Skip to comments.Poor management, not union intransigence, killed Hostess.
Posted on 11/25/2012 7:35:33 AM PST by SeekAndFind
Let's get a few things clear. Hostess didn't fail for any of the reasons you've been fed. It didn't fail because Americans demanded more healthful food than its Twinkies and Ho-Hos snack cakes. It didn't fail because its unions wanted it to die.
It failed because the people that ran it had no idea what they were doing. Every other excuse is just an attempt by the guilty to blame someone else.
Take the notion that Hostess was out of step with America's healthful-food craze. You'd almost think that Hostess failed because it didn't convert its product line into one based on green vegetables. Yet you only have to amble down the cookie aisle at your supermarket or stroll past the Cinnabon kiosk at the airport to know that there are still handsome profits to be made from the sale of highly refined sugary garbage.
It's true that the company had done almost nothing in the last 10 years to modernize or expand its offerings. But as any of the millions of Americans who have succumbed to Twinkie cravings can attest, there has always been something about their greasy denseness and peculiar aftertaste that place them high among the ranks of foodstuffs that can be perfectly satisfying without actually being any good.
Hostess management's efforts to blame union intransigence for the company's collapse persisted right through to the Thanksgiving eve press release announcing Hostess' liquidation, when it cited a nationwide strike by bakery workers that "crippled its operations."
That overlooks the years of union givebacks and management bad faith. Example: Just before declaring bankruptcy for the second time in eight years Jan. 11, Hostess trebled the compensation of then-Chief Executive Brian Driscoll and raised other executives' pay up to twofold.
(Excerpt) Read more at latimes.com ...
Hostess won’t be stiffing them anymore, will it?
Ok, the contracts embedded horrendously stupid conditions - can’t ship bread and other products on the same truck eg.
But management AGREED to every one of those ridiculous conditions. They’ve got to take some responsibility for that.
Never the fault of the poor, oppressed unions, at least by LA Times standards,.
Hmmm, and - of course - those modernization funds would have come from where?
I totally agree that management in that company - and in most companies - is right out of Dilbert.
But take the ineptness and corruptness of management, multiply it by a googol, and we’re approaching a fraction of the sleeze of a typical union leader.
An idiot without proper training becomes a union leader.
An idiot with an MBA becomes a manager.
I suppose you could make a business case for way the company was run for the past 10 years. They had a stale product line whose popularity was sinking. Either you invest in building a whole new product line or you milk the company for whatever you can get out of it for as long as you can.
Who knows, that might have been the smartest strategy?
This article is complete garbage.
MOST companies are struggling with pension obligations, even to make the minimum required contributions. I have no idea how the company was run, but wouldn’t expect the LA Times reporter to be unbiased.
Is it unreasonable to think union demands like artificially inflated wages, pensions, and other benefits kept them from spending enough on modernization?
I don’t know the answers, just not ready to swallow the LA Times story so easily.
Same crap we had to listen to about Detroit.... it wasn’t the unions but bad management. That should be the union motto.
I am so sick of the CEO getting a raise argument. It didn’t amount to squat compared to the amount of cuts required for the bankruptcy. It wouldn’t have saved them. It wouldn’t have saved enough even if the CEOs had worked for free.
It’s ridiculous! 2+2=5 with these people.
Do you really have to modernize to make, box and ship a twinkie?
Yes invest massive amounts of capital in a struggling enterprise as sales struggle and make sure you modernize but besure you do not headcount or reduce labor costs. When people realize that ROI dictates capital investment they might understand business.
Typical MO: Leftists lying to defend their own.
I think most liberals just think that businesses should run like the federal gov’t and run deficits for the greater good. The problem is they can’t.
You do know that the Hostess management team is a bunch of libtards guided by former House Democrat Majority Leader Dick Gebhardt?
For the unions, negotiations were a kind of game they played with management. The little feather-bedding rules that saved a few jobs while denying better working conditions to the people with real jobs, was the way they worked. Back in the early 70s, the Auto-unions did not press management to replace the worn-out factories that were hot in the summer and cold in the winter or get machinery to do jobs that were down-right depressing. My wifes uncle made an art-form of using his sick benefits and perversely passed on crappy product because the company did not want to bear the cost of turning out good stuff.
Not many liberals realize how poorly run many government offices are.
Modernization usually results in layoffs.
Interesting piece here:
Perhaps one of the most interesting aspects of the just announced Hostess liquidation, one that will be largely debated and discussed in the media, or maybe not at all, is the curious cast of characters and the peculiar history of this particular bankruptcy.
Some may not be aware that the company’s Chapter 11 (or colloquially known as 22) bankruptcy filing this January, which today became a Chapter 7 liquidation, was the second one in the company’s recent history, with Hostess, previously Interstate Bakeries, emerging from its previous protracted multi-year bankruptcy in 2009.
What is curious is that its emergence had all the drama of a anti-Mitt Romney PAC funded thriller, with a PE firm, in this case Ripplewood holdings, injecting $130 million in order to obtain equity control of Hostess as it was emerging last time. There were also more hedge funds, investment banks, strategic buyers, politicians involved in this particular story than one can shake a deep fried numismatic value Twinkie at. More importantly, however, as America has been habituated following the last season of the reality TV show known as the presidential election, if Private Equity then “bad.” Only this time there is a twist: because it wasn’t really PE that was the pure evil in the Obama long-term campaign, it was associating PE with Republicans, and thus: with jobs outsourcing. And here comes the Hostess twist:
Because Tim Collins of Ripplewood, was a prominent Democrat, a position which allowed him to get involved in the first bankruptcy process in the first place, due to his proximity with the Teamsters’ long-term Democrat heartthrob Dick Gephardt (whose consulting group just happens to also be an equity owner of Hostess). In other words, the traditional republican-cum-PE scapegoating strategy here will be a tough one to pull off since the narrative collapses when considering that it was a Democrat who rescued the firm, only to see it implode in a trainwreck that has resulted in the liquidation of a legendary brand, and 18,500 layoffs.
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