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Hostess Mediation Fails, Liquidation To Proceed; Furious Laid Off Workers Now Turn On Labor Union

Tyler Durden's picture


Last week, when discussing the next steps for the company, and specifically the hope that mediation may resolve the epic animosity between management and workers, we stated that "What makes a mediation improbable is that the antagonism between the feuding sides has certainly hit a level of no return: "Several unions also objected to the company's plans, saying they made "a mockery" of laws protecting collective bargaining agreements in bankruptcy. The Teamsters, which represents 7,900 Hostess workers, said the company's plan would improperly cut the ability of remaining workers to use sick days and vacation." Sure enough, moments ago we learned that mediation has now failed and the liquidation may proceed. And since in America nobody understands that proper sequence of events involved in a bankruptcy liquidation, where the valuable parts always end up being acquired by someone, in this case the Twinkie brand and recipe, let the pointless Ebay bidding wars over twinkies continue. As for what really happens next, if indeed Bimbo is prohibited from acquiring the assets in the Stalking Horse auction due to anti-trust limitations, then the buyer will almost certainly be a "financial", i.e., another PE firm, whose coming means the end of any hopes and dreams of preserving union status at fresh start Hostess, or whatever the new firm will be named.

From the WSJ:

Hostess Brands Inc. said Tuesday night it would proceed with liquidation plans after mediation fails.

Earlier Tuesday, the head of the bakers union whose strike precipitated Hostess liquidation plans didn't attend a last-ditch mediation session and wasn't hopeful about its prospects, he said.

"I'm not too optimistic about this mediation," Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said when reached earlier Tuesday afternoon in Columbus, Ohio. He said he couldn't get to New York, where the session was taking place; instead, he said, the union's secretary-treasurer was attending.


The mediation came at a judge's suggestion after the Twinkie maker said Friday that a week-long strike by the bakers left the company no choice but to seek a bankruptcy judge's approval for liquidation.


The judge, Robert Drain, urged mediation, citing among other things the hope for saving some 18,500 jobs. The company filed for bankruptcy protection for the second time in January.


The judge indicated Monday that if mediation wasn't successful, Hostess could return to court Wednesday to pursue its liquidation plan.


Doug Mansky, a Hostess driver in Detroit and a member of the International Brotherhood of Teamsters, was in the process of moving to a cheaper condominium on Tuesday, after his union had agreed to an 8% pay cut that he said would shave $200 a week from his income. After Judge Drain cleared Hostess to impose the same new labor terms on the bakers union, they went on strike.


"I hope things work out. I'm going to be 49 and trying to find a job in a market that's terrible," Mr. Mansky said.

Sadly, the reality of learning just how bad the labor market truly is, all smoke and mirrors of a recovery aside, will now have to be experienced by not only Mr. Manksy but 18,499 of his fellow co-workers, who may have been duped into hoping by their union that by holding out a hardline stance, they would gain something.

They have now lost everything. And not too unexpectedly, the workers are now turning on the Union!

[S]ome Hostess workers in another union awaiting the
mediation results criticized Mr. Hurt, the 20-year president of the
bakers union, who defended his decisions and actions during the
company's bankruptcy process.


Scott Quenneville, a Hostess truck driver represented by the Teamsters, said he feels his colleagues were misled by Mr. Hurt into believing that a buyer would swoop in for the company. Mr. Hurt on Sunday said he thought there was a good chance a buyer would emerge who would give union members their jobs back.


"Frank misled a lot of people. He was not going to settle for anything less than closing the company down, because they didn't want that 8% pay cut," said Mr. Quenneville. "If you don't want the job, leave the job. Why ruin 18,000 jobs?"


"I didn't mislead anybody on anything," Mr. Hurt said. He said he didn't tell workers preparing to strike that a buyer for Hostess was definitely waiting in the wings.


Mr. Hurt said, "I don't want anybody to think that anybody is guaranteeing anyone anything, but we did know that there were people taking a look at this company."

This would be a truly fantastic drama, if people's lives were not at stake. And no, not one former Hostess worker will retain their job at the new company: that much is certain.

As we said, if only people had a basic understanding of how bankruptcy truly worked, and what the real state of the economy was, then Hostess' workers may have had a chance and some amicable comrpomise would have been possible.

Then again, if people in America actually understood economics and simple finance, then the "Ohio outcome", and many others, would have likely been quite different.

Now we can only hope we were not correct about the ultimate outcome too: namely that the US government will effectively hijack the bankruptcy process, and in doing so "bailout" a junk food maker, just so 18k votes can be preserved at the expense of creditors and making yet another mockery of the bankruptcy process, and property rights in the US.

Then again, this is precisely what the Union was likely hoping for all along, because once the government starts bailing everyone out, just where does it draw the line?

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Wed, 11/21/2012 - 05:10 | 3001353 lakecity55
lakecity55's picture

O-Phone has experience in Twinks, not Twinkies.

Tue, 11/20/2012 - 20:51 | 3000544 The Gooch
Tue, 11/20/2012 - 20:57 | 3000563 jerry_theking_lawler
jerry_theking_lawler's picture

3rd, right? Interstate Brands was first iteration of the company.

Tue, 11/20/2012 - 20:50 | 3000538 Gully Foyle
Gully Foyle's picture


I just read about an international company that has been buying up beer makers. If they don't close the doors, they use lower quality ingredients which destroys the flavor of the beer.

All brands are not the same.

(Biden 2016 Trust dies but mistrust blossoms)

Tue, 11/20/2012 - 21:45 | 3000719 Bastiat
Bastiat's picture

Micro brew.

Tue, 11/20/2012 - 20:53 | 3000547 Everybodys All ...
Everybodys All American's picture

There are no garunteed outcomes for anyone in bankruptcy cases. The corporation will not survive very long if either management or the labor force or both fail to work toward a common goal. That goal normally is and should be profitability. Being profitable insures that you can continue with the product or service year after year. No one should believe that when going through bankruptcy that their job would be still available. That's the real world and always has been except in the very exceptional cases such as the automobile industry.

What I would say is a problem is that the shareholders and often including the board of directors at some point lose control over labor costs and therefore management. I'm really not sure what can be done other than having shareholders voting for pay increases for the employees. As a part of this process the workers should be shareholders as well so they understand the magnitude of their decisions on pay increases.

Clawbacks are a little too late because the corporation has already failed at that point.

Tue, 11/20/2012 - 20:56 | 3000561 LongSoupLine
LongSoupLine's picture

There are no garunteed outcomes for anyone in bankruptcy cases.



Well, unless you're GM...or anything covered under TARP...or Bernanke.

Tue, 11/20/2012 - 21:35 | 3000686 knukles
knukles's picture

Or one mother of all campaign contributors to Yomamma's efforts.

Tue, 11/20/2012 - 23:39 | 3001030 WillyGroper
WillyGroper's picture

It was murdered for PE. There's more money for all involved after the dust settles. BOD & Judges that is. Same story, different company. Playbook since the 80's.

Wed, 11/21/2012 - 00:23 | 3001133 Ident 7777 economy
Ident 7777 economy's picture






" This is the basic problem with the corporate system.   The top management walks away with millions, shareholders lose everything "



Company. Is. Privately. Owned.




Some ppl ought to pay attention.


After reading comments above adressed to and responded by LetThemEatRand -

Let it be said LetThemEatRand is just plain stoopid.


Tue, 11/20/2012 - 20:33 | 3000470 BORT
BORT's picture

These guys keep thinking something good is going to happen for them, but the middle class, or those jobs held by 12 years of school or less, opting for shop instead of science, are gone!!!!!!!!!!!!

Tue, 11/20/2012 - 20:34 | 3000471 cesarsp_us
cesarsp_us's picture

wow 8% cut = 200 less per week?? how much did these guys make??

Tue, 11/20/2012 - 20:42 | 3000506 CrashisOptimistic
CrashisOptimistic's picture

200 * 52 = 10,400 dollars / 0.08 = $130,000

Tue, 11/20/2012 - 20:42 | 3000508 dogbreath
dogbreath's picture

2500 a week by my calculation for being a delivery driver.  

Tue, 11/20/2012 - 20:46 | 3000522 cesarsp_us
cesarsp_us's picture

thats alot money these days

Tue, 11/20/2012 - 20:55 | 3000558 Gully Foyle
Gully Foyle's picture


Dude, for cross country trucking.

Not hustling bread from the bakery to the other side of town.

Quite a bit of difference.

Also, since you dumbasses bitch about them as if they only apply to ONLY you, after TAXES, fees, insurancce, dues, utilities, so on and so forth how much money do you think is left?

Maybe some trucker could explain just how much they pay out yearly and what that salary really means.

If any real working men are here that is.

(Biden 2016, The wheel is come full circle)

Tue, 11/20/2012 - 21:11 | 3000604 Seasmoke
Seasmoke's picture

You forgot to include UNION DUES

Tue, 11/20/2012 - 21:24 | 3000647 Michaelwiseguy
Michaelwiseguy's picture

Why does the Federal Reserve Corporation continually devalue the money, making it impossible for almost everyone to save and get ahead?

Tue, 11/20/2012 - 21:31 | 3000676 dogbreath
dogbreath's picture

Its a negative feedback loop. The more everything costs, the more everything costs especially housing which made everyone think they were rich real estate investors.  The more the average house cost the more public and private sector unions could demand as cost of living increases. 


Wed, 11/21/2012 - 03:56 | 3001327 bunnyswanson
bunnyswanson's picture

Why shouldn't the cost of living be matched with cost of living wages that are equivalent?  There was a time it was a routine event, once a year we'd get a cost of living raise and a performance evaluation and raise.

Over time, workers become more efficient and deserve to be paid better as time goes on.  Especially in light of their loyalty - If global corp want cheap labor so they can live like gluttinous kings and self-indulgent rock stars, they should be replaced by in their respective countries by businesses/industries/corporations who are willing to accept a work force which includes wages based on their country's cost of living including an ability to save for retirement.  The higher price they must charge will be affordable to workers who are paid a fair wage. 


Call it isolationalism if you'd like.  Whatever it takes to employ the citizens who carry the tax burden from a local to federal level, are responsible for their health insurance and funding their retirement which is 20+ years without ability to be productive for many elderly. 


Were it not for unions, we'd have a working class of people who jump out windows of factories to escape their plight.  Or small children who should be reading and learning would be forced to labor long hours through illness and worse for pennies.  Fukushima, Bhopal India, Valdez, Gulf of Mexico, should illustrate how far CEOs will go to save a dollar.  Wiping us off the face of the earth one geographical area at a time as a consequence of a failed business plan is just one bribed politician away.

Consumption has been encouraged through campaigns designed to take focus off family and community.  Debt slaves.


Wed, 11/21/2012 - 07:18 | 3001419 Urban Redneck
Urban Redneck's picture

Must have vs. Nice to have

To be sustainable a company must operate at a profit (or have a credit card from Uncle Ben).


Wed, 11/21/2012 - 02:47 | 3000654 dogbreath
dogbreath's picture

in other words you are saying that a teamsters truck driver is worth every cent of his 130k annual paycheck.  

Tue, 11/20/2012 - 20:33 | 3000474 nmewn
nmewn's picture

Ho ho ho...bitchez.

Tue, 11/20/2012 - 20:35 | 3000476 LongSoupLine
LongSoupLine's picture

if indeed Bimbo is prohibited from acquiring the assets in the Stalking Horse auction due to anti-trust limitations, then the buyer will almost certainly be a "financial", i.e., another PE firm



Ok, show of hands for Bimbo to win.

Then we can have Bimbo Twinkie, Bimbo cakes and the best...Bimbo Ho Ho's

Tue, 11/20/2012 - 20:37 | 3000482 cesarsp_us
cesarsp_us's picture

yeah I love Bimbo

Tue, 11/20/2012 - 20:54 | 3000552 Angus McHugepenis
Angus McHugepenis's picture

I'll take a Bimbo Muff-in. Hold the sprinkles.

Tue, 11/20/2012 - 20:58 | 3000568 LongSoupLine
LongSoupLine's picture

Oh, I'm sorry...we're fresh outta those...


How about some cream filled Bimbo buns instead?

Tue, 11/20/2012 - 21:30 | 3000670 Angus McHugepenis
Angus McHugepenis's picture

Nah, how about a MILF Muff-in? Got any of those? Bimbos give the clap... er ... indigestion.

Tue, 11/20/2012 - 20:36 | 3000479 Dr. Engali
Dr. Engali's picture

It seems to me like it would be a product mix for Pepsi if they can get away with it.

Tue, 11/20/2012 - 20:44 | 3000514 edb5s
edb5s's picture


Tue, 11/20/2012 - 21:37 | 3000698 knukles
knukles's picture

I saw that!

Tue, 11/20/2012 - 20:36 | 3000480 Savyindallas
Savyindallas's picture

A new company  with new management (and no union) will emerge. I feel sorry for those employees who got sold down the river by the union  - Im not defending management or the owners  -I'm sure they suck too  -but I do not trust today's unions  -they are pathetic. A whole new concept of unions needs to emerge  -the present system of collective bargaining sucks-it's inherently flawed. This type of socilaism does not work.

Tue, 11/20/2012 - 20:39 | 3000493 Zgangsta
Zgangsta's picture

The union system does work;  it just needs to become global in scope.

What's the point of holding the American labor system by the balls when companies can just move the labor out of America?

Tue, 11/20/2012 - 20:42 | 3000507 DaveyJones
DaveyJones's picture

an innevitable chapter in global economics which will get weird with oil and debt.

Tue, 11/20/2012 - 21:01 | 3000577 Matt
Matt's picture

Is this sarcasm? Sorry, it's just that it really sounds like you are serious. How exactly does one move the teamster jobs, that is to say, the jobs of delivering the goods within America, outside of America?

These people have a job that cannot be replaced by someone outside the country, because you must be inside the country, to deliver goods inside the country. Creating a global teamsters union would not magically make things better.

Tue, 11/20/2012 - 21:17 | 3000621 Zgangsta
Zgangsta's picture

Hmmm...let me think....what other business in this country has experience in delivering items to places inside of the country?  Any place in the country, no matter where it is located?  Maybe a business that is so deep in the red that it is desperately looking to expand into other areas of potential profit, such as delivering freight shipped from overseas...and a monolithic business with government backing that is so big that it could crush the Teamsters if it chose to do so?

Sorry, I'm drawing a blank here.  Guess you're right.

Tue, 11/20/2012 - 21:39 | 3000705 knukles
knukles's picture

And the quality/timeliness of delivery wouldn't matter since the half-shelf-life of the product is in excess of 123 years.

Tue, 11/20/2012 - 23:23 | 3000981 Matt
Matt's picture

"what other business in this country has experience in delivering items to places inside of the country?"

Exactly. Within the country. Glad to see you understand that your previous post,

"What's the point of holding the American labor system by the balls when companies can just move the labor out of America?"

Was irrelevant when discussing fresh baked goods being delivered within the country.

Wed, 11/21/2012 - 00:10 | 3001110 Zgangsta
Zgangsta's picture

Once the USPS's own union is busted out of necessity, USPS will bigfoot all other unions in the country.  And they'll be in bed with all of the foreign countries that are bringing them business.

So ultimately, they will resolve the problem of transporting foreign goods through non-union means.

Tue, 11/20/2012 - 21:39 | 3000706 Curt W
Curt W's picture

Doesn't want to send teamsters over seas.

wants unions to form in every countries to level the wages world wide.

then everything will be cheaper to make closer to home.

Tue, 11/20/2012 - 23:30 | 3001000 Matt
Matt's picture

Workers of the World, Unite! Good Luck on that one, getting unemployed people in Bangledesh to hold out to push labour costs up so that Americans can keep their union job over here.

Tue, 11/20/2012 - 21:22 | 3000641 CrockettAlmanac.com
CrockettAlmanac.com's picture



The union system does work;  it just needs to become global in scope.


Like this?


Service Employees International Union (SEIU) activists discuss their compensation:


Tue, 11/20/2012 - 22:00 | 3000762 nodhannum
nodhannum's picture

Yeah!  Working great in Greece and Spain.

Tue, 11/20/2012 - 20:37 | 3000487 Zgangsta
Zgangsta's picture

I don't think that Twinkies as we know them will ever return.  Whomever acquires the trademark and recipe will no doubt endeavor to find a way to use cheaper methods and ingredients to manufacture them.

The people that Twinkies appeal to will eat any slop you throw at them, so they'll likely eat the new Twinkies as well, but it will probably at least as big a change as the switch from cane sugar to HFCS in soft drinks in the early 80's.

Tue, 11/20/2012 - 20:41 | 3000497 Tyler Durden
Tyler Durden's picture

The recipe will be preserved as the manufacturing costs are absolutely meaningless. The key viability factor here was not the COGS, but the SG&A and of course, the balance sheet and the billions in unfunded pensions.

Tue, 11/20/2012 - 20:57 | 3000564 dark pools of soros
dark pools of soros's picture

and the endless extortion of raises from management that seem to escape these updates

Tue, 11/20/2012 - 21:09 | 3000598 knowless
knowless's picture

I think that's the point, a bloated bureaucracy which secures it's status through false handouts and lies... Who abandon ship with no harm to them. Sort of like a microcosm of something larger.

Extortion and usury seem to be generally overlooked these days, as far as crimes go.

Tue, 11/20/2012 - 21:54 | 3000747 Tyler Durden
Tyler Durden's picture

Actually the entire previous post on this issue was dedicated to the topic of management retention bonuses. You may have missed it.

Tue, 11/20/2012 - 22:02 | 3000771 knukles
knukles's picture


Tue, 11/20/2012 - 22:10 | 3000789 LetThemEatRand
LetThemEatRand's picture

The prior post (assuming I am thinking of the same one) addressed retention bonuses going forward post the most recent bankruptcy.  I'd be curious to see what management pulled out of the enterprise since say 2005, a few years before the first BK filing.  Not asking you to do the math, but I'll bet it's a very large percentage of the company obligations that are blamed for the BK.  For a few individuals.

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