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Twinkie Gate: Republicans Admit Hostess Closing was About Killing Unions
While the right has been blaming unions for the closing of Hostess, Newt Gingrich and George Will admitted that they expect the company to return without union workers in a right to work state.
RADDATZ: Can we have — can we a very quick thoughts of Twinkies in your life? Just — not you, Jon Karl. You’re too young. You’re the youngest member of this roundtable. Did you like Twinkies growing up?
WILL: I liked Hostess cupcakes, but don’t despair. Someone’s going to buy — someone’s going to — the brand has value. Someone will buy it.
RADDATZ: It’s not the…
WILL: And they will go and manufacture it in a right-to-work state, where Hostess does not have to operate under 372 collective bargaining agreements.
RADDATZ: OK. OK. Quickly, just Twinkie memories.
BRAZILE: I remember when it was 25 cent a pack, when my grandmother — it was two for five cents. It’s $1.69. I would like the original Twinkie back.
RADDATZ: Twinkies…
KARL: But I just have to say very quickly, I mean, what about Wonder Bread? Wonder Bread’s going, too.
RADDATZ: Yeah, that’s…
KARL: And this is not just about Twinkies.
RADDATZ: You brought that with you, because you like it so much.
BECERRA: I’m a chocolate fiend. Hostess has a company in Sacramento where I was born and raised, saw it every — almost every day of the week.
RADDATZ: Five seconds?
GINGRICH: I’m with George. Twinkie will survive in a new corporate framework.
All of the blame of unions by Hostess and the right wing media is a bunch of malarkey designed to further the conservative agenda of destroying organized labor. 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. The door is open for someone to buy the company, and relocate it to a right to work state.
According to Fortune, this is how Hostess emerged from bankruptcy in 2009, “Hostess was able to exit bankruptcy in 2009 for three reasons. The first was Ripplewood’s equity infusion of $130 million in return for control of the company (it currently owns about two-thirds of the equity). The second reason: substantial concessions by the two big unions. Annual labor cost savings to the company were about $110 million; thousands of union members lost their jobs. The third reason: Lenders agreed to stay in the game rather than drive Hostess into liquidation and take whatever pieces were left. The key lenders were Silver Point and Monarch. Both are hedge funds that specialize in investing in distressed companies — whether you call them saviors or vultures depends on whether you’re getting fed or getting eaten.”
Hostess was a distressed company that was taken over by Bain style management that had one eye on closing the company the whole time. Hostess had already stopped contributing to employee pensions, was swimming in debt, and demanded that workers take an additional 27%-32% pay cut.
The vulture capitalists don’t care that 18,500 people just lost their jobs. Like Mitt Romney, to the job killers running Hostess profit is king. The Hostess brand will resurface. It is likely to come back in a Southern red state with a labor force earning a bit above minimum wage and no benefits. The Twinkie will be back, but those 18,500 decently paying jobs with benefits will never return.
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48 Responses to Twinkie Gate: Republicans Admit Hostess Closing was About Killing Unions
hadassah weinreb
Nov. 18th, 2012 at 2:15 pm
The overlooked matter is that the Hostess line of bakery is crap. It tastes awful & I used to love the stuff…back when it had a taste to it.
Anne
Nov. 18th, 2012 at 2:26 pm
Anyone who doubts that a huge part of the GOP agenda is to get rid of unions is not dealing with reality. Willard Romney spoke the language of CEO’s with this mentality, because it’s the same one that enabled him as Bain’s CEO to bankrupt companies and fire American employees only to outsource their jobs to other countries like China. If Hostess is outsourced to a right-to-work state, that will mean lower wages and no benefits for other Americans and a larger profit margin for the company. As I’ve said in another post, a business firm’s most important resource is its employees because they are instrumental in helping the firm profit and/or meet other objectives. For that reason, they deserve a living wage and health care coverage, things that they are unlikely to get in a right-to-work state.
Billy Bob
Nov. 19th, 2012 at 7:39 pm
I’m from a right-to-work state and we’d be glad to have a business willing to come in and hire people. If they do not pay enough for my liking, then I won’t apply. Simple. Meanwhile, does anyone, ANYONE, really think a company that is currently making a profit would go out of business just to “kill the union?” REALLY? You realize that the other choice would be that they could charge $14 for each box of twinkies. Then the business could make money, the unions could be fat, and, oh yeah, no one would buy the product, including all the liberal union-types who will not support the union but will simply go by Little Debbies, fresh out of the non-union bakery.
allen
Nov. 18th, 2012 at 2:33 pm
of course this was planned by the BOSSES, they gave themselves pay raises of some 300%!!!
they should be prosecuted!
ThomasW
Nov. 18th, 2012 at 3:41 pm
Yes it will survive….The company will become profitable ..with millions of dollars in profits. And the work with $16 salaries will now make $7.
Can you see what is going on.. The company are showing profits that are outrageous. But the good salaries go away. Then we say there are no good jobs out there. There are jobs that don’t pay. We are looting our own people….But wait that is why the rich vote republican .and spent so much money trying to get rid of Obama.
rewinn
Nov. 18th, 2012 at 4:13 pm
Workers making minimum wage can’t afford the products they are making. This is a formula for economic collapse.
Robert
Nov. 18th, 2012 at 4:25 pm
Thanks for the nonpartisan report
LouieD
Nov. 19th, 2012 at 2:44 am
Hate to break it to you, but oftentimes the truth is partisan.
John
Nov. 18th, 2012 at 4:28 pm
It is truly a sad day! I am not anti union but what exactly where they thinking. Now over 18,500 people will be out of work and take my word for it you will not find a position of equal pay to what you just lost. I am not going to say that there were not issues within the company yet on the other hand up until now you were getting paid and could support your family and lifestyle. All these people have hard choices coming to them. It took me 2 years to even get back into the work force that is how messed up everything is out here. Many people may say that I am talking out of a lower part of my anatomy but they will find out the truth for themselves soon enough! I truly feel sorry for all these people. I had to learn a hard lesson and now sadly so will they. :(
Shiva (Moderator)
Nov. 18th, 2012 at 4:56 pm
The union had nothing to do with it. Do more research, the group that owned Twinkie had no intention of keeping Hostess open to start with
Bear Peterson
Nov. 18th, 2012 at 10:09 pm
Had the union played the company’s game the workers still wouldn’t have had as you said “a position of equal pay to what you just lost”. The company was demanding that workers take an additional 27%-32% pay cut. And that was on top of cuts already made, Funny that no mention is made at all about how much of a cut the CEO and the rest of upper management was expected to make, but I’d bet it would not have been drastic enough to put them anywhere near as close to poverty level as they were expecting the workers to accept.
Those workers were what gave Hostess its reputation for quality. If the brand does resurface again in a “right to work” state where the workers are paid just above minimum wage it will not have that same quality. About 30 years ago I worked in a food plant of that kind. There is no way I would eat anything that came from a plant like that unless I were starving to death simply because at that pay rate very few employees care about quality, they are too exhausted from working the 2nd job they need to work in order to stay alive.
Jeff R
Nov. 19th, 2012 at 1:10 am
Assume that by “they” you mean the unions. “They” were thinking, actually they KNEW, that even if the workers agreed to work for absolutely NOTHING, the “talented” management running the Hostess had made it impossible for the company to survive.
The union’s leadership and membership decided that those managers had to pay some price for tripling their own compensation while driving the company into insolvency, that price was the forced liquidation of Hostess, which in a reasonable world and economy, would have marked Hostess’ executives as incompetent to run any business.
It is likely that Hostess’ brand name, recipes (such as they are), and other assets will be sold. Personally it is my hope that the union will finance their purchase by the former employees. Although, I would expect the usual “business leaders” and other right-wing extremists to throw up many and perhaps insurmountable obstacles to the creation of an employee owned firm.
langushan
Nov. 18th, 2012 at 4:32 pm
this is why countries all around the world are laughing at us
Sara Rogers
Nov. 18th, 2012 at 6:04 pm
Going to reopen w/o union workers in a right to work state … Um, isn’t its headquarters in Irving, Texas, a right to work state? I swear that’s where the article I read said it was headquartered, the one that stated the smaller baker’s union that did strike after an agreement was made btw mgt and the teamsters union was made, and thus caused the closing of the company. Although, I’m sure the bakers union isn’t why they closed, the strike just hastened the decision.
Shiva (Moderator)
Nov. 18th, 2012 at 6:07 pm
The corp has been unprofitable for several years. First sign of weakness and the vultures pull their money
Sara Rogers
Nov. 18th, 2012 at 6:20 pm
Yep, just googles the company. Headquartered in Texas, prior to 2009 it was headquartered in Kansas, another right to work state. Good theory though, the facts just don’t back it up. Perhaps it would have been better to theorize it wpuld only close all plants and distribution sites in union states and just keep the plants in right to work states open. Either way, they’re closing down, for now.
stumptownhero
Nov. 18th, 2012 at 7:26 pm
It’s not where the company is headquartered its where the bakeries were!
Mark Sappenfield
Nov. 19th, 2012 at 5:40 am
You must live where people think Kansas City is in Kansas, perhaps you’re on the east coast? It’s Kansas City, Missouri where Interstate Brands/Hostess was for almost eighty years. Kansas City, Missouri. Please get it right.
Brandon
Nov. 18th, 2012 at 6:52 pm
Wow, that’s some mighty fine card stacking Mr. Easley.
I would suggest that you look into bankruptcy procedures, particularly how assets are sold off to pay back debts.
Other snackmakers, who operate in “Right to Work” states are in a financially better position right now because they don’t have union pension obligations and can actually operate their businesses on free market principles (i.e. 401k retirement plans instead of pensions; performance based pay rather than tenure based).
The only thing this transcript reveals is that the Twinkie brand still has value, and will probably resurface under a new corporate umbrella.
Bankruptcy 101.
You can’t provide good salaries and benefits if you’re out of money.
Shiva (Moderator)
Nov. 18th, 2012 at 8:03 pm
So thats why the managers of Hostess got 300% raises? I wondered about that.
BTW, Hostess has its Headquarters in Texas which is a right to work state.
Kate
Nov. 19th, 2012 at 6:04 am
Mighty ignorant comment, Brandon, since you apparently are unaware that the unions had already made quite a concession from the 2005 bankruptcy where employees took a paycut from $45K to $34K. They also took a major cut in benefits and contributions to pensions from the company. Now Hostess was proposing further benefit cuts and the $34K reduced to $25K.
However, there was no such problem finding the money to pay the CEO during this same period of time. His salary went from $750k to its current $2.25M, not to mention, there was also his buddies and other execs whose average increase was along the lines of $300K increasing to $700K during the same time period. These poor executives have received their salaries that are 28 to 102X the amount of the salary the lower level employees had proposed to them and another raise this year–but those same blue collar workers insisted on remaining at hourly wages that aren’t poverty level. The nerve of those employees!! Making $34K a year and still thinking they deserved a share of the profits they helped to build?! Hey, isn’t that the cry of the GOP, “we built that”? Or does that only count for the CEO’s, not the employees who provide the actual sweat equity?
There were several versions of this article but I had to hunt for those that even bothered to mention that the union employees had already taken a 25% wage cut years ago, with no increase since and that a further pay cut of 30% was being proposed along with continued cuts to pension and benefits. None of the articles mentioned the obscene salary increases for the CEO and other executives. Instead, it was all blamed on the union.
Worst of all, every article had comments in which posters automatically jumped to the union being bad for wages. They don’t believe these workers ever deserved $45K a year! I was reading the result of years of brainwashing of the RWers by Fox and other RWNJ sources!
Maranon
Nov. 20th, 2012 at 11:51 am
Sorry Brandon, it is not so…
I live in a right to work state and we are circling the drain financially, AZ had to sell the government buildings to the chinese and now we are renting them!
AZ it is a right to work state, and the unions are
present only in the FIRE and POLICE/ SHERIFF departments, yet nobody wants to do away with their benefits. One police chief retired his job and started collecting his pension of $100,000.00/ year for life, then returned to work as “training supervisor” to avoid the tittle chief, yet started to collect another 200,000.00/ year as he was “very valuable employee” talk about slime!
It is people like that give the unions bad name.
Yet the rest of us workers, the best we can do is minimal wages on part time work witout benefits ever! AZ is also at will dismissal, so you can be out of work w/o much reason. But even if we worked for $1.00 per hour, we would still make more than the companies want to pay, therefore they take the companies overseas, where they can pay much less and keep more…
Angry Voter
Nov. 18th, 2012 at 6:59 pm
Hostess just had $2.5B in sales.
They still had a $75M active line of credit.
Two companies had tried to buy them.
The CEO has already pushed half a dozen other companies into bankruptcy.
The CEO is like a little Romney – borrowing as much as possible, looting the company and then filing for bankruptcy.
Brandon
Nov. 18th, 2012 at 7:20 pm
The article I read said that there were no interested buyers. And 2.5 billion in revenue is great, but what were their operating costs and debt obligations?
Hostess as a company has only existed since 2004, before then it was Interstate Bakeries. It has been saddled with debt the whole time. Rising labor costs, and pension obligations (i.e. paying full salaries to retirees and also having to pay salaries to their replacements) are largely what crippled this company.
75 million in credit is a joke if your revenue is 2.5 billion a year.
Ingrid Buxton
Nov. 18th, 2012 at 9:22 pm
How could all the leaving CEOs get all those millions when they left?
Mark Sappenfield
Nov. 19th, 2012 at 5:43 am
Several articles have given interested buyers in Hostess Brands. Please do a Google search and you will see them plain as day.
kidcat24
Nov. 18th, 2012 at 8:43 pm
Republicans won’t be happy until the whole country is turned into a minimum wage service country.
Ingrid Buxton
Nov. 18th, 2012 at 9:21 pm
Well, after shopping at small local stores on black friday we could all go to the local Walmart, load up a cart with good and leave it in an isle with a 8×10 sheet of paper that says “This is what I would have bought if you paid your workers a livable wage.”
Kate
Nov. 19th, 2012 at 6:06 am
That is a great idea, Ingrid. Hope you don’t mind but I’m going to pass it on via Twitter. Let’s show Wal-Mart what they could be making if they paid decent wages. I doubt their employees even shop there!
Mary213
Nov. 19th, 2012 at 10:08 am
Their employees can’t afford to shop there.
Alan
Nov. 18th, 2012 at 10:15 pm
Here’s the problem with the author’s theory: You’re dealing with a perishable product here. Baked goods generally have a very short shelf life–a day or two for bread, for example. They simply can’t afford to concentrate all of the bakeries in low-wage Southern states and truck the product north–it won’t be fresh by the time it reaches store shelves. The company would be eaten alive by competitors who bake in the markets in which they sell.
Hostess/Interstate Bakeries had plenty of bakery operations in right-to-work states, so that also deflates the author’s theory. OTOH, it’s certainly possible that the new owners could try to reopen the bakeries as non-union shops.
Another example of vulture capitalism. How dare those union thugs, after two rounds of concessions, put their feet down and insist on a living wage…
DC
Nov. 19th, 2012 at 12:46 pm
Alan, that’s why most snack foods are loaded up with preservatives these days: So they had a longer shelf life and can be shipped greater distances.
craig
Nov. 18th, 2012 at 11:13 pm
At Alan: take a look at the baked goods at your local Walgreens. It is all made in Canada. It ships very easily at great environmental cost.
Jose Martinez MSQR
Nov. 19th, 2012 at 1:25 am
On the one hand, conservatives lament the 50′s good ol’days. With the other, they destroy it’s very foundation. The necessity for two-income households these days is due to lower wages. Or, as per their mantra, ”competitive wages”.
Richard
Nov. 19th, 2012 at 1:54 am
Still waiting for a “smoking gun” here.
Sorry, nothing quoted reveals any evil “plan”
here, just a statement of what is likely to
occur.
To really understand what happened you need to know
about the way the pension system worked. What happened is that you had a lot of companies working
under contracts with unions that effectively guaranteed the payments as a group. This means when a company goes belly up, the other companies are obligated to step in and carry the load. Kind of like the way insurance works.
The problem is, if you have too many of those companies go out of business then you have a large
strain on the ones remaining.
The costs of the baker’s union pensions were killing Hostess. They thought the company was
bluffing. The result of this will depend on what
happens in bankruptcy. Once the companies assets
are sold the pension fund will be high on the list
of creditors. This will be after the pay to current employees and secured creditors.
So, the pension fund will get a large lump, but it will no longer be getting a revenue stream from Hostess. I’m not sure which companies are left to support the pensions, but I’m sure they are less than happy about this.
Sadly, this IS a union vs union thing in the end.
The bakers union cared more about getting the money for their retired people and the other unions were concerned about jobs for their members.
And yes, like always, management was trying to line their pockets too. That said, the costs of
their greed pales before the costs of what they
were trying to get the baker’s union to give up.
The biggest losers are the share holders who will
likely see nothing when all is said and done. The workers are also screwed, but at least their paychecks are considered sacred in bankruptcy.
I’m guessing that the venture capitalists were very smart and got much of the assets as security for their investments. They win, though not as much as if they were able to get…
edward mullins
Nov. 19th, 2012 at 8:43 am
They have factories is red States now. I am in Oklahoma, a Right To Work state. We still have unions. And they will still need to manufacture their perishable goods near population centers unless they drop those items. (Certainly a possibility.)
Steve
Nov. 20th, 2012 at 1:49 am
Kate,
$45 THOUSAND dollars a year? You’re talking about bakery workers, making Twinkies, Ding Dongs, bread, etc. in an assembly line style work environment, where you are instructed on how to do your job step by step. And these workers made $45,000/year? Plus a pension? And healthcare benefits?
Of course Hostess is closing. That’s absolutely ridiculous. Even after a cut to $34,000/year, you have to ask yourself, if you owned a bakery, would YOU pay your workers that much money to make your baked goods? If you say you would, then it wouldn’t take long before you end up just like Hostess. Unionized or not, these wages are not “fair”, they’re excessive.
John sipe
Nov. 20th, 2012 at 9:41 am
I worked in Cincinnati plant. I know that poor management killed the Cincinnati plant. There was over timed payed for the most stupid stuff that was done. When your husband is your boss, of course you get overtime because, that money goes into his pocket to. When they bring you in on overtime and sometime double time to sweep the floor, or do his paperwork. That is mismanagement. Your husband should not be able to be your boss. Since he was, she made over 60 thousand dollars a year. And he did her payroll. If Cincinnati plant reopened , they need new management. No more buddie, buddie stuff. This plant has older machinery, but, they put out the same amount of product as the newer plants do. Hope every thing works out for all plants.
carol
Nov. 20th, 2012 at 10:01 am
What ppl really need to look at is: that in 1995 IBC bought Hostess/Wonder Bread that was on the verge of bankruptcy then & put there ppl on the board of IBC,,,, that was the 1st mistake because all they done was raid the company’s coffer’s w/bonus of millions of dollars it only took 9 yrs for them to bankrupt IBC,,,IBC was in bankruptcy for 5yrs the longest any company in the history of the USA was in bankruptcy,,,,Then if u owned stock in IBC it became worthless,,,,a lot of ppl lost a lot of money then, IBC became a privately held company NO STOCK, no longer traded on the stock exchange,,,,,I know plenty of ppl that lost a lot of money that way,,,then if u drove a company car the new company gave it to that person along with enough money to transfer it to ur name with plenty left over some ppl got as much as 10,000.00 ,,,, Then in Jan of this yr the new holding company files for bankrupty go figure,,,, so don’t go blaming the union’s they took plenty of concessions durning the 1st bankrupty,,, now Hostess wants them to take more ,,,,,just sayin what’s right is right & what’s wrong is just plain wrong
Paul
Nov. 20th, 2012 at 2:27 pm
As the son of a deceased union worker, I find nothing but stupidity being spewed here by uneducated people. First, you need to understand a corporate structure. CEO’s and execs DO NOT give themselves raises; that is something done by the board of directors for the company…the very people elected by the owners of the company to run it according to owners’ best interests! If the owners didn’t approve the salary increases based on past performance of the company, then there would be no raises even considered. Also, as I see it, the company still sells stock on the open market, and if the workers want to gripe about how the company is run, then they need to just buy stock in it….enough of it to make an impact. How much is enough? Without getting into particulars, just think of this….the squeaky wheel gets the grease (if nothing else than to just shut it up). If a group of those “poor” employees were to purchase even 5% of the outstanding stock, there would be enough of a clamor to be heard. Furthermore, to my knowledge, this is NOT the only employer in the area which has done this, and to blame a single company for taking a stand in which the owners decided this would be the most desirable outcome is competely wrong. A company can move its business operations anywhere it so chooses based on cost-effective measures. The thing I find strangest about this is that NOBODY has brought up the fact that General Electric’s CEO, Jeffrey Immelt, who happens to be President Obama’s head of the Job’s Council (Job Czar), transferred operations for the company’s 115 year-old X-Ray Division in Wisconsin to CHINA. Here is a link to a LIBERAL media article about it and what GE has done to jobs:
www.dailykos.com/story/20...
I am not a sympathizer of unions! I believe in a company’s ability to operate in the best interest of its owners who STILL call the shots for THEIR company’s…
Shiva (Moderator)
Nov. 20th, 2012 at 3:26 pm
Actually you beleive in the right of corporations to abuse the workers in any way possible
Shiva (Moderator)
Nov. 20th, 2012 at 3:53 pm
No one brought up that twinkies are full of garbage and are fattening either.
You don’t seem to be reading the article. The CEO is not in charge of the company. The Bain style investment company owns the majority stock and they along with the CEO and a couple others are raping the company for millions before they closed it. Big millions. The investment company is pulling its money out. The CEO doesn’t determine anything.
I have to assume that you know absolutely very little about the situation
L
Nov. 20th, 2012 at 8:14 pm
Amen, Steve!!! Another point is what the hell is wrong with capitalism? Just because you are a US citizen should not guarantee you a “decent” job. Get over yourselves, I also don’t blame the management when these employees “have” to go on federal assistance, I blame politicians like obama. Gone are the days a real man would rather starve than accept charity. Good job, America!
Shiva (Moderator)
Nov. 20th, 2012 at 8:52 pm
You didnt read the story did you? It was the management that was taking money out of the company. ANd now a judge has to determine if they can do that. What did Obama do? People have accepted charity for ever. Just last summer your party, the party of corruption was bragging on how they should stop all assistance and let the churches and charity take care of them. Your fucked up boy. You cant even keep up with the talking points
L
Nov. 20th, 2012 at 9:28 pm
What’s wrong with that? Sure it sucks for the worker, but the only thing guaranteed to them is their freedom, not a way of life – accept minimum wage. get another job…can’t find one, too bad, not Hostess’s problem.
L
Nov. 20th, 2012 at 9:36 pm
p.s. I’m sure you are one of those who believe they are ENTITLED to something. Well, here’s the cold hard TRUTH – you are not. The world doesn’t run on sweet smelling flowers, it runs on money and management. Stop punishing the top 1% because they are smarter, luckier or just more deserving (harder working) than you. YOU and the other 99% (including me) are replaceable, they are not.
L
Nov. 20th, 2012 at 9:44 pm
The bottom line is a person’s wage shoul not be established by a nation’s minimum wage but by the employee’s perforance or the company’s decision or what the market will bear. If the employee doesn’t like it – now hold your breath for this novel idea and try to let your small brain absorb it – quit and find a new job! Wow, so simple, yet so ideal! and if there are no other jobs – hold your breath again – take what you can get and be grateful.
RFL
Nov. 23rd, 2012 at 6:48 am
I worked for Hostess Brands for 26+ years as a route salesman. In those 26 years there never was a plan to invest into the company. The truck that I drove the last day I worked (Nov 16) was over 30 years old. We had the oldest equipment in the industry. Between 2004 -2009 Hostess was in bankruptcy. They said they were losing about $12 million per quarter. All union employees gave back a total of over$100 million in givebacks. Our sales between 2009-2012 were over $7.2 Billion. Yet in late 2011 the company stated that they were now $800 million in debt and losing $345 million per year. This from a management team that never re- invested a plug nickel back into the company. All estimated reports say that after selling the brands,real-estate and equipment they will end up with about $2.3 Billion. Yet we the 18,500 take the blame for Hostess Brands demise.