HOSTESS Spinning BOGUS Story: NO profitable company shuts down over a spat with labor.

[kpete]

Just a drive by, but on the Hostess thing : no profitable company shuts
down over a spat with labor. The deadline was always bogus, they never
intended to re open the doors. Just a way to spin it as the fault of
greedy employees versus incompetent management.

Hostess came out of bankruptcy in 2009. Went back in (Chapter 11) in 2011 (I think). Been negotiating with labor this year over new contracts, pensions, etc., in BK court. The strike is a response to management's latest offer, basically.

So now Hostess is going Chapter 7 (liquidation), 'cause they really don't have a choice. Bad management, sez I, but you can read the Fortune article and decide for yourself.
http://management.fortune.cnn.com/tag/gregory-rayburn/

[thelordofhell]

1. Yet they could afford to do this...........

Salary Increases at Hostess

Some creditors question Hostess pay raises approved in late July.

Brian Driscoll, CEO, around $750,000 to $2,550,000
Gary Wandschneider, EVP, $500,000 to $900,000
John Stewart, EVP, $400,000 to $700,000
David Loeser, EVP, $375,000 to $656,256
Kent Magill, EVP, $375,000 to $656,256
Richard Seban, EVP, $375,000 to $656,256
John Akeson, SVP, $300,000 to $480,000
Steven Birgfeld, SVP, $240,000 to $360,000
Martha Ross, SVP, $240,000 to $360,000
Rob Kissick, SVP, $182,000 to $273,008


This is Bain capitalism at it's worst........a company using bankruptcy as a bargaining chip........it failed so they are liquidating a profitable company.........

[kysrsoze]

2. OMG! What a bunch of greedy, slimy motherfuckers! Absolutely disgusting.

[Fire Walk With Me]

7. A smash-and-grab. The 1% have killed the Twinkie for personal, short-term gain.

[Overseas]

13. Disgusting. I hope the creditors continue to challenge those priorities.

[JohnnyRingo]

17. I don't know if Hostess was taken over by vulture capitalists, but...

In Matt Tabaii's Rolling Stone article on Bain Capital, he mentioned that one of the tactics for dissolving an acquired company was to add vice presidents and award them generously to aid in dismantling the company in question.

Golden parachutes for execs make them more compliant in eliminating their jobs.

[Pab Sungenis]

26. They were.

The company we now known as "Hostess" is actually the International Baking Company, a vulture capital arm of a computer company that was spun off in the 1990's. They bought Continental baking, which was the "real" Hostess company and tons of other companies at the same time with a lot of leveraged debt that's finally blown up in their face.

[railsback]

35. Actually, IBC was the original Hostess company founded in 1930

Not a vulture capital company.

[Pab Sungenis]

37. Wrong.

The original Hostess company was Taggart Baking, who created Wonder Bread and started the Hostess line, and was bought by the Continental Baking Company in 1925.

Interstate Baking was founded in 1930 as a bread wholesaler, the same year that the already-existent Continental Baking developed the Twinkie.

DPF bought IBC in 1975 as a way to exploit its existing capital and diversify into low-tech areas. Through IBC, DPF started its first big shopping spree gobbling up hundreds of brands through half a dozen acquisitions. In 1981 it sold off its computer arm and became a full-time mercenary bakery company.

[heaven05]

22. well

greed kills. Livelihoods, american family cohesion, neighborhoods, mortgages.....good ole corporate ameri ca. Looking out for it's workers again. And this mentality is what LIV's and extreme rightwingers wanted in the WH.

[harun]

28. Looters

[bulloney]

33. The greedy bastards at the top bleed the company dry and get out while the going's good.

Then, blame it on labor. And they'll have the MSM news stooges to back them up.

If these company executives were so brilliant, why did Hostess file bankruptcy? It's a crime that they received ANY payraise, let alone raises of the amounts listed above.

How many other times have we seen this? It reads like something out of a Mitt Romney playbook.

[PD Turk]

3. Yep

Just another company harvested by a hedge fund, and if they can blame it on the unions it's win-win for them

[coalition_unwilling]

4. Wonder whether it may now be time for a replay of Flint 1937 - n/t

[1KansasDem]

5. Scanning the article

it seems unfunded pensions are one of their biggest problems. I missed the line where they talked about being profitable.
This companies financials are so toxic, they've lost their ability to raise capital.
Coming out of their first bankruptcy with more liabilities than they went in with.
Smells of bad management in a bad economy making a product that is hostage to commodity prices.

[SharonAnn]

6. Unfunded pensions? They've been skimming the profit into executives' pockets.

[HiPointDem]

43. yeah, if you believe the *crap* coming out of corporate. the pensions are "unfunded"

because the company stopped funding them last year. in violation of the law & while they were doubling salaries in corporate, i might add.

[thelordofhell]

47. The bad management was hired by the Venture Firm that bought Hostess

The management then ran the company into bankruptcy and took big bonuses and raises to do it........then they tried to foist their debt onto the backs of the workers..........they gave in the 1st time..........then the management wanted more and the workers wouldn't give it too them..........so the managers gave themselves another hefty pay raise then declared bankruptcy (again) and are going to sell the company off to other places and take a large percentage of that sale to pay their inflated salaries and venture company stock, leaving the pension fund to the government (us) to pay.

There is your lesson in venture capitalism for the day..............

[MineralMan]

8. They've shut down their corporate website already.

http://www.democraticunderground.com/10021831596

[FreeBC]

9. I think they would have re-opened

It would have given the executives more time to loot the company.

But just how many pay cuts are people supposed to accept? Should they essentially work for free while the executives hand out bonuses to themselves?

[HiPointDem]

44. they've been looting it for more than 10 years, how much time do they need?

[SoapBox]

10. Have they actually filed?

[iamthebandfanman]

11. they announced this almost a year ago...

On January 10, 2012 Hostess Brands filed for Chapter 11 Bankruptcy for the SECOND time.

[JohnnyRingo]

12. Like blowing your head off to save money on aspirin.

This isn't the first time a company blamed it's woes on base employees. Come to think of it, if they didn't, that'd be a first.

[Johonny]

34. +1

[EC]

14. Their product has been just sucky in the last few years.

They've cheapened the product so much that it tastes really not good. I've gotten so I prefer Little Debbie for cheap bakery.

[kentauros]

23. I much prefer Bimbo these days.

They make some great pound cake snacks

And according to the wikipedia article, they're the world's largest bakery company. They appear to know how to run a bakery business, though I don't see anything about whether their workers are unionized...

http://en.wikipedia.org/wiki/Grupo_Bimbo

[HiPointDem]

45. uh -- mexico cheap labor non-union

[kentauros]

52. Okay, well, not everyone's perfect :)

They still make a good quality product

[DaveJ]

31. Same here - it's like eating plastic or something.

It used to love their cupcakes.

They seem to be smaller too, probably just because nobody could eat a full sized one anyway.

I hope the name Hostess can at least be picked up by another quality company after all this is settled.

[2naSalit]

15. The bright side could be

that the employees of all these "harvested" corporations start organizing for more employee owned or cooperative operations. And don't forget what an atrocious product they were manufacturing, no nutritional value, fodder for the medical industrial complex with new cases of diabetes and dental maladies and a host(ess) of other ugly-demon-nightmare-from-hell health issues for anyone who eats that crap, feel good food or not. I couldn't consider that stuff as food, personally. I ay good riddance... of the horrid product line.

The point is, we could stop feeding these greedy bastards... stop feeding their treadmill addiction to shit-food oligarchy and start grassroots food production. This is a big boon for the locavore movement if the workers are willing to move in that direction. Not only would it be the road to rehab from our crappy food habits, it will lead to a healthier population of people who can actually think more clearly and promote community and strengthen the democracy in so many ways.... really! And it can actually help in the phasing out of fossil fuel use and promote renewable energy production and put all that on a faster track than we could have imagined just a year ago.

[Historic NY]

18. Let them go...Little Debbie & Entenmann's..

will cleanup on the crumbs. I had a buddy that worked for them and left he does much better with Entenmans

[HiPointDem]

46. little debbie = southern non-union 7th-day adventist chicken torturer

[Illinoischick]

19. Bad Management is right!!

They never addressed their competitors like Lil Debbie. You can buy 3x more product for the same price as a Hostess product.

[mulsh]

20. anothern "Bained" company.

n/t

[cbdo2007]

21. Where do you see the part about them being profitable??????

Either I'm not seeing it.....or you didn't really see it either.

[Flatpicker]

24. Hostess was Bained

the hedge fund who owns them took out a 700,000,000 dollar loan in their name. Now they will walk away with all that money and the company will be liquidated.But, somehow this is the unions fault.

[closeupready]

40. +1. That term 'bained' ought to be in the Urban Dictionary.

or Wikipedia.

[HiPointDem]

48. +1. but some democrats are only interested in 'baining' when it's done by the republican

nominee.

all those hysterical ops about how mitt was destroying american businesses & now back to bashing unions.

[Blue Owl]

25. What kinda ding dongs are in charge there anyway?

n/t

[alfredo]

27. The Comic strip "Over The Hedge" has been doing story lines about the end of Twinkies

for many months. RJ has been hoarding them since the news broke.

01-23-2012

[no_hypocrisy]

29. All the silk mills in Paterson, NJ closed down at the turn of the century

rather than pay their workers one penny more per hour. All of them were making profits too.

[libodem]

30. Twinkies are bullshit non-food

There is not one gram of actual nutrition in one. I used them in my class of nurses aides when I taught at community college a few years ago.

I used an unwrapped twinkie as an example of something that even bacteria and fungus wouldn't touch because there is not one life sustaining ingredient to attract one.

So during the nutrition portion of my class the twinkie, got unwrapped and put on a paper towel. It would not change. It sat there preserved in all of its glory for eternity. A carrot would shrivel and rot. Nothing can rot a twinkie. Even bacteria and mold won't touch it.

That is why Hostess is going down. Fake food. Unhealthy empty calories of corn syrup.

[Flatpicker]

32. no

That's not why they are going away. Seperate the nutritional issue from the businesses issue.

Thats irrelevant to this discussion.

[libodem]

38. ok

Should I delete?

[Flatpicker]

42. no worries

i just wanted to blame to go to the right people.
vulture capitalism needs to be retired no matter the product.

As bad as Twinkies are, those people didnt deserve to lose their jobs like this.

[libodem]

50. True dat

It is the Vulture Capitalism. I admire a good flatpicker, BTW.

[HiPointDem]

49. no, it's not. & fyi sugar is a preservative.

[tsuki]

36. AgDay and WJHG-TV have weighed in on

the closure. Both blamed the workers. WJHG-TV was smugglilious.

[closeupready]

39. Probably, it was a foregone conclusion

that eventually, the company would go under. Sell off assets, award bonuses until the goose is cooked. Bain Capital's M.O.

[dem4ward]

41. Hostess has filed bankrupcty twice. It was very poorly managed.

Make no mistake Bimbo or one of the other bakeries will buy up the name and brands and will produce these beloved American staples. The value in these brands is huge. We may not see Hostess branded products for the short term, but the products will definitely survive this.

[savannah43]

51. The reason they are shutting down is because it was found that

there was no actual food in any of their products.

[aandegoons]

53. There sure is a lot CEO's crying in their soup about the Democratic process of this country.

Seems odd that many of them seem to be so much alike.

[gmurnane]

55. Hostess wasn't profitable.

Hostess suffered $341 million of net losses in 2011, with only $2.5 billion dollars of revenue (and their revenue was declining). No profitable company ever does close, but Hostess has been struggling with debt, and declining sales for a long time, so the only way they saw out was to pressure labor to take pay cuts. People aren't happy about taking pay cuts (especially after about a decade of taking other pay/benefit cuts) so they didn't, and Hostess closed.

[B Calm]

56. Piss poor management! Not labor costs!

[seabeyond]

57. that is how i saw it. i had been hearing about hostess woes way before now. agree and

welcome to du.

[hrmjustin]

58. Welcome to DU!