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Farewell, Twinkies

WildCat said:
I'm pretty sure federal labor laws prevent them from firing workers and hiring replacements at lower wages. And even if they did they'd still be on the hook for the former worker's pensions.
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I mean when the contract expires. I know it usually is renegotiated before that, but if the company's situation is that bleak then can't they just let it expire? And the pension is part of the contract, isn't it?
 
Sciwoman said:
Well, this is interesting...http://www.politicususa.com/twinkie-gate-republicans-admit-hostess-closing-killing-unions.html
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"The reality is that by closing the company, the investment bankers that run Hostess can suck even more profit out of an already twice bankrupted company."

I still don't understand how Goldman Sachs or whatever investment bank is going to get their money back and how they benefit from lending money to private equity firms to buy failing businesses, saddle them with the loan repayment, then drive them into bankruptcy. I understand that this could happen now and then but how can this work as a profitable, successful business model for the lender or private equity? There's this idea of vulture capitalists who do this for a living and I don't get it. I understand there could be a lot of short term gain for some executives at the failing company and for the PE firm but how can this be a sustainable relationship between PE and the lender? Pretend that I'm a slobbering idiot wearing pampers and a helmet and my parents have to walk me on a leash even though I'm in my 30's. Please walk me through it.
 
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Scopedog said:
"The reality is that by closing the company, the investment bankers that run Hostess can suck even more profit out of an already twice bankrupted company."

I still don't understand how Goldman Sachs or whatever investment bank is going to get their money back and how they benefit from lending money to private equity firms to buy failing businesses, saddle them with the loan repayment, then drive them into bankruptcy. I understand that this could happen now and then but how can this work as a profitable, successful business model for the lender or private equity? There's this idea of vulture capitalists who do this for a living and I don't get it. I understand there could be a lot of short term gain for some executives at the failing company and for the PE firm but how can this be a sustainable relationship between PE and the lender? Pretend that I'm a slobbering idiot wearing pampers and a helmet and my parents have to walk me on a leash even though I'm in my 30's. Please walk me through it.
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Here is an article that explains it in relatively easy terms.

http://www.addictinginfo.org/2012/1...ulture-capitalists-picked-corpse-clean-video/

It's a paper game with the workers losing their jobs and all their pension funds and having no recourse.
 
qayak said:
Here is an article that explains it in relatively easy terms.

http://www.addictinginfo.org/2012/1...ulture-capitalists-picked-corpse-clean-video/

It's a paper game with the workers losing their jobs and all their pension funds and having no recourse.
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The U.S. (perhaps the entire world's) financial system is a paper game and its a shame for people to lose their jobs and retirement over it but it's because of that paper game that they have an opportunity for jobs and retirement. I'm not being willfully obtuse or stubborn when I say the video hasn't answered my question. Step 4 of the video is PE using the company as collateral for borrowing more money from other banks (new additional lenders), step 5 is PE getting a special dividend to pay back investors (the original lenders), and the article talks about PE raiding the pension fund. The pension fund is now liable for $2 billion but I imagine that's the anticipated cost over the life of current and future retirees. How much money was in the pension fund when it was raided? Supposedly the company can now be sold for more than it was bought but is that really likely to happen in the case of Hostess? Is the money from the pension fund and the price of the company really enough to pay back all the lenders every time a vulture swoops in for a feast if that's what they do for a living? If Hostess gets sold for a bargain price then this can't be a sustainable, intentional PE business model.
 
So Hostess had $850 million in debt, or so. Grupo Bimbo will pay something like $150 million for the brands. The company's facilities will be sold at rock-bottom prices too, say $400 million for all the bakeries, trucks, the whole shootin' match. So the lenders are going to eat $300 million or so. That doesn't sound like a recipe (heh heh) for profit to me.
 
WildCat said:
So you have examples of a bankrupt company being saved by someone they hired for cheap?
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To extend the audiophile analogy, it's very common when pointing out this issue for them to make the point of how superior there $5000 cord is to a universally accepted piece of junk, rather than the $50 cord you proposed.

I'll ask you the same question. Do you have any evidence that the excessive price payed by these companies actually results in better performance from their CEOs?
 
DragonLady said:
I can't help but wonder what kinds of other terrible decisions the company might have made to get into such bad shape. In my experience, Hostess products sell like hotcakes...so they must have either failed to contain costs or had some serious misfortunes that cost too much to recover from. :(
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TV talking heads have said union rules required separate trucks for twinkie and wonderbread delivery.

Double drivers? Double loaders? unknown.
 
qayak said:
Forbes article on why the Hostess debacle isn't the union's fault and examples of other companies making, or which have made, the exact same errors.

http://www.forbes.com/sites/adamhartung/2012/11/18/hostess-twinkie-defense-is-a-management-failure/
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"Blaming the unions is simply an inability of management to take responsibility for a complete failure to understand the marketplace, trends and the absolute requirement for new products."

No, that's impossible. These are cunningly brutal (or brutally cunning?) vulture capitalists that knew exactly what they were doing the entire time and forced the company into bankruptcy and now they and private equity and the lenders are raking in the profits with dollar signs glimmering in their eyes!
 
Hostess To Pay $1.75 Million In Executive Bonuses After Blaming Unions For Bankruptcy

Hostess Brands will ask a bankruptcy judge on Monday for approval to shut down the company and pay $1.75 million in executive bonuses.

Unions representing workers at the maker of Twinkies, Wonder Bread and Drake’s snacks are arguing against the bonuses. [...]

Under the plan, bonuses ranging from $7,400 to $130,500 will be paid to 19 executives. The company argues the bonuses are below market rates for such payments.​

Even as it blamed unions for the bankruptcy and the 18,500 job losses that will ensue, Hostess already gave its executives pay raises earlier this year. The salary of the company’s chief executive tripled from $750,000 to roughly $2.5 million, and at least nine other executives received pay raises ranging from $90,000 to $400,000. Those raises came just months after Hostess originally filed for bankruptcy earlier this year.
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Clearly the greedy union bankrupted this company.
 
Brown said:
Never ate a Twinkie, never cared much for Ho-Hos. But the Hostess Fruit Pies ... ah, those were different. None of the knockoffs could ever match the taste of the real thing.
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Matthew Best said:
I've never eaten a Twinkie...

... and now it looks like I never will!
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WildCat said:
I wonder how many Twinkies you're allowed to take over the border?
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I see someone finally picked up on it (with the comment on the Mann Act), but these read very funny if you have a foot in the gay/bi community. I assume the term "twinkie" or "twink" is still in use? It became standard language two decades ago, as far as I know, and I've heard it used recently.

balrog666 said:
The CEO was converted from salary+bonuses to salary-only as is typical in bankruptcy proceedings. Other management personnel were treated similarly. Perhaps you were just unaware of the actual facts ... but it doesn't seem like that.
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Typically, this is not true. No one knows the golden parachute terms in the CEO's contract. They do know ('cuz he walked out last spring) that the previous CEO had a contract that called for a huge bonus if the company closed down or was sold off. His (the current CEO) current payroll check may be salary only, but that says nothing of the personal services contract he has with the parent company, and says nothing of the fact that the company's not going to actually close, but "reorganize" as a seller of bakery equipment, commercial/industrial acreage, and Private Brand licenses.
 
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balrog666 said:
Unfortunately, that is all too true.





In liquidation, all proceeds from selling off the brand and other assets will go to pay the creditors, not the owners, not management. Stockholders are wiped out entirely, stock options are worth zero.

And management is now out of a job just like all the workers.

Yes, management personnel were (fairly) compensated for sticking around and trying to get the failing company back on it's feet; now that that effort has failed it won't exactly look good on their resumes, now will it?
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For sticking around? Why those brave soldiers. The CEO has been there since March and has barely unpacked his Buckyballs and Nespresso machine!
 
balrog666 said:
Yes, the unions prevented reductions in employee headcount. Hostess had to use multiple drivers and trucks on their route deliveries because the unions refused to allow a single truck to carry both Wonderbread and Twinkies. Hostess had to have extra, redundant employees to load and unload the delivery trucks because the union drivers refused to do the loading/unloading. Ditto, ditto, ditto - it all had to do with BS involving union "job definitions" and union "work rules" that pad the union work force and extort more money out of the host company. And I use that word "host" deliberately.
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Oh, my! This, again, is in error. This isn't the first go-round. The unions previously agreed to wage cuts, layoffs, and benefit reductions. Apparently you've read nothing, and left the threads where this was being discussed with evidence and trotted out your aphorisms in this thread.
 
Skeptical Greg said:
I know what you mean ... People will support the unions, and rather have the company go bust and put everyone out of work, than make any concessions with wages and benefits..
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Another with the free market talking points? See above post to Balrog. The union that went on strike had conceded reductions in the previous OMG Save Our Company negotiations. That was when management was selling them on "all of us" taking the hit together, and prior to management then writing itself fat raises and bonuses.
 
StankApe said:
Indicators are that you are coming into this with a pro union bias as you have no evidence that the present wages of the members of the various unions weren't prohibitive in allowing the company to climb out of bankruptcy. They had lost money in 30 of the prior 37 qrtrs, though sales had been pretty stable, problems were apparently food cost increases combined with labor benefits. They got an influx of $130 mill from an equity firm to try and stave off bankruptcy again, and it wasn't enough. So back they went, they tried to keep the company afloat by cutting wages , every union but one agreed. Baker's said they woul rather be right than President.

Maybe it would have worked, maybe in 6 months it would have folded anyway. But to try and act like the Union assumes no blame here is a little silly.

Are the other unions involved stupid and mismanaged? Or was the Baker's union led astray by leadership?
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Please check your facts. Citing other posters' for data is probably not the best idea. It wasn't "every union but one". They reached agreement with the Teamsters, their largest union, representing more than 50% of their union staff. The next largest is the one on strike. There are ten more unions out there, and three or four had come to terms, but not sure if they'd all signed... and the rest had not reached an agreement.
 
StankApe said:
You love unions so much you will defend them even when they are obviously acting stupidly.

and I noticed you haven't answered my question in regards to the other unions. were they acting for the better interest of their workers? and if not why?
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See above. Get your facts straight before you go making notches on your gun belt.

The Teamsters agreement, as I explained, was easier to reach because if HB closes five facilities and moves the production to other facilities, they still have all those Teamster drivers delivering more products... just on different routes. The bakers are local and live local. They are concerned about losing jobs in their specific locations. And that was one of the rubs... HB was okayed by the courts to close down and sell off a total of almost half its facilities. It refused to discuss WHICH facilities with the people who would be most effected - the workers or their representatives.

Oh, and like that real close presidential election that we just had - the one that has Republican spinmeisters getting ready a four year indoctrination on how "it was real close and means that it could've gone the other way".... the Teamster vote was only slightly in favor of accepting. Many members did not want to take the deal.
 
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