My previous article, which indulged in bit of nostalgia about grade school lunches, missed much of the actual drama that put Hostess, the maker of Twinkies, Ho-Ho’s, and Ding Dongs, on the ropes.
It isn’t quite over . A USA Today article by Kevin McCoy reports that Hostess management and the baker’s union are meeting for mediation today, delaying the company’s second bankruptcy filing in less than a decade http://usat.ly/TU81SA.
The maker of popular snack foods has a billion dollars in debt, which it blames on an “inflated cost structure,” largely as a result of labor contracts. The union contends the problem is years of mismanagement. An outside financial analyst found that problems included, “years of underinvestment in products, facilities and equipment, long-term neglect of once-dominant brands and hollowing-out of a distribution system that once provided a competitive advantage,”
Bruce Maiman, a local contributor to the Sacramento Bee, interviewed workers striking at the local Hostess bakery who say their hourly wage and pensions are lower than other bakers like Oroweat and Sara Lee http://www.sacbee.com/2012/11/20/4998328/blame-workers-unions-or-the-executives.html. Maiman lists a string of gaffes by a management led by six different CEO’s in ten years.
Local workers claim that rather than replacing outdated equipment, money was recently spent to replace windows and paint the lunchroom, locker room, and floors. “They want it to look pretty so they can sell it,” says the head of the local baker’s union.
Selling assets may well be the outcome. US Bankruptcy Trustee, Tracy Hope Davis, joined the union in arguing against management’s current shutdown plans – which among other things, would grant them large bonuses. Davis favors Chapter 7 bankruptcy, which would liquidate assets according to US Bankruptcy Code priorities.
In other words, Twinkies may survive, so we’re better off waiting before spending $5,000, the going rate for a Twinkie on eBay. This, says Bruce Maiman, just goes to show that “as long as human beings exist, the planet will never run out of Twinkies or nitwits.”