Categorized | National

Who Really Killed the Twinkie?

 

Hostess Brands Bites the Dust

 

–82-Year-Old Company Dead Shortly After Equity Buyout–

 

Skippy Massey
Humboldt Sentinel

 

Hostess Brands Inc. says it’s went out of business after striking
workers across the country crippled the business, company executives claim.

Hostess Brands, maker and baker of Twinkies, CupCakes, Ho Hos, Ding Dongs, Zingers, Fruit Pies, and Honey Buns, shut down operations November 16 after the company said a union strike by bakers crippled its business to the point that it had to liquidate.  It sought court approval to close, declare bankruptcy, and sell off all of its assets.

“Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands,” CEO Gregory Rayburn said in a letter to employees posted on the company website.

He added that all employees will lose their jobs, “some sooner than others.”

“Unfortunately, because we are in bankruptcy, there are severe
limits on the assistance the company can offer you at this time,”
Rayburn wrote.

The company shuttered 36 plants nationwide, including Twinkies’ 1930 birthplace plant in Chicago’s Schiller Park where workers baked the tasty treats–as well as Butternut, Home Pride, Nature’s Pride and Wonder breads.

In all, 18,500 workers lost their jobs.  It’s a death knoll– say bye-bye, adios, sayonara, and ciao–  for Hostess Brands and its employees.

The Twinkie, however, may survive in some other form.  Hundreds of potential buyers, including at least five major retailers, have expressed interest in Hostess’ brands, recipes, and some of its factories.

Jim Hightower, populist, muckraker and national columnist, had a different take on Hostess’ demise that never reached the mainstream press.

In his recent column Mr. Hightower gave us the rest of the story we hadn’t heard about:

Ripplewood is a private equity firm that had bought out Hostess Brands three years ago, including Twinkies.  Just before Thanksgiving, the firm asserted that it had been forced by greedy labor unions to kill off Hostess Brands.

Far from greedy, however, the 18,500 unionized workers were quite reasonable and very loyal – in fact, they had previously given back $100 million in annual wages and benefits to help the company survive.

The true greed in this drama is inside Ripplewood’s towering castle of high finance in Manhattan.

Rather than modernizing Hostess’ factories and upgrading its products as the unions had urged, the equity hucksters plundered the company to feather their own nests.

For example, they siphoned millions of dollars out of Hostess directly into their corporate pockets by paying themselves “consulting and management fees,” which did nothing to strengthen the company.

But it was this year that the rank managerial incompetence and raw ethical depravity of the vultures of Ripplewood fully surfaced.  While demanding a new round of deep cuts in worker’s pay, health care, and pensions – they quietly jacked up their own take.  And by a lot!  The CEO’s paycheck, for example, rocketed from $750,000 a year to $2.5 million.

Like a character in a bad Agatha Christie whodunit, Ripplewood – the one so insistently pointing the finger of blame at others – turns out to be the one who killed the Twinkie.

Along with the livelihoods of 18,500 workers.

It appears Twinkie was plundered– its worth quickly extracted by a private equity firm padding its own pocket before forcing the company into bankruptcy and then selling off what was profitably left to pillage. 

We also wonder if the employee pension plan will be given an attempted sacking before finally shuttering the 82-year-old business, turning off the lights, and locking the doors on the way out.

BCGTM, The international bakers’ union representing Hostess’ employees, repeatedly said that mismanagement and the debt placed on the company were responsible for the company’s failure– and not the strike.

The union criticized Hostess’ management for demanding benefit cuts while providing raises for the CEO and other top executives.  In 2011 for example, Hostess executives had received raises of up to 80%.  During the company’s liquidation, $1.75 million in bonuses ranging from $7,400 to $130,500 were made for 19 executives provided they meet certain benchmarks in managing the liquidation.

After Hostess announced that it was ceasing plant operations and laying off its employees, the union responded the same day, stating:

“When a highly-respected financial consultant, hired by Hostess, determined earlier this year that the company’s business plan to exit bankruptcy was guaranteed to fail because it left the company with unsustainable debt levels, our members knew that the massive wage and benefit concessions the company was demanding would go straight to Wall Street investors and not back into the company.”

Meanwhile, Chicago is believed to have received the country’s last Twinkie delivery as 20,000 boxes arrived for sale this Tuesday.  They were offered to customers at the regular price and there were no limits on purchases.

“They weren’t here long,” Karen May, manager of the Six Corners store in Chicago, said.  “We sold out quickly.”

Hostess’ workers were also sold out quickly, too– by Ripplewood and company executives, who in the end were no different than any other private equity corporate raiders on the block.

Unfortunately, expect more of the same to follow suit.

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