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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drumpoint's picture

Twinkie defense is gone! What now?

JonNadler's picture

you can' eat.....twinkies?

Silverhog's picture

What will Trolls eat now?

Slightly Insane's picture

Ever heard of Cannibalism?  Once they eat the Host(ess), and there is no more, then they have only thmselves to consume.

gaoptimize's picture

Important lesson to unions at the bridge to the second Obama term.

three chord sloth's picture

I want to support private sector unions... I really do. I think it is important to have some kind of way to push money from the C level of corporations out to the workers, but is this the best we can do? Do all of them need to be math illiterate..? Is that some kind of law or something..?

And worse, every time one of these labor actions blow up in the face of the private sector workers, it only increases the odds that the public sector will remain unionized... and that is a systemic poison.

Nikao7's picture

As a Union Industrial Painter I couldn't agree more.

New England Patriot's picture

I don't have a problem with unions. If people want to bargain collectively, they should be free to do so. But if the company (or local/state/federal government) wants to hire workers for less, they should also be a liberty to do so.

 

Collective bargaining usually only works in the case of a rare or unique skillset, or through intimidation.

Turin Turambar's picture

I agree with freedom of association.  If a group of people decide to voluntarily get together for a specific purpose, then they have the liberty to do so.  Go ahead and unionize if you like.  Similarly, the employer has the right to fire any and all for whatever reason he decides or no reason at all.  A respect for liberty and property rights would put a stop to these ridiculous coercive shakedowns.

Turin Turambar's picture

This is for those who would negatively rate my comment regarding free association:

 

You have a right to a job. It's called SELF-EMPLOYMENT. If you VOLUNTARILY decide to work for somebody other than yourself and agree to the terms of their employment offer, that's the limit of what you should legally and morally expect from your employer - nothing more, nothing less.  Of course, you are free to attempt to renegotiate at any point in time, and similarly, your employer is free to replace you if he so chooses at any point in time.

GeezerGeek's picture

Your attitude is so ninteenth century! The Federal government no longer believes in or defends those kinds of rights. Next thing I know, you'll be suggesting that businesses should be free to decide with whom they will do business. I guess you never read the Executive Order that changed the meaning of the Constitution's Commerce Clause (regulate interstate commerce) to this: "the government can micromanage all commercial and private behavior".

That said, I do agree with you. It's how things should be, not how they are.

MachoMan's picture

This is the inevitable conclusion to collective bargaining (and, oddly, the inevitable conclusion to virtually any control over employees...  or citizens for that matter).  It's the same cycle, over and over again.  Just bouncing between the poles like pinballs.

Oppressive medium of control>resentment>activism>collective bargaining>capitulation and mitigation of degree of oppressiveness>emboldenment>additional collective bargaining>crippling of desired return on capital>withdrawal or liquidation of capital>repeat.

This doesn't even account for "natural" causes of business destruction, e.g. resource constraints.  Which, oddly enough, track the same pattern...

Saro's picture

The perfect response. 

The position of the government on unions (like so many things) should be that it has no position on unions.  Let the chips fall where they may.

PrintingPress's picture

The unions don't have anything to worry about.  They are getting paid from other competitors to close down these guys so they can be bought on the cheap.  Then the union bosses will move to another shop.  It's all the suckers that actually do work and rely on hourly wages that get fucked... but you know we all need some "collective bargaining" I'm sure they all collectively came together and said let's blow up our jobs!  Maybe they were afraid the mexicans and illegals were going to take them away from them. 

Orly's picture

Exactly!  That'll teach them wetbacks coming in here to do my job for less!

DOT's picture

A while back my company was preparing to move onto a job when the place blew-up. It was necessary to use dynamite to remove non-union labor from over the border (Wisconsin).Wonder if use of explosives was covered during apprenticeship.

ArkansasAngie's picture

Jobs?  We don't need no stinkin jobs.  We've got Washington to provide us with spending money.  And ... besides ... everybody knows you don't have to pay your mortgage when you lose your job.

I'd like sprinkles on my cake and ice cream please.

 

And you want me to pay for this?

BigInJapan's picture

Fuck unions.
Better yet, stand back and watch as they fuck themselves.

GetZeeGold's picture

 

 

Workers of the world unite....and kill your leaders.....cause they sure as hell wouldn't think twice about killing you.

insanelysane's picture

And by "workers" you mean citizens of a 1st world country that manage to learn less than people from 3rd world countries and have as much use and work ethic as Paris Hilton.  You mean those valuable workers?

Cursive's picture

Subtitle for this post:  The parasites or eating the host or how Michael Bloomberg had an orgasm.

GetZeeGold's picture

 

 

Sheer genius.....take off your shoes. This is wholly ground.

Savyindallas's picture

My God! Is that Lloyd Blankfein? It sure looks like him. Look at his face-that evil smile/smirk. Is the squid at work with this Twinkie disaster? Goldman sachs is behind the destruction of another American iconiic institution? Are these cretins not pure evil? Surely this is the  final straw that will unite Americans to take down these cretinous, vulturous vampires.

williambanzai7's picture

I don't know what they will do without weaponized twinkies.

Alpo for Granny's picture

Out friggin standing Banzai. Thanks for the laugh.

jayman21's picture

with Cramer in the background.....+100

GetZeeGold's picture

 

 

The black ones usually are....not that it's really news to anyone.

GetZeeGold's picture

 

 

I should point out there is the exception.....as clearly someone has found out.

Big Slick's picture

Vote down if you're a loser

(I love this retro-active editing ability.  Kinda reminds me of POTUS 2012-2016... "Wait, I didn't vote for that")

stocktivity's picture

Even Cramer is staring from the TV in stunned silence.

AurorusBorealus's picture

Hostess didn't make this twinkie.  Somebody else made this twinkie.

Race Car Driver's picture

"The meme is weak, Cap'tn - ya c'not push it no further."

"One or two more uses and it'll be dead, Jim."

"Stand down you two and put those phasers away! That's an order! This isn't your meme! You didn't create it! Somebody else started it!

But the History Eraser Button ... oh, the shiney red button ... it's mine! All mine, I tell you! Ha ha! Ha ha!

Now get the fuck outta my way!"

 

Oldballplayer's picture

Check out the semen stained undies on the floor.  That touch is pure genius.

Calculated_Risk's picture

Is kramer staring at his ass?! I knew that guy was a fucking perv!

And it looks like he pissed on the shelves... hehe

nice!

billwilson's picture

Fantastic day for the health of Americans. About time companies that make crap for customers to eat go out of business.

inevitablecollapse's picture

jesus christ - does everyone now have to have their hand held?  be told what to eat? what to put in their bodies? each and every one of us is a sovreign and if i want to stuff my fucking face with twinkies, while doing blow off a hooker's ass then it's my perogative.  until we get out of the mindset of playing nanny for one another, the human race will come nowhere near it's potential.

GetZeeGold's picture

 

 

According to at least one person the answer to that is.......yes.

inevitablecollapse's picture

oh...ok, well...ah fuck it - i give, someone direct me to the nearest overeaters anonymous / food adiction self help group

buzzsaw99's picture

No word on how much the money grubbing execs looted the company for? No mention of mismanagement? Blame the unions and don't dig any further? Who looted the pension fund? Weak. Fucking really weak. Way to side with the maggots again zh.

mumbo_jumbo's picture

fucking aye dude, WTF! isn't there 2 sides of every story? the brainwashing of some people is amazing.

in a fair well managed balanced company a union would never be formed...unions don't exist cause management/capital have  always been playing fair....wake the fuck up.

Urban Redneck's picture

two unions- one chose to strike while the company was in the middle of a bankruptcy reorg, and one chose not to strike

the stupdity of one union

end of company

end of story

 

youngman's picture

"Who looted the pension fund"

Well now they are free to fund their own pensions fund....I call it savings....no looting involved...the Unions destroyed this company..they have struck many time over many years...I know there is a factory/bakery in my home town..

Matt's picture

Was the pension fund goalseeking 8% returns forever? The Bernanke might have some blame in this mess ...

j0nx's picture

Agreed buzz. My thoughts exactly. I wonder how many execs would be driving up in a new Maranello on Jan 1st after demanding that the workers take an 8% pay cut and pensions be cut. Scorched Earth is the new black. At least that way ALL sides get the shaft. I encourage all workers to do the exact same thing unless their execs accept a 50% pay cut in wages and benefits as a good will gesture to the average workers. Leadership comes from the top and we are sorely missing that now in business and politics.

ElvisDog's picture

You seem to be under the impression that those Hostess execs will "get the shaft". The reality is they (a) probably already have enough money to live on the rest of their lives and (b) it will be easy for them to get a senior exec job at a new company because they have demonstrated their steely resolve at Hostess.

Your "scorched earth" approach may allow you to puff your chest, but the only people it really hurts are the workers who are mis-led down that path. "Yeah, we showed 'em. Fucking A. Oh, wait, my mortgage payment is due next week".

ebworthen's picture

buzzsaw99 - Agreed, I'd like to hear the other side too.

Bankers and the rest of the finance industry don't need a union, they've got the FED (Congress too).

The death of an iconic American company has to be about more than just the union.

BTW - is this another sign of the "recovery"?

ElvisDog's picture

You can blame management mis-steps if you want, but it was the union leaders and specifically the union leaders that cost all their workers their jobs through arrogance and stupidity. Did they really think if they talked tough and didn't budge an inch, that Hostess management would cave in. Fucking stupidity is not an effective negotiation strategy.

One thing I don't understand about modern-day unions and modern-day progressives (I assume you are one), is they don't seem to grasp 5th-grade mathematics, addition and subtraction. If there's not enough money to pay the current contract, then there's not enough fucking money. What exactly was Hostess supposed to do? If they raise prices, sales volume falls and they don't make enough money. There was no way for them to pay that contract and stay in business.