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Twinkie the Kid’s Last Roundup

November 21, 2012

Who would imagine the leading snack cake brand, which is almost a century old, going completely under! Especially a sweets-lover like me. But it seems to be corporate politics as usual, and the fingerpointing now spills over into the political climate, fresh out of a heated presidential election.

http://www.vendingmarketwatch.com/news/10829363/bctgm-union-responds-to-hostess-facility-closings

The company was mismanaged, and the workers had suffered cuts for years, while the CEO’s jack up their income insanely. People call this kind of observation “covetousness”, “class envy”, and say the “market” determines who makes what; but how could that be so if the company, and even the industry, was in trouble for years? This is what is always missed.

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from$375,000 to $656,256.

Figures! This is what they do. And everyone’s saying “greedy unions”, (and unions BTW, are likely included in The Tea Party and Romney’s “47%” ‘takers’!) Then, they say these CEO’s “deserve” all this (they surely aren’t “takers”!), and again, that we’re being “covetous”, fostering “wealth envy”, etc.
Not when they do that while doing all this cutting, saying there’s NO MONEY for anything!

Conservatives I debated with gave the usual answers:
“were the workers forced to stay on the job? they could have left for another better managed company”

That sounds simple enough, but how could they so quickly forget what they’re supposedly so mad at Obama over:
no jobs!

So yes, they may have cut their nose off to spite their face, and I believe that what these unions (including my own) do is often very unwise in these situations, but it’s not as clear cut a choice as that’s made out to seem.

“liberals are like kids who cannot understand why there is never enough money around to satisfy them. Its just piled up in the back room and no one will let them at it”

No, management is like kids unleashed in the back room, and when they’ve consumed as much as they can (in addition to the toy market being weak as it is, to continue the analogy) and still want more, and then go after the weaker. (And then at the same time ironically have everyone believing the weaker are the ones who are getting it all, simply because they complain!) So they always get a pass, no matter what, it seems. (“Survival of the fittest”?)

Truth is, this is another company that engaged in a series of megamergers, but then bit off more than they could chew, and then bust (while the CEO’s were probably rewarding themselves before it ever became clear that the combined company would be profitable).

Technically, the company isn’t (originally) even Hostess, it’s archrival Dolly Madison (IBC), who bought out Hostess/Wonder (CBC), and northeast archrival Drake’s, and had earlier bought out the huge southern rival Merita/Mickey (ABC) and a bunch of other bread labels across the country. They had created a virtual monopoly, except for Little Debbie and El Grupo Bimbo becoming bigger over the years. (As a snack cake buff, I’ve followed these companies for decades. From when I went to college down south, and found they didn’t have Drake’s, which were my favorite).

I thought all those companies under one umbrella was interesting, but I’ve seen a lot of times, when companies do that, they overdo it, get cocky with finances, and can’t handle the resultant behemoth, and then it soon bursts at the seams. My old company Alexanders Dept. Stores went down 20 years ago right after an ambitious expansion plan, that made the future look bright.

Everyone complains about “big government”, but big corporations are just a different class of organization the same kinds of people climb up through, and aim to control as much of the world as possible through; just through different means.
Companies actually have a lot of power and can force things themselves. Their interests can even buy out political leaders, and thus can have a lot of control in the government. So that’s Americans of all classes who can become “takers”, not just the lower ones. Just because one was able to climb up the ladder doesn’t mean they’re owed everything, and everyone else deserves nothing.

As for mismanagement (poor decisions):

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

One person says to me:
«The left is trying to place a moral responsibility on the company to do things the way the left wants. Truth is there is none. The responsibility is on the employee to do what is necessary to provide for themselves. The company has none.»

And that’s what they did, but the right is trying to place moral responsibility on the workers, because they ended it collectively, instead of individually. The company, supposedly, is supposed to provide for itself (don’t we always say their only mandate is profit and survival?). But what is “itself”? Everyone apart of it. But what happens in practice is that the leaders use it for their own benefit and sap the institution, but the right justifies them and blames the workers for reacting.

The way this is framed is that there are two entities: “the company” and the individual worker, and apparently, the leaders (individual or all of them) are apart of the first group, and of course this institution is superior to an individual worker. But in reality, they are individuals too, and have to bear some of the blame for the demise of the institutions, especially when they in their position have greater power with their decisions, which carry greater negative effects when they do the wrong things. But the right has clearly made itself the defender of the institution and its leaders (as one entity, it seems). But as I said, this is really not much different than another kind of institution, one that is chartered as a “government” agency, and the right then complains about the imbalance of power seen with them.

Here are some more good articles on this:

http://www.salon.com/2012/11/20/vulture_capitalism_not_unions_killed_twinkies

http://www.washingtonpost.com/blogs/she-the-people/wp/2012/11/16/unions-did-not-kill-twinkies-but-theyll-take-the-fall

http://www.newyorker.com/online/blogs/newsdesk/2012/11/who-killed-the-twinkie.html

Hostess Blames Union For Bankruptcy After Tripling CEO’s Pay

http://thinkprogress.org/economy/2012/11/16/1203151/why-unions-dont-shoulder-the-blame-for-hostesss-downfall

This article mentions potential buyers:

http://www.abc15.com/dpp/news/national/wonder-bread-twinkies-hostess-strike-buyers-prepare-bids-for-hostess-assets

Mexican baker Grupo Bimbo (Marinelas cakes, the US based Orograin group: Arnold bread, Sara Lee, Entennmann’s, Thomas’, Stroehmann’s, Freihofer’s; already makes Wonder Bread in Mexico, etc); McKee Foods (Little Debbie); Flowers Foods, large southern company (Blue Bird, Mrs Freshley’s cake, and a large portion of the Sunbeam bread franchise, and also last year bought Tastykake), and Canadian company Weston Foods

To repeat for those who aren’t aware, Drake’s; formerly Hostess’ archrival in the northeast, is now owned by Hostess, as is the national archrival, Dolly Madison. Also, the south’s Merita Bread, and various other bread labels. (Hence, “by Hostess” added to Drake’s labels, and Dolly “Zingers” appearing in Hostess labels). It was actually Dolly’s IBC company that bought Hostess/Wonder (CBC). The final mergers were about 14-17 years ago.

So Drake’s and Dolly are affected as well, though they’ve only been mentioning Twinkies (even here in NYC news. Many don’t realize Drake’s is apart of it too. Some in the blogosphere have said stuff like “I don’t care, I like Drake’s”).
Here in NYC, Devil Dogs were always just as iconic as Twinkies. And let’s not forget Drake’s getting some national attention from Rosie O’Donnell, and on Seinfeld as well. for a time.

I always could picture Hostess/Wonder as belonging to the really big food companies Kraft General Foods (like Nabisco) or FritoLay, and IBC should have perhaps sold off Hostess/Wonder, and then use the proceeds to build up Drake’s/Dolly, and maybe that would have helped them?

If Bimbo buys them, that would truly be a monopoly. Hostess and Drake’s would now probably be squeezed on the Marinelas racks that have popped up in bodegas across the city. They would also monopolize the NYC bread market. Since Stroehmann’s already dominates the shelves over Wonder (And even the Bimbo label itself becoming more popular), I wonder which one, if any, would be phased out.

If Flowers buys them, then they would have Merita and pretty much lock down the south’s bread market, and Hostess, Drake’s Dolly and Tastykake would all be under the same company. (I could imagine all three or four brands in an area packed on the same rack; perhaps one or two shelves for each. I wonder if they would fold Merita into Wonder since that’s the national brand).

If McKee bought them, then it would be Hostess, Drakes, Dolly, and Little Debbie (what had become the next leading national brand after Hostess), creating a virtual cake monopoly. Hard to imagine them all on the same racks as Little Debbie is so different from the others. Wonder if they would try to merge the labels or some of their products, like they did with the Zingers. (See also, http://erictb.wordpress.com/2012/05/01/flowers-cake-label-collection-and-cake-brands-in-general

The worst case scenario would be that someone buys Hostess only, but lets Drake’s fall to the wayside. (Imagine if they weren’t under the same company. This would have really been good for Drake’s to expand).
If the brands are separate, as I say on the other article, Bimbo picking up Drake’s would pair it with its own corresponding bread label (whichever one), to go back into competition with Hostess and Wonder. In NYC, it always seemed like Hostess/Wonder vs Drake’s/Taystee, but Taystee and Drake’s were never related. Taystee was actually ABC (American Baking Company), like Mickey and Merita, but was sold to Stroehmann’s instead of IBC. So with that merger, (with one particular bread product retaining the Taystee franchise), then Drake’s would be aligned with Stroehmann’s, and also, the other popular NYC-based cake brand, Entenmann’s. Bimbo also owns a Texas based baker, Mrs. Baird’s, which years ago had it’s own “Devil Dogs”, which sounds like it was nearly identical to Drakes': http://keylarker.blogspot.com/2009/10/definition-of-luxury.html A merger could create a demand, for those who remember them, if they find out that Drake’s has a similar product.
If Flowers bought just Drake’s, it would neatly fill in the northeast area where Flowers does not have its own operation, and Drake’s and Tastykake would be aligned. (There always did seem like something similar about them).

My wife and I had our “final toast” of both Twinkies and Devil Dogs the day the final decision was made (I haven’t been eating them this year, because of of being diagnosed with diabetes last year, though I do occasionally grab a Little Debbie because they are smaller and cheaper). So now, as I write this, the combined Hostess/Drakes racks are dwindling. (And the prices reduced from the $1.59 most of them had climbed to, to $.99. (One store had actually jacked them up to $2.50 for some reason! Probably counting on people trying to buy up the last ones). Who knows if any of those companies will come and rescue them.


In other, but similar news, here’s an article where Papa Johns owner denies saying he would cut back because of Obamacare; effectively shattering the obvious conservative validation that rumor created:
http://www.huffingtonpost.com/john-h-schnatter/papa-johns-obamacare_b_2166209.html

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From → Interests, Politics

9 Comments
  1. If this weren’t enough, now, the CEO’s have the audacity to ask for seven figure bonuses to liquidate the company: http://abclocal.go.com/wabc/story?section=news%2Fbusiness&id=8902249
    Sin Vergüenza! Apparently think nothing of it! With all the justification management has had in public consciousness (and focusing on those lower down as the real “takers”), it’s not that hard to believe!

  2. More on Hostess executive bonuses:

  3. Looks like Flowers is stepping up, but only to buy the bread (“Wonder, Nature’s Pride, Butternut, Home Pride and Merita, along with 20 bakeries and 38 depots [and] another bid for Beefsteak”): http://www.huffingtonpost.com/2013/01/11/hostess-wonder-bread-sale_n_2460546.html

    I didn’t quite picture Flowers being able to buy the whole company, so it figures it would be divided up somehow, for them to buy a part of it. So now, they have almost a monopoly on bread in the South. In Norfolk, for instance, they had Sunbeam, while the competitors were Merita, Wonder and a local baker, Mary Jane. They had already bought Mary Jane, and now will have the other two. I don’t know if there’s anyone else, now, unless Bimbo has been moving in to places like that.
    Wonder how they will consolidate operations. Will you still have all the brands, but they’re just owned by Flowers (like all of Bimbo’s “Orograin” brands).

    “Hostess is expected to announce buyers for its famed dessert cakes in coming weeks. The company has said a wide variety of parties have expressed interest in its brands, including national supermarket chains and the makers of brand name packaged foods.”

  4. “Pi-Day”; the deals have finally been finalized on both Hostess and Drake’s, after no other bidders came forth:

    http://abcnews.go.com/Business/wireStory/hostess-picks-mckee-buyer-drakes-cakes-18731661

    http://news.yahoo.com/twinkie-pabst-blue-ribbon-match-made-heaven-144000072.html

    Now, the race to get them back on the shelves (though I’m really trying to take a break from this stuff. A “Drake’s Break”, LOL!)

  5. OK, so Hostess is on the way back, with a rough date even given (but without the unions, though):

    http://www.huffingtonpost.com/2013/04/26/hostess-reopen-kansas-bakery-250-jobs_n_3161597.html

    http://www.cnbc.com/id/100674792

    http://www.usatoday.com/story/money/business/2013/04/29/hostess-bakeries-indiana-illinois/2121559/

    So now, what is Little Debbie doing with Drake’s? (considering they already have bakery operations up and running, unlike Hostess, where closed bakeries have to be reopened, and new people hired. That deal was also approved on the originally scheduled date: http://www.cnbc.com/id/100628672)

  6. I had mentioned the merger to a store clerk, and he says he asked a Little Debbie delivery man, who told him Drakes would reappear in December! I wonder what would make it take that long? Moving the equipment from the old bakery to the Little Debbie plant? I was hoping Drake’s would get the jump on Hostess, but that’s a long delay. All the other brands (including the ones Flowers bought) will probably be up and running before that.

    Anyway, LD has put up a new Drake’s page on Facebook: https://www.facebook.com/Drakes

    In the photo album, this gem harking back from around college days:

  7. Old news, but just turned up:

    Twinkie CEO Admits Company Took Employees Pensions and Put It Toward Executive Pay

    http://www.alternet.org/corporate-accountability-and-workplace/twinkie-ceo-admits-company-took-employees-pensions-and-put-it

  8. WONDER is finally back; saw it at the big Pathmark in Harlem when going up there to get liquid monk fruit that had been sold out in the Atlantic Terminal store.

    It says “Distributed by” Flowers Foods, Thomasville GA, etc. and now uses the main Flowers UPC mfr code, [0-]72250 (Regular loaf of white bread had product code 01150, IIRC).
    Hostess had taken on a very “odd” 8-88109, so it looks like the prime 0-45000 is totally abandoned. (Wonder why. All the big brands grab up the UPC mfr codes ending in three zeroes. Like 44000 is Nabisco, 43000 is Kraft General Foods, etc).

    It also resurrected the old “all caps” logo.

    It came back very quietly, too, first reported Sept. 23rd, the same date Drake’s returned. I know I haven’t been seeing Wonder anywhere here in the city, but apparently, it began in certain places, like Delaware, where Flower’s operations previously ended (And that was a fairly recent expansion) “Where ever these brands were available before within our market area—they are returning” the Flowers VP says.

    http://phx.corporate-ir.net/phoenix.zhtml?c=107221&p=irol-newsArticle&ID=1857225

    http://www.nbcnews.com/business/wonder-bread-returns-shore-shelves-4B11236674

    http://consumerist.com/2013/09/25/wonder-bread-returns-to-shelves-after-rising-from-the-ashes-of-hostess-bankruptcy/

    http://www.usatoday.com/story/news/nation/2013/10/06/wonder-bread-back-on-store-shelves/2928585/

    So this pretty much draws to a close the whole Hostess going under saga (with the exception for the remaining individual Hostess cakes that haven’t come back yet, like I think the Suzy-Q’s and a few others).

    Here from the Hostess site is an old pack of Twinkies (I think I might vaguely remember them looking like this, unless it is totally before my time. I remembered them all being 25¢ before starting to go up in the late 70’s):

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