End of the Twinkie? Hostess moves to shutter operations
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NEW YORK (AP) - Twinkies may not last forever after all.
Hostess Brands Inc., the maker of the spongy snack with a mysterious cream filling, said Friday it would shutter is operations after years of struggling with management turmoil, rising labor costs, intensifying competition and America's move toward eating healthier snacks even as its pantry of sugary dessert cakes seemed suspended in time.
Some of Hostess beloved brands such as Ding Dongs and Ho Ho's likely will be snapped up by buyers and find a second life, but for now the company says its snack cakes should be on shelves for another week or so. The news stoked an outpouring of nostalgia around kitchen tables, water coolers and online people relived childhood memories of their favorite Hostess goodies.
Customer streamed into the Wonder Hostess Bakery Outlet in a strip mall on the west side of Indianapolis Friday afternoon after they heard about the company's demise. Charles Selke, 42, pulled a pack of Zingers raspberry-flavored dessert cakes out of a plastic bag stuffed with treats as he left the store.
"How do these just disappear from your life?" he asked. "That's just not right, man. I'm loyal, I love these things, and I'm diabetic."
After hearing the news on the radio Friday morning, Samantha Caldwell of Chicago took a detour on her way to work to stop at a CVS store for a package of Twinkies to have with her morning tea and got one for her 4-year-old son as well.
"This way he can say, 'I had one of those,'" Caldwell, 41, said.
It's a sober end to a storied company. Hostess, whose roster of brands dates as far back as 1888, hadn't invested heavily in marketing or innovation in recent years as it struggled with debt and management changes.
As larger competitors inundated supermarket shelves with a dizzying array of new snacks and variations on popular brands, Hostess cakes seemed caught in time. The company took small stabs at keeping up with Americans' movement toward healthier foods, such as the introduction of its 100-calorie packs of cupcakes. But the efforts did little to change its image as a purveyor of empty calories with a seemingly unlimited shelf life.
Even taking into account changing tastes and competition, Hostess' problems were ultimately rooted in its own financials. The company, based in Irving, Texas, had been saddled with high pension, wage and medical costs related to its unionized workforce. It was making its second trip through bankruptcy court in less than three years.
Before the Chapter 11 filing in January, citing growing competition from rivals that expanded their reach over the years, the company had been contributing $100 million a year in pension costs. The new contract offer would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Tensions between management and workers were also an ongoing problem. Hostess came under fire this year after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent even as the company was struggling last year. Although some of those executives later agree to reduced salaries, others - including the former CEO Brain Driscoll - had left the company by the time the pay hikes came to light.
Hostess filed a motion to liquidate Friday with U.S. Bankruptcy Court after it said striking workers across the country crippled its ability to maintain production. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended Friday. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
CEO Gregory Rayburn, who was hired as a restructuring expert, said Friday that the company booked about $2.5 billion in revenue a year, and that sales volume was flat to slightly down in recent years. So far this year, the company said Twinkies alone accounted for $68 million in sales.
The move to liquidate comes after thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting the latest contract offer. The bakers union represents about 30 percent of the company's workforce. A representative for the bakers union did not return a call seeking comment.
Although many workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels; three plants were closed earlier this week. Hostess CEO Gregory Rayburn said Hostess was already operating on thin margins and that the strike was a final blow.
"The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products," he said.
The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking.
Ken Hall, general secretary-treasurer for the Teamsters, said his union members decided to make concessions after hiring consultants who found the company's financials were in a dire situation.
"We believed there was a pathway for this company to return to profitability," Hall said
Although Hall agreed that it was unlikely anyone would buy the entire company, he said "people are going to look for some fire sale prices" for some of the brands.
"Frankly it's tragic, particularly at this this time of year with the holidays around the corner," Hall said, noting that his 6,700 members at Hostess were now out of a job.
Kenneth McGregor, a shipper for Hostess in East Windsor, Conn., arrived at the plant Friday morning and said he was told he was laid off immediately. He blamed the bakery workers union for rejecting a proposed contract.
In a statement on the company website, CEO Rayburn said there would be "severe limits" on the assistance the company could offer workers because of the bankruptcy. The liquidation hearing will go before a bankruptcy judge Monday afternoon; Rayburn said he's confident the judge will approve the motion.
"There's no other alternative," Rayburn said.
Hostess Brands Inc., the maker of the spongy snack with a mysterious cream filling, said Friday it would shutter is operations after years of struggling with management turmoil, rising labor costs, intensifying competition and America's move toward eating healthier snacks even as its pantry of sugary dessert cakes seemed suspended in time.
Some of Hostess beloved brands such as Ding Dongs and Ho Ho's likely will be snapped up by buyers and find a second life, but for now the company says its snack cakes should be on shelves for another week or so. The news stoked an outpouring of nostalgia around kitchen tables, water coolers and online people relived childhood memories of their favorite Hostess goodies.
Customer streamed into the Wonder Hostess Bakery Outlet in a strip mall on the west side of Indianapolis Friday afternoon after they heard about the company's demise. Charles Selke, 42, pulled a pack of Zingers raspberry-flavored dessert cakes out of a plastic bag stuffed with treats as he left the store.
"How do these just disappear from your life?" he asked. "That's just not right, man. I'm loyal, I love these things, and I'm diabetic."
After hearing the news on the radio Friday morning, Samantha Caldwell of Chicago took a detour on her way to work to stop at a CVS store for a package of Twinkies to have with her morning tea and got one for her 4-year-old son as well.
"This way he can say, 'I had one of those,'" Caldwell, 41, said.
It's a sober end to a storied company. Hostess, whose roster of brands dates as far back as 1888, hadn't invested heavily in marketing or innovation in recent years as it struggled with debt and management changes.
As larger competitors inundated supermarket shelves with a dizzying array of new snacks and variations on popular brands, Hostess cakes seemed caught in time. The company took small stabs at keeping up with Americans' movement toward healthier foods, such as the introduction of its 100-calorie packs of cupcakes. But the efforts did little to change its image as a purveyor of empty calories with a seemingly unlimited shelf life.
Even taking into account changing tastes and competition, Hostess' problems were ultimately rooted in its own financials. The company, based in Irving, Texas, had been saddled with high pension, wage and medical costs related to its unionized workforce. It was making its second trip through bankruptcy court in less than three years.
Before the Chapter 11 filing in January, citing growing competition from rivals that expanded their reach over the years, the company had been contributing $100 million a year in pension costs. The new contract offer would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Tensions between management and workers were also an ongoing problem. Hostess came under fire this year after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent even as the company was struggling last year. Although some of those executives later agree to reduced salaries, others - including the former CEO Brain Driscoll - had left the company by the time the pay hikes came to light.
Hostess filed a motion to liquidate Friday with U.S. Bankruptcy Court after it said striking workers across the country crippled its ability to maintain production. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended Friday. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
CEO Gregory Rayburn, who was hired as a restructuring expert, said Friday that the company booked about $2.5 billion in revenue a year, and that sales volume was flat to slightly down in recent years. So far this year, the company said Twinkies alone accounted for $68 million in sales.
The move to liquidate comes after thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting the latest contract offer. The bakers union represents about 30 percent of the company's workforce. A representative for the bakers union did not return a call seeking comment.
Although many workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels; three plants were closed earlier this week. Hostess CEO Gregory Rayburn said Hostess was already operating on thin margins and that the strike was a final blow.
"The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products," he said.
The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking.
Ken Hall, general secretary-treasurer for the Teamsters, said his union members decided to make concessions after hiring consultants who found the company's financials were in a dire situation.
"We believed there was a pathway for this company to return to profitability," Hall said
Although Hall agreed that it was unlikely anyone would buy the entire company, he said "people are going to look for some fire sale prices" for some of the brands.
"Frankly it's tragic, particularly at this this time of year with the holidays around the corner," Hall said, noting that his 6,700 members at Hostess were now out of a job.
Kenneth McGregor, a shipper for Hostess in East Windsor, Conn., arrived at the plant Friday morning and said he was told he was laid off immediately. He blamed the bakery workers union for rejecting a proposed contract.
In a statement on the company website, CEO Rayburn said there would be "severe limits" on the assistance the company could offer workers because of the bankruptcy. The liquidation hearing will go before a bankruptcy judge Monday afternoon; Rayburn said he's confident the judge will approve the motion.
"There's no other alternative," Rayburn said.
Another fine union success story. The unions push and push until companies decide to just shut their doors. Now all of those baker union folks will be without jobs along with the white collar folks that work along with them. Way to go IDIOTS!!!
 @scooter sr. http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery#
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What was this last/best/final offer? You'd never know by watching the main stream media tell the story. So here you go...
1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don't have it now then you never will
.
Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer. It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me. That $3+ per hour they steal totaled $50 million last year that they never paid us. They sold $2.5 BILLION in product last year. If they can't make this profitable without stealing my money then good riddance.
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THis is the most ridiculous story i've ever heard in my entire life... Who the flip cares if Hostess goes out of business, they're responsible for ALL of the fat people in this country. High Fructose Corn Syrup and Hydrogenated Oil are 2 of Hostess's main ingredients. Good RIDDANCE.Â
Thy have had knock-offs for decades. Don't freak out people.
Most of the problems come from these exorbitant pension programs. We have the same problem with state and federal workers. I think its time we put an end to pensions and just make employees responsible for their own retirement.
 @Blindman Oh! You LIKE working into your grave! Kool!
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If employees are responsible for their own pensions (not a bad idea in many ways) they will need a bit more income in order to fund same. The problem then is that businesses do not like to give them that, and to the idea of the company pension program was devised whereby the extra money is "invested" by the company USUALLY IN ITSELF. Then, because the company invests money on behalf of the employee(s) - hence the term "vested" - the investment becomes a debt owed to the employee. But all too often - especially of late - we see companies which have simply SPENT the retirement funds on executive perqs or simply to keep the lights on - without telling anyone. Then the company folds and the employees are left holding the empty bag.
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Bernie Madoff never had it so good!
With people going hurgry and kids living in cars there are TWINKIES on E Bay......Makes ya wonder
 @DISPATCH911 Just says who the Ding-Dongs are...
 @DISPATCH911 people in this country sure have their priorities straight
@Larry*X*K @DISPATCH911 In this line of work .. you try and keep an open mind .... HOWEVER :)
All the right wing nonsense of the union taking down Hostess is a complete myth. In the year before "going bankrupt", Hostess saw fit to give their CEO a 300% raise... to $2.2 MILLION a year. Does that sound like the actions of a corporation worried they aren't going to financially make it? Meanwhile the Hostess workers themselves who were averaging around $43,000 had been asked to take major wage and benefit concessions. Workers (not some CEO) that made the Hostess brand into what it was. Unions didn't kill Hostess... Corporate greed did. Pay attention now, the product line will be sold off to some vulture capitalist, who'll likely make the products treating his workers like workers from red China, and the "great patriots" on these forums will applaud him for it. I'd say stupid people who think like that get what they deserve, if I wasn't worried you were dragging my kids down the hole with you. And that's why I'll correct your stupidity every chance I get.
If the company was a profitable, ongoing, money-making machine, ....don'tcha think there would have been a lobby of non-union stakeholders (especially in this god awful, never-ending Obama Depression) who would be lobbying to keep the money-making, income-generating machine going????
If all it took was cutting CEO pay don'tcha think the stockholders might take notice?????
Geeeez, you are a headless, commie chicken. 700 people have lost their jobs locally and the company is GONE. The income machine no longer exists.
Congratulations, doofus. Many champagne classes are being clinked tonight in the Seattle Soviet. Well done!
 @Attila Now you are calling people "commies"...Are you from the 1950's??
 @CrankyPanky  @TruthinAdverts  @Attila You are so off the edge of the world... and you don't even realize it. Commies... for heavens sake... I actually laughed out loud when I read it.Â
 @TruthinAdverts  @Attila Not the 50's 2012 demorat party is the "commies"
Yep, Hostess is gone.
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What a victory for the workers and the Union. Stupid.
 @Attila Just to be clear, its the Bakers union not the IBT that was the force behind the end of Hostess. Even IBT has stated they saw the financial woes of Hostess and agreed to several concessions in their contract negotiations. They urged the Bakers union to do the same but were ignored.
Not all unions are evil.
 @Attila evil? Seriously? You chose that screen name for a reason, didn't you.
You're right. All unions are not evil (just most of them).
 @Attila I like how you avoided the issue of the CEO's raise and the corporate squirreling away of profits. Meanwhile you sit on these boards and parrot Faux talking points. It's proper that you end your statement with the word "Stupid". Indeed your statement was.Â
@TruthinAdverts@Attila@CrankyPanky
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 @unobtanium @DarkRenegadeÂ
http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery#
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What was this last/best/final offer? You'd never know by watching the main stream media tell the story. So here you go...
1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don't have it now then you never will
.
Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer. It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me. That $3+ per hour they steal totaled $50 million last year that they never paid us. They sold $2.5 BILLION in product last year. If they can't make this profitable without stealing my money then good riddance.
 @CrankyPanky Man, you REALLY have those FOX Shibboleths down pat! Must have been practicing all your life!
 @CrankyPanky Thanks for identifying yourself as a total wing-nut to any moderate with a brain... the more you talk... the more we win.
 @CrankyPanky  @TruthinAdverts  @Attila Actually most of FOX's programs are not allowed to be called news but rather entertainment.
They are not news but instead opinion based programs that are not held to being factual. Glen Beck, Rush, that wacky broad, they arent news.
I'm sure all of the other programs you listed are out of touch with reality and FOX is the lone program spot on.
 @TruthinAdverts  @Attila Yep Fox news that is whats wrong with the country shut it down .
 @TruthinAdverts I stand by my comment you are the brainwashed you just don't know it. The entire public school system is run by union left wing socialist. They openly attend Marxist conventions, the latest was in Chicago. All those shows I mentioned are in the tank for the left I don't care who owns them. Watch some sitcoms modern family really, really.
 @Attila so can you explain to me how giving a CEO a 300% raise fit into this while giving employees major cuts across the boards? You haven't quite explained that. 300%? $2.2 million??? And they have to give workers averaging $43,000 a year major cuts? I'm thinking you have to be in on this whole "break the workers down until we are treating them like red China does" agenda... that for some reason you support it... You can't be dumb enough to not see it... can you?
 @CrankyPanky  @Attila You mean Fox news who tried to defend it's "right to lie"? That Fox?
Â
http://www.youtube.com/watch?feature=player_embedded&v=jDKLFn0pty4
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 @CrankyPanky Wow... I one brief post you've totally painted yourself. It's ALL a leftist conspiracy... from ALL of the news agencies (a surprising number of news agencies are now owned by extreme right individuals/corporations like Rupert Murdoch... but you conveniently ignore that or are simply too brainwashed to realize it), ALL television and movies, and the ENTIRE public school system. Do you have any idea how stark raving nuts you sound? You don't do you. You have no idea how far you're gone.Â
If the company was a profitable, ongoing, money-making machine, ....don'tcha think there would have been a lobby of non-union stakeholders (especially in this god awful, never-ending Obama Depression) who would be lobbying to keep the money-making, income-generating machine going????
If all it took was cutting CEO pay don'tcha think the stockholders might take notice?????
700 people have lost their jobs locally and the company is GONE. The income machine no longer exists.
Congratulations. Many champagne classes are being clinked tonight in the Seattle Soviet. Well done!
 @unobtanium  @TruthinAdverts  @Attila But this is not propaganda---------------abc news, nbc news,cbs news, cnn, msnbc npr, as well as night talk show like Leno, letterman, Conan, Chelsey latly, coalbat, Jimmy Fallon, Bill mare, and all Hollywood tv shows and movies not to mention the entire public school system.
 @CrankyPanky  @TruthinAdverts  @AttilaÂ
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"But oh no Fox news is the villain and must be put down."
Â
Fox =/= news. Â It is pure propaganda specially formulated for useful fools.
Â
http://www.rollingstone.com/politics/news/how-roger-ailes-built-the-fox-news-fear-factory-20110525
 @TruthinAdverts  @Attila Really Fox news you mean the only nation news that is not a leftist propaganda machine. Perhaps you should be mad at abc news, nbc news,cbs news, cnn, msnbc npr, as well as night talk show like Leno, letterman, Conan, Chelsey latly, coalbat, Jimmy Fallon, Bill mare, and all Hollywood tv shows and movies not to mention the entire public school system. But oh no Fox news is the villain and must be put down.
 @CrankyPanky  @Attila Well... actually I'd blame those who blindly listen to the propaganda on Fox... Oh I know they claim they don't, but then they come on these forums and parrot the slogans... word for word... Do you fit that group?
 @TruthinAdverts Of course they are going to avoid it.Â
Otherwise, they will have to come face to face with one simple fact.
Â
The whole "job creators taking all the risk" meme is just a stupid talking point with little basis in fact on the large scale.
Sure there are lots of of actuall small business out there where 1 or 2 guys took a giant risk.Â
However, there are plenty of these large companies where the top board members are taking zero risk, raking most of the benifits, and they don't even want to pay their farking taxes.
Â
And these are the first people to gripe and moan about a group of people who want free stuff , won't take responsibility.Â
These people are the first ones to play the "class warefare" card. And they will complain about "envy" when the fact is, they are just trying to cheat the system to accumilate wealth because they envy the bigger boat the guy in the next slip has.Â
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 @TruthinAdverts  @Attila I like how you found a way to blame Fox news, brilliant.
Now what are we going to eat during the Zombie Apocalypse ?!?
 @Reginald Edward Smythe seriously dude, these zombie jokes were funny like 5 years ago for like 10 minutes
700 local people lost their jobs during our Obama Depression.
Oh, the irony.
Oh, the humor.
Only to a Liberal.
 @Attila "Obama Depression"Â
Â
Those new talking points are getting more and more desperate.Â
Â
Could what Unions and unsustainable pension and healthcare costs did to Hostess perhaps be a harbinger for what the Democratic Party and it's Union Allies are doing to our national economy?
Hostess is gone, and 700 people locally are out of work during our never-ending Obama Depression. Most will end-up on UI.Â
Why don't Liberals "end poverty" by voting to raise the minimum wage to $1,000 an hour? That seems to be the calibre of their knowledge and understanding of economics.
Â
Very well said!!!
This is great and all, but Southpark already did it. Â
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http://www.southparkstudios.com/full-episodes/s05e06-cartmanland
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Make everyone want something they can't have and it'll become the most popular thing ever. Â
 @LandsharkÂ
Â
Most of us come hear to get away from the freak shows of Hollywood and the weirdos who watch those shows.
My neighbor was a manager at the Hostess plant in the 70's/80's in Seattle. He would always let me raid his truck whenever I wanted. Ding dongs and Snowballs were my favorite (never liked the Twinkies, unless they were frozen). He's passed on, but I've been reliving those memories today & yesterday. It makes me sad to see Hostess go. :(
Just as Fredrick and Nelson's (dam* I miss that store... talk about an icon) Frango's Candies were resurrected after F&N disappeared, I'm hoping twinkies can be resurrected by someone. In the meantime, I'd like to find a few boxes to hide in my freezer.... and savor the taste.....
Sad to hear this! People are losing their jobs! I don't like the sugary sweets, but they are indeed an "icon". Perhaps
another company may "pick up" the Hostess Name etc. I know it is "a long shot". God Speed to the workers etc.
You watch...they will come back with new management,then they don't pay the workers
good or any benefits.............typical Republicans way !
 @scychan You got that right. But you can bet the big boys of hostess got there money. Its not all the unions fault corporate greed played a part as well.
I don't even know where to start with this one. First, it's "well" not "good." Second, think about it for a second. Is it better the republican way, that is, keeping the company profitable and everyone employed, or is it better the democrat way, where unions demand more pay and benifits than the company can provide. The company goes out of business, everyone is now unemployed. No more job, no more company, and more importantly, no more twinkies!
 @Upgrayedd Read this article. Hostess got Bained.
http://www.squarestate.net/showDiary.do;jsessionid=3060CF7B0FEB3510E6F5F38D19191D16?diaryId=2530