Twinkies, Ding Dongs Maker Hostess Liquidates Following Failure To Resolve Labor Union Animosity

Tyler Durden's picture

Hostess Brands, the company better known as the maker of Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, and of course Wonder Bread and Twinkies, and which previously survived one multi-year Chapter 11 bankruptcy process, when it operated as Interstate Bakeries, has just made a splash at the NY Southern Bankruptcy court, for the last time, with a liquidation filing. The reason: insurmountable (and unfundable) difference in the firm's collective bargaining agreements and pension obligations, which resulted in a crippling strike that basically shut down the company. In other words, Twinkies may well survive the nuclear apocalypse, but there was one weakest link: the company making them, was unable to survive empowered labor unions who thought they had all the negotiating leverage...  until they led their bankrupt employer right off liquidation cliff. Will attention now turn to that another broke government entity, the Pension Benefit Guarantee Corp (PBGC), which will have to step in to resuscitate some 18,000 pension plans which suddenly vaporized after labor unions took their "negotiating" freedom a step too far.

From the filing:

Beginning on October 21, 2012, the Debtors began implementing the modifications to the CBAs. On November 7, 2012, the Debtors began to receive strike notices from various local unions affiliated with the BCT. On November 8, 2012, the Debtors received a strike notice from the IUOE. Between November 9 and November 13, 2012, various local unions affiliated with the BCT commenced strikes at 12 of the Debtors' bakeries. At another 12 bakeries, picket lines were set up by striking BCT workers, and certain BCT and other unionized workers at those bakeries chose to honor the picket lines by not reporting for work. As a result, production was significantly disrupted at the 24 bakeries impacted by the Strikes; however, many of the impacted bakeries remained operational to varying degrees due to management filling in for production workers and, in some plants, high numbers of employees crossing picket lines.

 

Since the strikes (the "Strikes") were commenced, the Debtors have urged striking employees to return to work. Unfortunately, at this time, thousands of the Debtors' employees continue to participate in or honor the Strikes. As a result, a sufficient number of the Debtors' baking facilities have become inoperable, and the Debtors are no longer able to fulfill customer orders or sell product at their retail stores. Because of the material impairment of the Debtors' business operations, the Debtors will soon lose access to the funding necessary to operate their businesses, and the Debtors will have triggered certain remedial provisions of the final DIP Order. As a result, the Debtors are beginning to take steps to wind down their business  operations, including the relief requested in this Motion.

In other words, the labor unions representing 18,000 workers fought the company, and the unions won... A very pyrrhic victory. Sadly, they are all now out of a job as the unionized victory just happened to lead to the terminal winddown of their employer.

As to the future of the iconic brands, fear not: Hostess' numerous brands will be bought in a stalking horse auction by willing private buyers, however completely free and clear of all legacy labor and pension agreements which ultimately led to the company's liquidation.

Now if only Hostess had raised taxes... (because they tried cutting spending, and liquidation followed).

Finally, those 18,500 new initial jobless claims next week? Sandy's fault.

Full winddown motion:

 

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L_Conquistador's picture

Here's an idea.  Why don't you reopen Hostess and pay generously?  Pay these high skilled twinkie technicians enough to raise a family, and revive their pensions so they can live well until the day they die for all of their contributions to society.

juangrande's picture

It's a cake. It's a candy. It's 2 great tastes in one!

Matt's picture

How about you create a company that makes Twinkies knock-offs, and pay all your employees whatever amount of money they feel they are worth? Then, let me know how it goes.

stant's picture

or is it so lazy wouldnt work in a pie factory, old sothern saying

ejmoosa's picture

No, this was a profit problem.

That involves both revenues AND expenses-like labor.

GetZeeGold's picture

 

 

My grandma is still without power in NY......she told me to send her regards to the union thugs. She thinks you're righteous dudes.

Sofa King's picture

Oh fuck, so much for my Twinkie Inflation Indicator...shit, now I have to modify my trading system.  Anybody have any ideas? Sure as hell can't use the lies spewed by the BLS.

Big Slick's picture

Fitting banner at the top of my ZH page: "Chevy's Giving More"

("... to you, taxpayer, from behind, as you grab your ankles, thanks to an illegal bailout")

babkjl's picture

Big Mac index.  They were introduced in 1969 for $0.49 and remain an identical product.  Has all inputs: labour, food, real estate, shipping etc.  

OpenEyes's picture

wait, don't Twinkies last forever?  And they'll certainly become more scarce soon.  Gee, I think I've discovered the next great store of value play!  You can't eat gold but you can damn sure eat Twinkies!

GeezerGeek's picture

Clearly: it's Bush's fault.

ghengis86's picture

Should have clarified.
They learn that working is for suckers in the USSA. Do the right thing (cross the picket line) and still get fucked. So the union people hate you, you still lose your job and all because you thought you could work hard and get ahead.

Gully Foyle's picture

I'm surprised brains are not exploding around here due to the conflicting positions taken.

You hate junk food and fat people and unions, but also hate a company closing it's doors, a company whos unions manufacture junk food.

Truly priceless to read this thread.

(Biden 2016 who's sorry now)

RSBriggs's picture

"You hate junk food"....   Not so much, why?

fuu's picture

He's doing his Bob Ross impression.

"First we'll take our broad brush and paint some Happy Little Exaggerations."

Dre4dwolf's picture

Wait ok

I hate fat people-Correct

I hate unions-Correct

I hate Junk-Food - WHAT? 

 

Junk food for responsible people who have self control is one of gods gifts to mankind.

 

Totentänzerlied's picture

Hate fat people: No, I hate having money stolen to pay for anyone's healthcare, particularly those who show their gratefulness by doing just about everything in their power to ensure they will be in need of much healthcare.

Hate junk food: Yes, but it is none of my business what other people eat so long as they and not I are the ones who must face the consequences of their actions.

Hate unions: Yes, they are a barrier to entry into the labor market, a compulsory extortion rackets which cannibalize their own members - while having the gall to claim to be serving their interests. They attempt to create monopolies, price people out of jobs, forbid their workers from working how and when they please, and as demonstrated here, are so fucking petty that they'd rather their members have no job than give in to management's (in this case entirely reasonable) demands. Union members are victims who have been convinced to identify with and support their victimizers, just like middle class Obamney supporters.

Biden 2016 - "What've you got left to lose! (No really, what have you got? We need to know so we can tax the fuck out of it! FORWARD!)"

Slightly Insane's picture

John was that quiet fellow over on line #7 the Dabney Taggert Ho-Ho line that they haven't been able to fix since Galt went on vacation.  They've had loads of maintenance and management folks over there for weeks, and it seems like the programmable logic controller just won't communicate.  They've replaced the controller and re-booted a dozen times and the darn thing just won't do a thing.

Big Slick's picture

"I will destroy the partially-hydrogenated animal-shortening-containing junk food that runs the world"

Slightly Insane's picture

I think this could also be titled "Name the author - How the Capitalists try to Scare the people?"

ToNYC's picture

Lots of John Galts selected a toxic food for extinction. The crime was not doing it sooner.

myptofvu's picture

I'm trying to call my union rep to see if I can get some of my dues money back, but he's not answering the phone!

Monedas's picture

Finally .... a relevant thread !    Tylers got gravitas !

Zap Powerz's picture

It is my professional opinion that there is no political or peaceful way to liberate mankind in general and American citizens in particular.  The choice is clear:  submit to collectivism or wage war for your freedom. If you think the political process can successfully return us to our founding principles then I must assume you have been heavily indoctrinated in US public schools.

GetZeeGold's picture

 

 

Bam Bam killed twinkies......how is that even possible?

SilverIsKing's picture

That's even worse than killing off Big Bird.

GetZeeGold's picture

 

 

They handed Bush a shotgun on the set of NPR.....what did they think was going to happen?

GetZeeGold's picture

 

 

Naw, Cheney diesn't shoot birds.....no sport in it.

krispkritter's picture

You do realize Big Bird is a guy in a chicken suit right? ;)

GetZeeGold's picture

 

 

Huh....never made the connection.

 

tickhound's picture

RISE ABOVE!  FOR THE TWINKIES!

peekcrackers's picture

I cant say those  GMO chemical tasting cakes were good for much ..not sad to see them go .

 

JPM Hater001's picture

Meh, big bird and twinkies are part of a balanced diet.

LongSoupLine's picture

Biggest take-away?...

 

 

This should have been the fucking model for GM!

Fuck you Bernanke, Geithner and Obama.

New England Patriot's picture

Offering some price relief on corn and corn sweeteners...

fonzannoon's picture

This all could have been averted if Hostess brands just raised everyone's real estate taxes.....sad.

 

GeezerGeek's picture

Or simply passed along an Obamacare surcharge to customers.

KidHorn's picture

Maybe some of the strikers will get lucky and land a job with whoever buys the factories. At a lower wage and reduced benefits.

JPM Hater001's picture

Failure is a powerful lesson.

MachoMan's picture

The illusory war between capital and labor has been dead for decades, at best.  [the real war was won by capital before it started].

youngman's picture

That would be the first question I would have on the application

GetZeeGold's picture

 

 

Good thing Stalin stepped in and stopped them.....that was close.

bigfire's picture

Huh?  Whoever buys the brand will be just buying the brand.  The product will be made elsewhere.  Those precious contract and pension that Union won't yield on are gone.

Overfed's picture

Yep. And they'll open a new state of the art facility in a (probably Southern) right to work state.

In fact, find the right to work state closest to the biggest corn producer in the US, and that is probably where the new bakery will be.

Matt's picture

 You Get Nothing! You LOSE! Good Day Sir! Gene Wilder:

http://www.youtube.com/watch?v=HaoySOGlZ_U

slyhill's picture

Not to mention those pesky pensioners...