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 ...
MBA’s....the bane of my existence.
Toss in the mix, Six Sigma, and Lean Manufacturing and you understand why businesses fail. Poor quality is the result of sourcing your parts to a single supplier and then when that supplier (who knows that you have no inventory) sends you all of his rejects. At Incoming Inspection, they fail. You call the supplier and they say “sure we can send more in about six to eight weeks”. Magically, this is the current delivery amount. You have no inventory, and you can’t shut down your production...so what do you do? You waive them and hope that it doesn’t blow up in your face.
In Hostess’ case, since they had so much debt, and obligation, you run the machines you have into the ground and hope that you can get yours before the whole thing collapses.
At some point the board of directors knew that it was toast and they managed it on that basis.
As you said, “the fact remains that there are 18,500 workers out there who will be shifting from taxpayer mode to government dependency “
Just what the Obama administration and union want.
“Same crap we had to listen to about Detroit.... it wasn’t the unions but bad management. That should be the union motto.”
I guess all us HICKS in the South are better at running factories than those Ivy-League (and similar) educated geniuses in the north...
If that’s the case, I have yet to meet a SINGLE person from that part of the country that agrees the people up there are just all born to be crappy managers.
“You do know that the Hostess management team is a bunch of libtards guided by former House Democrat Majority Leader Dick Gebhardt?”
Could care less. They still didn’t want to have to shut down.
“Modernization usually results in layoffs.”
Exactly - see how much ‘help’ the unions provide when management tries that.
Hard to blame them for simply running out the clock with the company - given that they had to deal with a union.
I’m sure Obama can fix everything by creating a new Department of Strategic Twinkie Resources. This will be a cabinet level position with 275,000 Federal employees in 42 district offices. The new department’s budget will be $250 billon per year. Twinkies will be made available to the public with a doctor’s prescription, cosigned by an authorized person from your local Twinkie district office. Twinkies will cost $178... each.
So I see a $4,000,000 total increase in your numbers.
That comes out to about $200 per employee. The union said (I think) that they would be seeing at least a $10,000 equivalent pay cut (including benefits). So would they have settled for a pay cut of $9,800 - I don’t think so.
The unions put them under nothing else!!!
Unions and bad management killed GM, just like unions and bad management killed Hostess. They’re is enough blame to go around. Unlike GM though, Hostess will be allowed to go bankrupt and the law will be followed.....they’re just not big enough, or located in the right states, for the Marxist in the White House to care.
Think “GM jobs bank”.
There should have been no pay raise for management unless and until the pensions were fully funded. What Hostess did was immoral. If hourly workers are asked for givebacks, that same request should be made of management.
When a company is in trouble, all should be asked to give up some of their compensation.
Well put.
Really, Michael Hiltzik? You gonna go with that?
I wonder if the unions’ refusal to budge had anything to do with so-called lack of modernization. Capital spending ain’t free, ya know.
Nope, seems to me when people don’t show up to work, they lose their jobs.
There are even stories out there of some Hostess workers HAPPY to lose their jobs. Fine with me.
I’ve seen other stories of Hostess employees ANGRY at the union leadership for putting the company out of business.
How amazing it is, when someone wants to find an excuse for the mouth breathers who won’t show up to work in a rough economy, that they find some hack “journalist” to carry their water for them...and blame the COMPANY that provided the jobs.
Hey, speaking of lack of modernization, how is the circulation and profit margin of the L.A. Times in the past 10 years, Michael Hiltzik?
First they'll blame China (that loaned the money to the feral gov't to bailout Government Motors to begin with).
Then they'll blame the average American......GM spent so much time and effort developing innovative energy efficient cars like the Volt but Americans are just wasteful blah blah blah.
They come up with solutions that rely on changing human nature, then when it fails they blame us for not changing.
If Hostess had moved all operations to right to work states the moment demands became unreasonable, Hostess would be here in the black, and all the employees would have fully paid jobs.
Except the union bosses and executives.
It appears that milk it they did.
Driscoll outlined a "Turnaround Plan" to get the firm back on its feet. The steps included closing outmoded plants and improving the efficiency of those that remain; upgrading the company's "aging vehicle fleet" and merging its distribution warehouses for efficiency; installing software at the warehouses to allow it to track inventory; and closing unprofitable retail stores.
A company with inefficient plants, an aging vehicle fleet, no software to track inventory, and unprofitable retail stores is on its way to bankruptcy. Now, I suspect [as is often the case] that high union wages combined with investors' need to see a return led to ignoring capital improvements.
It's what happened to American railroads in the seventies and the steel industry in the eighties. It is only through capital investment leading to greater productivity that employee wages can increase.
As a consumer, I used to love this stuff... but I haven't bought any of their products for decades for one simple reason: the ridiculous high price of the products.
I know there are a thousand factors involved in this, but your first goal is to either have a competitively priced product, or a vastly superior product that is worth the outlandish price. Hostess had neither. You can sit around and point your finger at a dozen exec who are bleeding the company of 10 million annually in salaries... which is on par with Obama telling us he can fix the deficit by eliminating the corporate jet tax deduction.
Although I personally think it is shameful for an exec to accept millions in salary while a company is crumbling around him, that is a decision for the company and it's investors... not the clock punchers who have somehow evolved the ideal that they are entitled to as much of the company's profits as the investors themselves. I think we would all agree... executive compensation was a mere drop in the ocean compared to the expense of union labor, benefits and pensions.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.