IN, those machines were scrapped. A good reason why the union was giving hell was Hostess wanted to cut wages by almost 20%: the union already agreed to a 10% cut and reduction of benefits. Hostess wanted 9% more, and threw a tantrum here locally. Who was in the right? I have no idea. But it looks the the nuclear option was used: blow it to the ground.

32 points by codegeek 14y ago

Surely a fresher word than "iconic" exists to describe Twinkies. I'd suggest "Beloved", but that sounds only a little better than "iconic" when it's said out loud. "Iconic" is the "robust" of the 2010s, doomed to look and sound dated, like the music and fashion of the 1980s.

mikeash 14y ago
I suggest "infamous".
charonn0 14y ago
"Culturally Idiomatic"?
ygmelnikova 14y ago
'Fresher' & 'Twinkies' is an oxymoron.

deleted 14y ago

[deleted]

gte910h 14y ago

The brand will be bought by yet another company, and the snack cakes will be produced again. This is the umpteenth time they've been sold.

charonn0 14y ago

Twinkies + Liquidation = Best. Milkshake. Ever.

SwellJoe 14y ago

I wish this was simply because demand for food-like substances had disappeared and the market was punishing those companies that make predominantly food-like substances, and instead choosing actual food made with recognizable ingredients. But, it's not. It's mismanagement. I suspect the bankruptcy is simply a method of ending all of the union contracts and moving to factories in right-to-work states in cities without strong unions. It's been done more than a few times in the past few decades by major corporations. That's not to say the unions are all right, just that based on my reading of the situation, they're being used as a convenient scapegoat in a situation caused by long-term mismanagement and incompetence.

frankc 14y ago
That is not the case here. In fact, they are already in bankruptcy. The judge had imposed a new contract on the union that didn't accept, so they went on strike. The company claims they cannot whether the strike and instead are completely liquidating all assets of the company. They are closing down, not reorganizing.
- SwellJoe 14y ago
  I'd bet dollars to donuts (or Twinkies) that there will be a new team, made up of a few members of former management at Hostess, who will raise funds and purchase the most valuable assets of Hostess. That team probably already exists, and the private equity company already has the contracts written. They will then be starting with a clean slate, with only the really valuable assets (the brands, mostly), and none of the baggage of old contracts and agreements. Of course, another company might buy up those assets, since bankruptcy sales have outside oversight (to some degree), and thwart those plans. But, I'm confident those plans are underway, and would be surprised if it doesn't turn out with some of old management heading up the new company that begins producing Twinkies again.
  - deleted 14y ago
    [deleted]
  - gwright 14y ago
    There is a good chance you are right and this would be evidence that the union was holding out for terms that the market had determined were unsustainable. If you can start from scratch and lease/purchase/hire what you need under new terms then it is an existence proof that the union had priced itself out of the market (i.e. there were other workers completely willing to accept the new terms). This is true whether the new management is truely a new group of people or simply a new legal entity for the old group of people.
    - SwellJoe 14y ago
      That's a simplistic interpretation (as is mine). Without studying the numbers, the compensation of executives at various levels, the terms of employees, etc. it's impossible to say this business couldn't have continued to run and honored old contracts and satisfied new demands. It's true that there's often a disconnect in how much unions demand and how much the rest of the labor market demands, and it can lead to businesses preferring to hire in non-union areas (making areas with strong unions suffer economically). I'm not entirely convinced that's the best outcome for everyone (everyone in the city, state, country, world), since it leads to employers holding a disproportionate amount of the power (the corporation becomes the only organized, powerful, force in the negotiation), and employee compensation consistently being pushed downward, while executive compensation often skyrockets. I'm pretty libertarian, so I like market forces, but I think we're seeing evidence that not having some kind of force that opposes corporations having disproportionate power leads to stagnant wages (not keeping pace with inflation), more reliance on government services (when an employer doesn't pay for any benefits, the employees end up relying on various government services for those necessities like healthcare), and a bigger disparity in power. Corporations and states end up having all the power, while individuals (those not lucky enough to have money and influence) end up getting pushed around. If executives are receiving massive pay increases (which is what happened at Hostess; 300% pay raise, apparently), while the ship is sinking, I'd say there's a lot more than mere market forces at work. I think greed plays a role, too. In a company with some folks making millions, while others are asking for a $1/hour raise, I'm not sure I'm willing to call it merely market forces at work.

fragsworth 14y ago

> Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement" It's surprising that the union would actually let the company fall apart. Was there some lapse in communication? Did the unions think the company was bluffing when they said "we're going to go bankrupt"? Also, their downfall probably had more to do with a change in social perception that they couldn't do anything about. Everyone knows that Twinkies are "bad for you". It's almost stereotypical for a fat person to be eating Twinkies, and this makes everyone want to avoid them.

at-fates-hands 14y ago
>>>> their downfall probably had more to do with a change in social perception that they couldn't do anything about. Agreed. When I was growing up, I ate a LOT of these snack foods and regularly had twinkies in my bag lunch I brought to school. Nowadays, there's a much better emphasis on nutrition and making sure kids avoid getting obese. Back in 2005, the same thing happened to Krispy Kreme. They flooded our city with stores, but within a few years, they were all gone. There were a victim of the health food craze taking off. As much as I hate to see them go, it's a good sign.
- dkl 14y ago
  The Krispy Kreme situation is quite different. They had an accounting scandal that actually caused them to contract, in addition to the health craze reasons that many people assume. http://www.nytimes.com/2005/08/11/business/11place.html?_r=0 http://www.nytimes.com/2005/08/11/business/11place.html?_r=0
  - enraged_camel 14y ago
    This is off-topic, but I really hate the term "health craze." People caring about something does not make it a "craze." When people put on their seat-belt, we don't say they have a "safety craze." For the same reason, we should stop using the term "health craze."

binxbolling 14y ago

Blaming this bankruptcy on strikes is so utterly, transparently horseshit. I hope pundits call them out on this.

cobrausn 14y ago
If you have details, please share.
tptacek 14y ago
Nobody is blaming the bankruptcy on strikes; they were in bankruptcy long before this strike. What's happened as a result of the strike is that their Chapter 11 (restructuring) has changed to Chapter 7 (liquidation), because they are not capable of generating revenue if they can't reliably produce products, and their operational overhead is huge.
- binxbolling 14y ago
  I think "nobody" is a bit inaccurate: Seattle PI (AP): "The Irving, Texas, company said a nationwide strike crippled its ability to make and deliver its products, which also include Ding Dongs, Ho Ho's and Home Pride bread." http://www.seattlepi.com/news/texas/article/Twinkie-maker-Hostess-reaches-the-end-of-the-line-4043395.php#ixzz2CPcWHJoE http://www.seattlepi.com/news/texas/article/Twinkie-maker-Ho... MSN (Reuters): "Nearly 18,500 workers will lose their jobs as the company succumbs to the crippling effects of a nationwide union strike." http://money.msn.com/top-stocks/post.aspx?post=6d7b095e-e558-4dc4-83e9-1859d177e676&ocid=ansmony11 http://money.msn.com/top-stocks/post.aspx?post=6d7b095e-e558... Read other articles this morning (sorry I don't have them on-hand) that are also pinning this on strikes, mostly because AFAIK Hostess is trying to pin it on the strikes.
  - tptacek 14y ago
    The strike is crippling them. But the strikes themselves aren't the systemic cause of Hostess Brands bankruptcy, which started long before this round of strikes. Demand for Hostess offerings is down, and Hostess' overhead is atypically high for its industry.

muraiki 14y ago

There's a lot more detail on what went on behind the scenes in this article: http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles http://www.zerohedge.com/news/2012-11-16/hostess-liquidation... (I'm not endorsing any particular political viewpoint expressed in it, but merely posting it because it has a lot of info)

tptacek 14y ago
It looks like that entire article is blogspammed from this (good) CNNMoney article: http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/ http://management.fortune.cnn.com/2012/07/26/hostess-twinkie...
- muraiki 14y ago
  Thank you. Had I seen that article first I wouldn't have posted the one I found!
- ChuckMcM 14y ago
  Wow. So much of Hostess' crisis, and the state of California and its cities hinge on pension obligations. It makes me wonder if it is even possible to create a pension plan that isn't eventually toxic.
  - tptacek 14y ago
    Well, at least a private company can eventually just go bankrupt. Nobody knows what's going to happen in CA and IL.
    - ChuckMcM 14y ago
      Good point. San Jose discharged a lot of its future pension debt with negotiation. But my question wasn't how people get out from under the debt, rather it was how such a program could be designed so that it wouldn't have this issue. For example, could you say "You pay 10% of your salary and we'll match that, into an investment account that buys inflation protected treasuries, then when you reach the age of 55 you have the choice of getting 20%, 50% or 100% of your salary paid out annually until the total of the amount paid in + appreciation over that time reaches zero." Basically once the company/state had matched the 10% they have no further obligation. And if you're genetics were great and you lived to 115 perhaps your 'salary' would run out at 75 long before you died. But what I don't know is how practical this is, it was so much easier when people actually died around 72 than it is now.

politician 14y ago

It takes 18,500 people to make Twinkies?!

deleted 14y ago
[deleted]
tptacek 14y ago
It takes 18,500 to put Twinkies on the shelves across the entire US.
sageikosa 14y ago
And "Ho-Ho"s, but since they are baked goods with a shelf-life measured in days/weeks (not years as is commonly assumed), having them produced close to their markets reduces shipping time, but demands more facilities and therefore more employees.

IanDrake 14y ago

I'm going to buy a few boxes then give them out as Christmas gifts in 10 years.

forgotAgain 14y ago
At which time they'll probably still be "fresh".

codegeek 14y ago

I shared this link earlier and had the word "iconic" in it. Simply because growing up in the US, everyone knows what Twinkies are. Whether you like it or not.

Arjuna 14y ago

What's in a Twinkie? http://www.thedailybeast.com/newsweek/2012/05/05/what-s-in-a-twinkie.html http://www.thedailybeast.com/newsweek/2012/05/05/what-s-in-a...

grecy 14y ago
Hopefully in 200 years people will look back in shock that we actually used to eat that stuff.
- kip_ 14y ago
  In 200 years, they can open up a pack of Twinkies from today and still experience them as we do now.
  - grecy 14y ago
    Hopefully people will be smart enough not to.

JimmaDaRustla 14y ago

Anyone else think, Bad Luck Brian's first union job!?

TheAmazingIdiot 14y ago

(I posted this in the other article about hostess that got buried) I will remind people here the following: Indiana is a right-to-work state. This was passed last year. Right to work lowers employer burden why someone is laid off/fired. Along with that, makes it a felony to require union dues to work at a company. However, the union is still required to represent you upon its charter. Hostess also lost a sizable chunk of money with the lawsuit concerning Sachs donuts. Because of things I do not understand, Hostess had to kill all lines of yeast donuts and all "packaged fresh" yeast donuts. And from talking to employees of Hostess in Columbus,IN, those machines were scrapped. A good reason why the union was giving hell was Hostess wanted to cut wages by almost 20%: the union already agreed to a 10% cut and reduction of benefits. Hostess wanted 9% more, and threw a tantrum here locally. Who was in the right? I have no idea. But it looks the the nuclear option was used: blow it to the ground.