The bakers union cooks its own goose as Hostess shuts its doors
By: Ed Farnan | Published Monday, December 17, 2012, 6:02 PM | Updated Monday, December 17, 2012, 6:02 PM
If there’s anything that symbolized America’s greatness in the snack industry, it was the iconic Hostess Twinkie. The tasty snack was a must have for cravers of a cheap, high caloric/carb/sugary fueled food rush.
We grew up with the entire family of Hostess snack foods: From chocolate covered Cupcakes, to the powder sugar Gems, Ding Dongs, Ho Ho’s, Sno Balls and Donettes.-these were comfort foods to millions of Americans. Every quick stop and grocery store in America carried Hostess products.
Everyone has had a personal relationship with some Hostess product at some point in their life.
But today it was announced that relationship is coming to an end as Hostess stated they were shutting their doors forever.
On announcement of the news, stoners on the Cheech and Chong blog said one of their favorite treats is going up in smoke and decry the empty Hostess shelves in local grocery stores.
An American success story in manufacturing and marketing since 1930,, Hostess, (Interstate Bakeries), also owns, Wonder Bread, Nature's Pride, Dolly Madison, Butternut Breads, and Drake's brands.
Hostess had been trying to get an agreement from their unionized labor pool of approximately 18,000, in order to stay in business and remain competitive. Operations at their plants had been paralyzed due to strikes and pickets. Last minute negotiations had brought some of the unions to agreement, but the bakers union voted 92% to turn down requests for scale backs on pay. As a result Hostess is shutting its doors and the 18,000 employees are all out of work.
The company had 372 collective bargaining agreements with a dozen unions and had roughly $2 billion in unfunded pension liabilities to its various unions' workers.
Hostess work rules based on labor contracts included separate drivers for deliveries of different Hostess products, vastly increasing labor costs to the company.
Management has a part to play in the demise of the company as well. Many said they have been riding the popularity of the Twinkie since 1933 and had failed to refresh their company and products image. Sales began to decline in the 1980s and '90s as consumers found healthier alternatives to snack cakes and white bread. The debt started to pile up and lead to the first company bankruptcy in 2004.
But a last minute order by a bankruptcy judge forced Hostess and the bakers union into a negotiation to see if a compromise could be worked out. The judge said there are “serious questions as to the logic behind the decision to strike.”
If the company is forced into liquidation, its brand names are valuable. Prior to the judge announcing the forced, last minute labor negotiations, there were rumors that some companies were willing to step in and take over operations, but would not be honoring any of the union labor agreements. Perhaps the Twinkie will be back, but it will never be the same.