Hostess To Reopen For Business

Quote: Originally Posted by captain morganView Post

... And all this because of the humble twinkie.

I don't know whether I should blame the striking union at Hostess or the twinkie itself.

it's all three, poor business management, twinkie avoidance due to death by twinkie and union inability to foresee hard-assed, inflexible bargaining due to profit loss due to death by twinkie...

it's a
The investment company that bought out Twinkie land and threw out the unions is closing the one plant it had reopened with great fanfare last summer.

Yeah, they broke the company's back again. The story says workers were making $15 an hour with a union contract.........

Hostess Brands said Wednesday it will close its Schiller Park bakery, where Twinkies and other iconic sweets have been produced for 84 years, affecting about 400 employees.

Union officials said they were notified of the closure on the same day they were set to start negotiating a new labor contract. About 280 of the workers had voted to unionize in May.

The plant, among only four remaining Hostess bakeries in the country and the last left in Illinois, is expected to close Oct. 19. Twinkies were invented in the Chicago area in 1930.

Donald Woods, president of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union Local 1, said he learned about the plant closure when he met with company officials to negotiate a labor agreement.

“We were shocked,” Woods said. Union members average about $15 an hour. “It's devastating for them,” he said.

Workers in Indianapolis and Georgia also voted to join the union earlier this year, Woods said. The same union unit that represents workers in Schiller Park also covers workers in Indianapolis and their contracts were both being negotiated at the same time.

Hostess re-opened the Illinois facility in July of last year following the snack brands’ $410 million purchase by private equity firms Apollo Global Management and C. Dean Metropoulos & Co. The famous line of treats was bought out of bankruptcy following the old Hostess' bitter dispute with its main employee union

Eighty-five of the 400 workers are employed “on a contingent basis,” according to Kansas City-based Hostess. Severance packages and job placement services are being offered to employees, the company said.

Local union President Woods that some workers might be able to get jobs at the Indiana facility, which he says the company is not planning to close, but it's unclear how many positions are available. The union represents about 175 people there.

Workers on break outside the Schiller Park factory Wednesday afternoon said the company summoned them to meetings Tuesday evening and Wednesday morning to inform them of the closing.

Those approached by a reporter said they were instructed by the company not to speak to the press and said they were afraid they could lose their jobs before the closure date if they were quoted by name. They said they have been working 12-hour days in two shifts.

Twinkies and other Hostess treats were off store shelves for eight months before the company was revived.

During that hiatus, competitors introduced knock-offs that appear to be hurting Twinkie sales.

Hostess Twinkie plant in Schiller Park closes after 84 years - Chicago Tribune (external - login to view)
The union could alwaysput their money where their mouths are and buy into the company or buy the closed plant and ruin it themselves.
Quote: Originally Posted by taxslaveView Post

The union could alwaysput their money where their mouths are and buy into the company or buy the closed plant and ruin it themselves.

That would be a tough go as the article says the new Management screwed up as competitors jumped in and grabbed the market whilst the Union hating company tried to figure a way out of paying anyone a decent wage.

Of course they could always go and set up shop in Libertarian Land and be free from pesky Unions and other regulations.....


The union does in it's members again.
Quote: Originally Posted by WalterView Post

The union does in it's members again.

I think this time looks to be bad timing. The bankruptcy process caused the stuff to be removed from the shelves and the consumers went for replacements or alternatives. So the company likely underestimated the market which they would have available. Had they been paying reasonable wages, they likely would not have had unions.
Twinkies, Ho Ho’s, Sno Balls and Ding Dongs: I can't think of four more nutritionally useless sugar products.
A union does not destroy a company bad management destroys a company.
Poor babies can't use illegals anymore and they screwed the union to get a
deal for more profits for themselves at the expense of their workforce here is
one person who wouldn't buy a thing they are selling. And no I am not in a
union I am a farmer. Statements that lead with supposed news headlines
are always suspect with me. The header was more propaganda than
Illinois is one of the worst states to run a business.
People are more health-conscious these days. I can't see Twinkies making a comeback. I imagine the reason the company was looking for union concessions to strat with was because sales were down.
Quote: Originally Posted by ZipperfishView Post

People are more health-conscious these days. I can't see Twinkies making a comeback. I imagine the reason the company was looking for union concessions to strat with was because sales were down.

Yep. And "Diet Twinkie" just didn't have the same ring to it.
How the Twinkie Made the Super-Rich Even Richer

As fans gathered on Rockefeller Plaza in Manhattan, Al Roker pulled up in a big red delivery truck, ready to give America what it wanted: Twinkies.

The snack cakes flew through the air into the crowd pressed against metal barriers. One man shoved cream-filled treats into his mouth. Another “Today” host tucked Twinkies into the neckline of her dress.

Across the nation in the summer of 2013, there was a feeding frenzy for Twinkies. The iconic snack cake returned to shelves just months after Hostess had shuttered its bakeries and laid off thousands of workers. The return was billed on “Today” as “the sweetest comeback in the history of ever.”

Nowhere was it sweeter, perhaps, than at the investment firms Apollo Global Management and Metropoulos & Company, which spent $186 million in cash to buy some of Hostess’s snack cake bakeries and brands in early 2013.

Less than four years later, they sold the company in a deal that valued Hostess at $2.3 billion. Apollo and Metropoulos have now reaped a return totaling 13 times their original cash investment.

Behind the financial maneuvering at Hostess, an investigation by The New York Times found a blueprint for how private equity executives like those at Apollo have amassed some of the greatest fortunes of the modern era.

Deals like Hostess have helped make the men running the six largest publicly traded private equity firms collectively the highest-earning executives of any major American industry.

Yet even as private equity’s ability to generate huge profits is indisputable, the industry’s value to the work force and the broader economy is still a matter of debate. Hostess, which has bounced between multiple private equity owners over the last decade, shows how murky the jobs issue can be.

In 2012, the company filed for bankruptcy under the private equity firm Ripplewood Holdings. Months later, with Ripplewood having lost control and the company’s creditors in charge, Hostess was shut down and its workers sent home for good.

Without investment from Apollo and Metropoulos, Hostess brands and all those jobs might have vanished forever after the bankruptcy. The way these firms see it, they created a new company and new jobs with higher pay and generous bonuses.

But the new Hostess employs only 1,200 people, a fraction of the roughly 8,000 workers who lost their jobs at Hostess’s snack cake business during the 2012 bankruptcy.

And some Hostess employees who got their jobs back lost them again. Under Apollo and Metropoulos, Hostess shut down one of the plants they reopened in Illinois, costing 415 jobs.

The collapse and revival of Hostess illustrates how even in a business success, many workers don’t share in the gains. The episode also provides a snapshot of the economic forces that helped propel Donald J. Trump to the White House.

Since losing his job at Hostess in 2012, Mark Popovich has had three jobs, including one that paid about $10 an hour, half what he made at the Twinkie-maker. A lifelong Democrat and devoted “union man,” Mr. Popovich said he supported Mr. Trump, the first time he ever voted Republican.

“It’s getting old, getting bounced around all the time,” said Mr. Popovich, a 58-year-old Ohio resident.

Such frustrations stem from broader shifts in the economy, as all types of companies turn to automation to cut costs and labor unions lose their influence. While these changes have helped keep companies profitable, private equity has used these shifts in the workplace to supercharge wealth far beyond that of the typical chief executive.

“People understand jobs going to China,” said Michael Hillard, an economics professor at the University of Southern Maine. “But no one has ever heard of these private equity firms that come in and do all this financial engineering. It is much more complicated and less visible.”

The Times investigation of the Hostess deal shows that today’s private equity also uses another set of tactics, like special dividends and tax arrangements, that maximize profits in creative, yet financially risky ways.

A year after the layoffs at the Hostess plant in Illinois, Apollo and Metropoulos arranged for the company to borrow about $1.3 billion. Apollo and Metropoulos used most of that sum to pay themselves, and their investors, an early dividend on their investment.

The firms also found a way to make money even after the company was sold. The firms, The Times investigation found, struck a deal to collect as much as $400 million over the next 15 years, based on what Hostess’s future tax savings might be.

These winnings do not come without risk to the private equity firms, which------ (external - login to view)

Similar Threads

no new posts