Thread: The REAL reasons why Hostess went belly up

they could have stayed open if the workers would have taken an 8% pay cut instead they rather lose their jobs, and they did. I'm sure the union bosses are making pretty good money off the hard working backs of their members. now they just lost over 18,000 members. morons.

Originally Posted by Swiper

moronic drivel

It has nothing to do with mismanagement. Clearly management is incompetent with their inability to keep the business running while awarding themselves massive pay raises.

Originally Posted by Swiper

they could have stayed open if the workers would have taken an 8% pay cut instead they rather lose their jobs, and they did. I'm sure the union bosses are making pretty good money off the hard working backs of their members. now they just lost over 18,000 members. morons.

they would have gone under anyway if you actually read any of the articles. 2 fillings for bankruptcy in less than a decade and the CEO's pay is TRIPLED (300%) of a failing company in it's last year...

and a 8% pay cut can take a person living paycheck to paycheck to one that can no longer make ends meet. you've obviously never worked for a large company that has done that, many of us have.

the same thing was going to happen to Tastykake a Philly based company that makes snack cakes, etc.. for almost the entire life of the company (many decades) they didn't ship outside of the area to insure freshness. then the company was bought out the new owners have been shipping to all 50 states and they are back in business again. all they needed to do was change their business model.

Originally Posted by LAM

they would have gone under anyway if you actually read any of the articles. 2 fillings for bankruptcy in less than a decade and the CEO's pay is TRIPLED (300%) of a failing company in it's last year...

and a 8% pay cut can take a person living paycheck to paycheck to one that can no longer make ends meet. you've obviously never worked for a large company that has done that, many of us have.

the same thing was going to happen to Tastykake a Philly based company that makes snack cakes, etc.. for almost the entire life of the company (many decades) they didn't ship outside of the area to insure freshness. then the company was bought out the new owners have been shipping to all 50 states and they are back in business again. all they needed to do was change their business model.

pure speculation. they could have stated open.

I'm glad the workers got what they wanted. now they're gonna mooch of the govt. Obama 2016!

Originally Posted by Swiper

pure speculation. they could have stated open.

I'm glad the workers got what they wanted. now they're gonna mooch of the govt. Obama 2016!

or maybe people just aren't buying as many snack cakes that have more chemicals than natural ingredients in them. they had bad sales before the recession and 2008 was the coup de gras and the firm never recovered.

as usual you don't know jack about how business work in reality having never ever worked for a large firm and surely never actually reading any papers from economists or from financials about them. keep getting ALL your info from the news like a good sheep should.

Is it me, or is it just the uber-left columnists who are spinning these it wasn't labors fault articles?

Anyway, the fact is in any big business bankruptcy proceeding labor usually takes a pay cut (typically a lot more than 8%) and key executives get raises/incentives/golden parachutes to stay on and right the ship. Sure Hostess was a dying brand but it could have been restructured even if it meant shrinking the business or being bought by another.

Stubborn pride doesn't buy Thanksgiving dinner and Christmas presents.

my buddy was on e-bay last night & people are already selling Twinkies prices liked collectables..

$5 a twinkies or 20 for a box, i think he said

This morning, Hostess Brands, the maker of such staples as Wonder Bread and Twinkies, announced that they would be liquidating their operations, laying off all of their workers, and going out of business. The issues at Hostess have been decades in the making, a failure to innovate, to improve manufacturing methodology, and a regular problem of conflict between management and workers.

In 2004, the company entered bankruptcy with approximately $450 million in debt. It emerged after investment from Ripplewood Holdings. Today, it now stands at just shy of $1 billion in debt, despite additional investment by two more firms, Silver Point and Monarch. How did this happen?

These firms borrowed money to invest, which then they transferred that debt to the firm, simple. In effect, there never was any investment, only more debt added.





To emerge from bankruptcy, the companies unions agreed to large concessions which these vulture capitalists demanded, cutting thousands of jobs, transferring benefits or cutting benefits entirely. The companies also agreed to modernize the factories, which were running at a loss due to the age of the equipment, some of which dated to the 1930s. The investments from Silver Point and Monarch were to go towards this modernization. Instead the company found itself saddled with even more debt. To add to the company’s woes, the holding companies stopped supporting the retirement fund, raiding it for easy cash to extract from the firm. The current estimates put the liabilities of this fund at over $2 billion currently.

In order to “save” the firm, the operators of the company turned to the unions, which had already surrendered huge concessions just a few years back to turn the company around, and demanded an across the board slash, an additional 31%, along with eliminating the retirement and benefits entirely. It was a bridge too far. The union went on strike, and now the company has declared it will be liquidated.

Of course the right-wing media is quick to blame the unions, but in the end the union members would have lost more if they had capitulated to the vulture capitalists demands. By this move, they can hope to salvage the retirement plan, while if they’d given in they would have lost it all. $2 billion is a lot of money to just “give away” in negotiations. Of course the unions were expected to surrender despite the fact that the management company was asking the bankruptcy court to give their outgoing CEO up to $5.5 million. All of this was in addition to the 80% raises the executives were being treated to.

Then there were company payments to the Teamsters Union for managing the retirement funds, insurance, etc, agreed upon in the earlier bankruptcy proceedings. The company failed to pay for those either, adding an additional $100 million to the pile of bad debt the firm has all to extract as much wealth out of the firm as possible. This cost will, if not resolved during the liquidation, be spread to other companies the Teamsters operates with, as part of the contracts. The Hostess liquidation now will impact not only their direct employees, but hundreds of other firms.

For those who not grasp how these firms operate, here is former Secretary of Labor Robert Reich explaining it.

Originally Posted by Swiper

they could have stayed open if the workers would have taken an 8% pay cut instead they rather lose their jobs, and they did. I'm sure the union bosses are making pretty good money off the hard working backs of their members. now they just lost over 18,000 members. morons.

No, it was a 32% reduction in pay and elimination of retirement which was a fund worth 2 billions dollars.

The REAL reasons why Hostess went belly up............

..........We can only hope it was because their 'Products' are 'CRAP' & only increase obesity & diabetes....[no such luck]

Originally Posted by Big Pimpin

Stubborn pride doesn't buy Thanksgiving dinner and Christmas presents.

if you can't pay your bills after a 8% pay cut and you can't pay them on unemployment what difference does it make? it doesn't...once you get a pay cut even IF the company bounces back you NEVER get those monies back. which means a job that USED to pay the bills no longer does, and through no fault of the workers.

Originally Posted by hoyle21

No, it was a 32% reduction in pay and elimination of retirement which was a fund worth 2 billions dollars.

"a bankruptcy judge gave Hostess permission to force the bakers union to accept a new five-year labor contract that featured an 8% wage cut in the first year, new pension plan restrictions and a 17% increase in health care costs for employees."

http://online.wsj.com/article/SB10001424127887324556304578122632560842670.html

You would think right wingers would be for the working stiffs rights and not sicking corporate cock

Originally Posted by maniclion

You would think right wingers would be for the working stiffs rights and not sicking corporate cock

nope...they all worship the all mighty dollar, sadly most of them will never ever have an excess of it while championing for policies that only benefit those that already do.

it's why the GOP never ever talks about wages only taxes and never with any empirical data to support their policies just mythology. as if income is not a factor in a economy based on consumption of goods and services.

Originally Posted by oliolz

my buddy was on e-bay last night & people are already selling Twinkies prices liked collectables..

$5 a twinkies or 20 for a box, i think he said

These are the same people who pay $70 for a carton of cigarettes. The addicted.

Originally Posted by hoyle21

No, it was a 32% reduction in pay and elimination of retirement which was a fund worth 2 billions dollars.

Originally Posted by Swiper

"a bankruptcy judge gave Hostess permission to force the bakers union to accept a new five-year labor contract that featured an 8% wage cut in the first year, new pension plan restrictions and a 17% increase in health care costs for employees."

http://online.wsj.com/article/SB10001424127887324556304578122632560842670.html

8 X 4 = 32

Were they planning on hitting the workers with an 8% reduction every year for four years?

Originally Posted by Curt James

These are the same people who pay $70 for a carton of cigarettes. The addicted.

More like afflicted...

Originally Posted by hoyle21

In 2004, the company entered bankruptcy with approximately $450 million in debt. It emerged after investment from Ripplewood Holdings. Today, it now stands at just shy of $1 billion in debt, despite additional investment by two more firms, Silver Point and Monarch. How did this happen?

These firms borrowed money to invest, which then they transferred that debt to the firm, simple. In effect, there never was any investment, only more debt added.

I have stated this many times in the past several years and many people just don't understand what is really going on with many large firms in the US. the corporate big wigs are extracted equity out of many company's in cash dividends paying themselves and replacing that with debt. this will be occurring more and more in the future as company's file for bankruptcy because there is no equity in the firm and they have not been reinvesting for future growth.

much of profits many of these firms are making are not sustainable because of how they were made, not all by market principles and far too much is debt based and financial investments in real-estate, etc.

I work in a grocery store and all the fat slobs loaded up on the last of the hostess products. We ran out as soon as the hostess news hit the newspapers. Twinkies will be back, some other company will buy the brand. Probably Kraft Foods. They own everything.

Originally Posted by Big Pimpin

Is it me, or is it just the uber-left columnists who are spinning these it wasn't labors fault articles?

Anyway, the fact is in any big business bankruptcy proceeding labor usually takes a pay cut (typically a lot more than 8%) and key executives get raises/incentives/golden parachutes to stay on and right the ship. Sure Hostess was a dying brand but it could have been restructured even if it meant shrinking the business or being bought by another.

Stubborn pride doesn't buy Thanksgiving dinner and Christmas presents.

It's you.

Those workers have valuable snack making skills, I'm sure they won't have a problem finding another well paying job with in demand talent like that.

With elevated pay increases to the top and forced bankruptcy, It smells as if Hostess is looking for a bailout.

Come on, I know I can't be the only one thinking this.

Originally Posted by Curt James

8 X 4 = 32

Were they planning on hitting the workers with an 8% reduction every year for four years?

for one year

Originally Posted by IronAddict

With elevated pay increases to the top and forced bankruptcy, It smells as if Hostess is looking for a bailout.

Come on, I know I can't be the only one thinking this.

Somebody should put a hole in the heads of all the CEO's children while he watches.

Originally Posted by troubador

Those workers have valuable snack making skills, I'm sure they won't have a problem finding another well paying job with in demand talent like that.

How much should they give up before its too much in your eyes? 30%, 50%, 80%?

Don't forget the company also wants their pension fund which is worth 2 billion.

Meanwhile the CEO is asking for 6 million more? He clearly is mismanaging the business, why isn't anyone talking about him?

Originally Posted by hoyle21

How much should they give up before its too much in your eyes? 30%, 50%, 80%?

I didn't say they should give up anything.

All the people who are bitching about the ding dong makers wages getting cut should pitch in and loan them the money to buy out their own company.

Originally Posted by troubador

I didn't say they should give up anything.

All the people who are bitching about the ding dong makers wages getting cut should pitch in and loan them the money to buy out their own company.

My initial thought is that they may do just that. They could easily use the 2 billion retirement fund.

It wouldn't be the first time something like that has happened