Bakers End Hostess, and More Importantly, What It Means for Twinkies

The news has already made its way through social networks and news media as some rejoiced and others mourned: Hostess, maker of Twinkies, Ho Hos, and Wonder Bread, has gone out of business. The process started with a bankruptcy filing in January and was brought to a front this past Friday morning.

Hostess, though, is 82 years old, which is partly how their products became so ingrained in the national experience. What could have possibly undone a company that has survived countless health-food trends and a previous Chapter 11 process? Simply, the bakers union they employed.

82 years of business accompanied a load of changes to the Hostess Company, most recently in their re-invention of the most health-conscious Hostess Brands in 2009. During the dealings, Hostess took on over $860 million of debt. But, ultimately, it was the labor costs would broke the back of the major baker.

The Teamsters, which has 6,700 members at Hostess, said it played an instrumental role in ousting Hostess’s previous chief executive, Brian J. Driscoll, this year after the board tripled his compensation to $2.55 million. The union also hired a financial consultant, Harry J. Wilson, who had worked on the General Motorsrestructuring.

While highly critical of management missteps, the Teamsters agreed in September to major concessions, including cuts in wages and company contributions to health care. As part of the deal, the union was to receive a 25 percent share of the company’s stock and a $100 million claim in bankruptcy.

About a month ago, Mr. Rayburn said, the bakers union stopped returning the company’s phone calls altogether. For its part, the bakery union said the company had taken an overly aggressive approach. David Durkee, the union’s secretary-treasurer, said Hostess had given an ultimatum. “They said, ‘If you do not ratify this, we are going to liquidate based on your vote.’”

The Teamsters stood firm, nevertheless, and shut down operations along a picked line this past week. This proved to be the straw that broke the baker’s back for Hostess, whose executives called it quits with strikes occurring across their manufacturing sites. They have now begun liquidation. And while there remains a chance that the Hostess company manages to sell their idolized Twinkies brand, it remains unlikely amidst a newly health-oriented atmosphere.

In the words of the satirical news group The Onion: “This is your kingdom now, Little Debbie. Rule with mercy.”


NY Times Deal Book
The Onion

Commentary Ticker

  • Data Knows Best: Greatest TV Shows Get Ranked and Graphed
    March 26, 2014 | 10:50 am

    Every argument is better with charts and graphs. Sometimes a little linear regression can provide more insight than a long-winded report. GraphTV tests that theory by plotting the ratings of popular television shows. It all started with Breaking Bad. Data guru Kevin Wu was watching its fifth and final season and couldn’t help but think [...]

  • A Coin-Inspired National Spirit, Hopefully
    March 20, 2014 | 11:56 am

    The Lakota Nation, a group of seven Native American bands in North and South Dakota, voted to make a Bitcoin-like crypto-currency called MazaCoin their official currency, according to Forbes. Programmer and Lakota activist Payu Harris believes that the coin will help the Lakota people gain sovereignty over their land. “To be a truly independent state [...]

  • Smartguns and the Promise of Progress
    March 3, 2014 | 9:50 am

    With the recent Sandy Hook elementary school shooting (and the 44 school shootings since) still relatively fresh in our collective minds, and with Congress empirically unable to do anything to stop gun violence at all, it seems slowing, if not stopping, the gun violence epidemic has fallen on a strange coalition of gun manufacturers, Silicon [...]

  • Watch: Movies Without Imaginary Friends
    January 28, 2014 | 12:56 pm

    If you seriously haven’t watched Fight Club yet (or read the book by Chuck Palahniuk) stop and go do that right now. You’re fifteen years late to the craziest party. Okay, you’ve watched it now? Onwards. A visual effects specialist in New York accelerated himself to Internet fame in mid-January when he edited Tyler Durden [...]

  • The Racism of “Racism”: The Complicated Origins of the Term
    January 17, 2014 | 12:27 pm

    “Racism,” like race, was invented. The term “racism” has done a lot of heavy lifting for anti-racism advocates, helping to frame anyone discriminating by race as misguided. Just as with classism or sexism, not only does the word racism give name to an evil, it helps to create the thing as evil in the first [...]

  • RSSArchive for Commentary Ticker »

Join our mailing list!

Trending on The Airspace