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Better stock up on Ho-Hos

 
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eeven73
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PostPosted: Nov 16, 2012 6:14 am    Post subject: Better stock up on Ho-Hos Reply with quote

http://money.cnn.com/2012/11/16/news/companies/hostess-closing/



Quote:
Hostess Brands -- the maker of such iconic baked goods as Twinkies, Devil Dogs and Wonder Bread -- announced Friday that it is asking a federal bankruptcy court for permission to close its operations, blaming a strike by bakers protesting a new contract imposed on them.

The closing will result in Hostess' nearly 18,500 workers losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide, as well as 570 outlet stores. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union represents around 5,000.

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PostPosted: Nov 16, 2012 6:53 am    Post subject: Reply with quote

Bloomberg Radio was interviewing the CEO last night on my way home and this morning on my way to work. Of the 18,500 employees, 97% are unionized between 12 different unions. Management asked for everyone, top to bottom, to accept an 8% pay cut and the company would quit funding the pension plan for a limited time. The cut worked out to a 4% cut in compensation over 4 years. Everyone except one union accepted the cut and that one union, albeit representing 5,000 people, is bringing down the entire company.
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PostPosted: Nov 16, 2012 6:55 am    Post subject: Reply with quote

Sounds like the union did a great job representing their members
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PostPosted: Nov 16, 2012 7:11 am    Post subject: Reply with quote

How does an 8% cut n pay and cutting pension funding = 4%
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eeven73
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PostPosted: Nov 16, 2012 7:24 am    Post subject: Reply with quote

I believe there plan was to reinstate half of the wage cuts over the next 4 years.
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PostPosted: Nov 16, 2012 7:30 am    Post subject: Reply with quote

I know they are striking out here.

Even if Hostess as we know it right now "closes", another player will scoop up the remains and keep it going. Of course, the new company probably won't hire back the workers from that union...

This type of idiotic strike drives me nuts. It's the very definition of cutting off your nose to spite your face. Neutral

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eeven73
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PostPosted: Nov 16, 2012 7:35 am    Post subject: Reply with quote

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This type of idiotic strike drives me nuts. It's the very definition of cutting off your nose to spite your face. Neutral


Really amazing that it would come to liquidation. Stood there ground right into unemployment. Perfect timing too, because I would guess extended unemployment benefits are going to be changed with fiscal cliff.

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ScottyB_RochNY
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PostPosted: Nov 16, 2012 8:09 am    Post subject: Reply with quote

Go galt
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PostPosted: Nov 16, 2012 9:27 am    Post subject: Reply with quote

If that amount of labor costs is what brought the company down it wasn't in very good shape to begin with. I blame Fat America for becoming just a bit more health minded and opting for products other than theirs. They never adjusted to it, though.

On the flip side, I'm curious to hear what the union leaders told their members after this announcement. Obviously they overplayed their hand.

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PostPosted: Nov 16, 2012 9:36 am    Post subject: Reply with quote

chavez wrote:
I know they are striking out here.

Even if Hostess as we know it right now "closes", another player will scoop up the remains and keep it going. Of course, the new company probably won't hire back the workers from that union...

This type of idiotic strike drives me nuts. It's the very definition of cutting off your nose to spite your face. Neutral


The CEO thought the brands would be sold off, but the future buyers probably wouldn't need Hostess' facilities or labor force. If that's true, it sounds like they were running a business with high fixed costs and someone else can pick up production without picking up the fixed costs.
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PostPosted: Nov 16, 2012 9:38 am    Post subject: Reply with quote

pet575 wrote:
If that amount of labor costs is what brought the company down it wasn't in very good shape to begin with.


I think squeezing all the profit out of a company is a union's job. When harder times hit, the unions won't give and the company goes under. See General Motors.
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PostPosted: Nov 16, 2012 9:47 am    Post subject: Reply with quote

ohsix, the only thing I'm thinking is the equipment is likely specifically designed, which means any likely buyers would probably want to keep all of that.

I'm certain the fixed costs were through the roof, making them very unattractive to potential suitors pre-BK. Through this process they will divest themselves of their baggage and probably emerge under a different ownership with a much better structure.

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eeven73
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PostPosted: Nov 16, 2012 10:07 am    Post subject: Reply with quote

Quote:
the only thing I'm thinking is the equipment is likely specifically designed, which means any likely buyers would probably want to keep all of that.


I would say that there isn't a piece of technology or equipment in the bakery business that is proprietary enough to come close to the labor/legacy costs that Hostess had to make this true.

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PostPosted: Nov 16, 2012 10:21 am    Post subject: Reply with quote

I remember when Delphi was having trouble, my uncle had worked there 28 years. They asked the unions to accept pay cuts, which they didnt, and months later bankruptcy ensued. Unions started to help the employees from being screwed by the companies, but now days only help the employees to screw the companies.

Being in the cabinet business, I feel sorry for the other cabinet guys I've talked to who have to deal with the unions. It's ridiculous.

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vette74
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PostPosted: Nov 16, 2012 10:27 am    Post subject: Reply with quote

I am working with a client right now that they are sick of the unions running their company with approx 1500 employees in Pennsylvania. So they are moving there entire operation down here in Houston, we are designing the first building now once it is built they will start operations here. At that point they will offer all their employees jobs in Houston for their non-union shop if they do not want to move locations an to a non-union shop their positions will be terminated.
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PostPosted: Nov 16, 2012 10:29 am    Post subject: Reply with quote

Not all unions operate in this fashion so I do not think you can cast that broad net. In this case criticism is deserved and generally when talking about public employee unions who extract concessions regardless of the economic state of the public.

To be honest Hostess going under does not surprise me. I don't think I have ever bought a twinkie and haven't had a ho-ho since I traded a soda for one in elementary school.

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PostPosted: Nov 16, 2012 11:18 am    Post subject: Reply with quote


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eeven73
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PostPosted: Nov 16, 2012 11:57 am    Post subject: Reply with quote

http://www.bloomberg.com/news/2012-11-16/twinkie-seekers-raid-grocery-shelves-as-hostess-plans-to-close.html

Twinkies are also listed for sale on EBay Inc. (EBAY) A 10-pack is available for $24.99 and four 10-packs are listed for $99.99 on the online retailerís website.




Hopefully Eric Holder will investigate these gougers.

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PostPosted: Nov 16, 2012 3:57 pm    Post subject: Reply with quote

I wouldnt really care when a sweets company goes under, but all the off brands of twinkies and hohos just dont compare. I might have to find one at a gas station tomorrow to have my last one. Laughing
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PostPosted: Nov 16, 2012 6:30 pm    Post subject: Reply with quote

Maybe Obama will bail out the twinkie giant... Smile

Bought a box of twinkies about 4 months ago just because. I can live without them but I do find it sad that a company that has been around for a long time cannot make it.

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PostPosted: Nov 16, 2012 8:22 pm    Post subject: Reply with quote

Onion delivers
http://www.theonion.com/articles/laidoff-hostess-employee-forced-to-look-for-cremei,30425/?utm_source=Twitter&utm_medium=SocialMarketing&utm_campaign=standard-post:headline:default

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