f13.net

As a kid who grew up on stuff like Wonder Bread, Twinkies, and all the other Hostess/Dolly Madison snacks, it is a sad day.  

Story here. (http://www.chicagotribune.com/business/breaking/chi-hostess-brands-seeks-court-permission-to-liquidate-20121116,0,3175964.story)

I am totally getting some cupcakes for lunch.

Ouch, that's a lot of jobs lost.

Some other company will buy the name and the recipe and resume production shortly, I'm sure.  As long as there's demand there's no way that stuff's going away.

About a month ago we had a giant pile of Hostess stuff in the break room.  I had one of each thing and thought "welp, I think I'm good on that for the rest of my life."  Good timing.

My guess is that they were already on the skids because of the economic slump, since their brand is not dirt cheap and none of their products are nutritional staples. Then the collapse of the corn harvest this year (and the mediocre one last year) raised grain prices enough that they had nowhere to turn but labor costs. The brands will all sell, I'm sure, so the only lasting effect on the rest of us will be the lingering anti-union message: If you strike, you'll wind up on the street.

ONO!!!  What will they deep fry for dessert in the trailer park???

Saw this this morning. I haven't eaten one in decades and now I have a craving for one. :awesome_for_real: :oh_i_see:

Also here's a nice article with a bit of history about it:

http://news.yahoo.com/happens-twinkies-really-away-202553538--finance.html

HURRY! (http://www.cbsnews.com/8301-505123_162-57551308/hostess-closure-sparks-twinkies-rush/)

I was just at the store, all I got for myself was a couple Hostess cherry pies, but they were pretty much sold out.  I saw a couple people with like 5-6 boxes of twinkies and cupcakes in their carts.

Humorous.

Now.. if Hostess had stopped selling these at 2 boxes for $5 they might've had a better stance.   Speculation at the office is Lil' Debbie will buy the name rights up. I'd almost bet Wonder is a dead brand, but I'd want to know its popularity these days.  I don't see many people buying it anymore, even the poor folks can afford the cheap store brand of soft bread vs Wonder locally.

Wonder still sells pretty well in my area.  Then remember they also make like 3-4 other bread lines.  Mother Nature, Beefsteak, Home Pride, etc. 

If I'm going to get just some generic white bread I usually buy Wonder, cuz that's what I grew up with.  Then again I'm the only one in my household that will really eat anything besides just plain white bread.

I doubt Little Debbie buys them out, I think it'll be someone bigger like Kraft.  Although from what I read some Mexican company tried to buy Hostess before, I think they now have their opening.

Wonder bread is pretty much the standard, most abundant bread in Canada.  One of our super rich old money families owns the license here.  I have no idea how popular it is in the states but I wouldn't be surprised if the Westons bought the name.

Interesting notion I'd just heard on one of the NPR pieces and hadn't considered.  Hostess resisted branding or developing, well, anything beyond the initial products.  No multi-flavor Twinkees, Twinkee or Ho-Ho flavored Vodka, T-shirts, hats, etc.  They were a 1950's bakery mindset in a 2012 world. 

Also, as you mention, the Marketplace piece went off on the Wonder brand being big deal worldwide.  Lots of opportunities there that were never explored.

Another case of corporate darwinism, then?

Hopefully they change the formulas. Their stuff always did taste better than Hostess.

It certainly seems like it based on that piece. We'll see as the analysts dig in, because with such a recognizable brand going under there's SURE to be tons of papers on this.


Zebra Cakes!   Ho-Hos have always been my favorite Hostess, but I stopped enjoying them when they switched from sugar to corn syrup all those years ago.   I wonder at times if Little Debbie adjusted their recipes to account for the change while Hostess just swapped one ingredient and called it a day.   You really notice the difference.

People are fucking retarded. The sad thing is the 18,000 jobs. Someone will buy the brands and keep making fucking twinkies and ho hos; they aren't going anywhere.

I gather at some point they bought Drakes. About once a year we get a box of yodels. I'll miss them if nobody picks up the license.

NPR had an industry critter on who basically said "well what did they think, they did no updating for 50 years and didn't even position themselves as retro kitsch... wtf?!" and it's hard to argue there.

This turns out to be another Bain type vulture capitalism story.  (Not trying to move this to Politics but...)

http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/ (http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/)

You obviously did not read it.

From what I'm getting the hedgefunds involved tossed hundreds of millions of dollars into the company that spent 5 years in bankruptcy, trying to turn it around.  Pretty much it seems Hostess got stuck with MEPP payemts from companies no longer in business and was seeing declining sales. No one wanted to give them anymore money as they were burning 2 million dollars a week.

Someone will buy the assets (branding) and due to excess capacity the bakeries will almost certainly remain closed.

And the Teamsters don't want to budge because if Hostess pulls out of the MEPP's, the situation for every other company in them gets worse and the dominoes continue to fall.

--Dave

And you must've missed where the huedge funds paid themselves a nice high rate of return for the past 20 years while continually squeezing the unions for more concessions.  All while management failed to adjust to the changing market yet were recently granted 80% pay raises.

Between the Mayan calendar and the death of Twinkies, this world has no hope at all.   :ye_gods:

Hold me! :ye_gods:

Read the article.  Sucks for the workers, but why bother giving in to more management demands?

Baseline problem is the company was poorly managed, operating with antiquated equipment, and made desperate decisions to put duck tape on their leaking sales.

Their market is shrinking, and they have no way to respond. That being said, from a pure accounting/worker standpoint, pensions are the dumbest thing ever. They sound awesome that you can get a set payment no matter what, but it's not economic reality, and the companies usually can't or won't support them. People may bitch about 401ks not getting great rates of return at times, but I guarantee you that having your own account under your own name that's untouchable by the company and held by a 3rd party TRP is much better for your long term retirement unless you just happen to be old right now.

Ya, looks like a suicide spiral with both parties fully participating in its demise.

Yeah I'm gonna miss the NHL.....oh wait what?

 :sad:

National Hostess League?  :why_so_serious:

Quiet you, I like my pension very much thanks. I have a thrift savings plan/401k as well, but I hate the idea of my retirement being contingent upon the stock markets not being retarded.

The only problem with pensions is we allow companies not to fund them.

Or states.

While that can be a problem, it's certainly not the major problem. The major issue is you're essentially guessing on when people die. Which when you think about it, it's really stupid when the alternative is allowing people to just put their money in their own accounts.

Ppl living longer and wildly optimistic expectations of future growth of investments

Guessing when people die isn't hard at all. The actuarial tables are well defined, and get better every year. As even an accountant should know. Misfunding pensions isn't about how long people live, it's about shitty companies not wanting to fund their obligations, and knowing a bankruptcy judge will let them ditch them.

Ok just so we're clear. On the one hand I have absolute certainty about a known value. On the other I have an educated guess. Are you really telling me you'd rather (on either side of the equation) rely on people living by the tables AND having a company continuing to be a going concern, let along being subject to variances in interest rates?

In my mind, I've much rather have the tax free dollars flow to me in my own account that's completely untouchable, rather than grouped together in some potential lump sum fund that's promised to all. Part of that reasoning is because I can transfer it away from my employer should I choose to leave. The other part is that the risks fall on my direction of how I want to invest the money rather than the economic success of my company, and/or their investment choices. If you don't trust companies, it makes logical sense to take it out of their hands.

I have both. I like my defined benefit more. I trust my defined contribution more.  :oh_i_see:

Hostess could always fudge those tables by feeding their employees twinkies, thus having to pay less in pensions  :why_so_serious:

Now I want fudge.   :ye_gods:

Me too.

The living longer thing is far less relevant because it's primarily about far fewer early deaths, not long term life expectancy of a retiree.

I'll put it this way, if anybody was given the option right now to take a lump-sum from their pension, I'd advise them to do that and invest it their way. Interest rates are in the toilet and that affects not only the normal returns, but also the PV calculations for the funded status of a plan.

If you aren't 55, you take a pretty severe tax hit.  Is it still worth it to pay the 10% penalty and reinvest?

I would say yes, unless it's a federal pension. Those are a different ball of wax. I just don't believe in pensions as a long term option for corporations given the shifts we've seen in the last 2 decades. Also, if you're younger, and plan on working for another 20 years, the DOW has basically quadrupled in that time frame. I believe you can more than make up a 10% hit if you invested wisely with the blue chip stocks.

I've got a lot of money in Coke, as an example. I'd just rather have 90% of my money today and control my own destiny than rely on the economic conditions of one entity doing right by me. It's sort of an eggs in one basket scenario I don't care for.

I hate the thought of gambling in any sense... all this retirement stuff makes me extremely squirrelly. Glad I will never see retirement as not to worry about it.  :awesome_for_real:

I'm surprised Paelos didn't put actual numbers to his "take it out" when Nebu asked.  Seemed like perfect accountant bait.. I'm so disappointed!

So if you have 100k and take a 10% hit, you get 90K.  Even a modest return of 6% per year will make that up in 2 years. 3% will take 4.

I'm with the monkey on this one.  Too many times we've seen the "pensions defrauded" and "company goes bankrupt, pensioners screwed" stories to put any trust in companies not fucking you over.  Give it to me and let me manage it, then I'm the only one to blame for the hardship on my family.

Too bad the money retained by not paying out a pension is never turned over to the employees and even 401(k) matching is going the way of the dodo.  (Yes, yes, tech sector people. It hasn't hit you yet.  Just wait, because it'll hit your kids.)

Meh, it involves actual finance calculations, something I'm admittedly not the be best at without a calculator and on top of that I'm already thinking about turkey. Point stands, though. When it comes to your own retirement, I will always fall on the side of keeping your destiny in your own hands.

Oreos.  Fuck those things are good.

(When you live in Florida you have to try the fare every now and then.)

I had the deep fried beer last year at the fair and it actually wasn't bad. lol.

Hostess and the Bakers' Union have agree to mediation, preventing shut down, happy that they just sold a lot of Twinkies.

Judge forced them into it and I highly doubt their will be any kind of resolution.  Don't worry though someone will buy up the rights to make Twinkies and I wouldn't be surprised if it happened in under a year.

I can't look at this thread anymore.  Every time I do, I get that fucking stupid "Bye, Bye Miss American Pie" song stuck in my head and I hate it, hate it, hate it.  I hope Evilrider gets it stuck in his head forever because he started this thread!    :ye_gods:

At least I'm not the only one. ><

Well, to be fair my pension IS a federal pension.

Closed. (http://hostessbrands.com/Closed.aspx)

That is a very passive aggressive web site.   :awesome_for_real:

You expected less from the brand of folks that own places?

Fallout from this was I heard a lot of bitching from franchisees this last week, as they couldn't find buns & bread for their stores.  No concern about things beyond, "Those assholes had a contract with me and now I'm inconvenienced."  We're all self-centered in our own special ways.

There are a significant number of labor-intense companies without CBAs or with weaker CBAs that're nervous about this sort of action.  Sometimes unions push things a little too far.  I've yet to read compelling evidence as to why the union representatives found a Hostess company bankruptcy and subsequent mass layoff acceptable.

Many times I see unions as necessary (NHLPA right now for sure), but this is the type of thing that makes my company nervous.

They believe management was screwing them by rewarding themselves at the expense of the common man (which a few years ago was definitely true).  So they are sticking it to the man and now everyone loses.

They also sometimes take a pretty wide view of things. If they "cave" on wages for this group of employees it will put downward pressure on wages across the industry and affect all their other members. Not saying it is correct thinking, but that is likely part of the thinking.

Teamsters union is definitely not happy with the bakers, that is for sure.

From a story that I read the bakers union weren't happy with the teamsters.  Supposedly the bake shops were pretty well run but the bakers union got sick of having to make concessions because of how expensive the teamsters had become.   I'm sure there is plenty of blame to be spread around.   

It's times like these I'm proud to work for Publix Super Markets.  They really take care of their employees (associates).  I firmly believe that taking care of your folks and paying them fairly equates to no union activity.

I'm not demonizing unions or supporting them.  Rather, I see them as pointless if employers employ optimally.

You must be lucky. The Publix a few blocks from my house has the most unhappy poorly treated staff I have ever seen.

With big corps like that it's always about local management, though.  Look no farther than the store or regional manager to discover why things are so bad.  (Store if it's one or two stores, regional if it's the whole area, obv.)

If nobody ever broke any laws, we wouldn't need police.

If nobody was ever Sinij, we wouldn't need moderators!

The unions found it acceptable because they views the payout from the liquidation into their pension funds would be higher than if they continued working.

When a company is liquidated the payoff order basically goes input>bonds>equity. Pension funds are input costs (as they're associated with labor) and so get paid off relatively first(as with all debts relating to flour etc).  This means that if a company is failing, and prolonging the company may or may not save it, but will reduce its general funds and asset position it may make sense for labor to force a liquidation.

I.E. labor says "we can find new jobs, but if the company keeps losing money we can't find new pensions".

There was a general view that the management at Hostess was looting the company. After the first negotiations they did not reinvest the concessions labor had made and ended up paying large retention bonuses to management and still closed plants. This is not something that is uncommon. If a company is potentially going to fail, it makes sense for management to loot for the same reason it makes sense for labor to liquidate. If you can get more out of a companies coffers by (essentially) robbing it than you can from getting paid in the future then you rob it. The best way to do this is to sell assets (I.E. shut down plants) and then don't reinvest that money into new capital (I.E. give management bonuses)*

Basically the narrative that you're not hearing from the media is that the Labor choice to strike and so force a liquidation probably makes the most sense once you look at their incentives.

Labor had given them a chance to turn the thing around and management failed to do so. Labor then said "well ok, time to cut our losses"

---------

Big picture what happens is Hostess sells its brand and the plants, another company buys the plants and the brand and hires all(or many) of the people that Hostess fired. The money from the sales go to pay the pensions of the laid off workers.

If hostess was allowed to continue running they would have shut down plants and sold the equipment, then instead of putting that money into the pensions they would have paid it out as management bonuses. Eventually hostess fails and other companies rehire the people that hostess laid off.

The difference is that if labor liquidates now they still have some amount of their pensions. If they wait, they don't have pensions.


*Edit: If you shut down plants and then invest in new capital that new capital can be sold and so doesn't reduce the asset position of the firm. I.E. If reinvestment occurs labor essentially just transfers some of their money from current wages to their pension when they make concessions. If reinvestment doesn't occur, labor essentially transfers some of their money from current wages into the pockets of management.

Basically the unions were saying "we don't think you're actually going to do the right thing"

It's easier to blame 18,000 people than the handful at the top looting the coffers.  Obviously those 18k had more influence.

PM me the location of your store and any specific things you've seen?  We take customer complaints very seriously.

http://hosted.ap.org/dynamic/stories/U/US_HOSTESS_BANKRUPTCY (http://hosted.ap.org/dynamic/stories/U/US_HOSTESS_BANKRUPTCY)


$2.3 billion/year in revenue, but it can't handle a million a month in pensions. And it wants approval for $1.8 million in executive bonuses, larger if they conclude the liquidation promptly  :uhrr:

Yep, they were fucking over the workers. No shock there.

It's another reason why I don't believe in pensions. Even if the economics are good, they are out of your control and run by people who can absolutely screw you over.

I thought that was why actuarial tables exist?

We covered that. Paelos doesn't seem to understand the core concept of Actuarial Science or statistics. Which oddly seems typical for accountants.

I understand it fine. It has nothing to do with the fact that no matter how much education or number cruching you try to put on it, you are suggesting you can predict the future (which itself is so fucking arrogant it makes me cringe). Within tolerable limits, I have no problem with it being used to establish long term government plans, metrics for demographic shifts and insurance coverage of a population, or other government goals.

I do have a problem with it in corporate enterprise pensions because A - I don't believe in the long term feasibility of a corporation like I do a government, B - the populations of a corporation are smaller and can be less predictable than a larger scale population blended amongst a government pool, and C - Human elements such as funding concerns, economic concerns, mismanagement, and general greed can bypass any actuarial results and fuck up the entire enterpise.

EDIT: And I should also add that this whole pension thing is a relatively new concept when you think about our economic development. I'm not entirely sure that it's the way to go because of the uncertainty involved and the discounting that actuaries do on the pension models for present value in regardes to funded/underfunded.

Sigh,

The unions knew Hostess would screw them out of their retirement so no real surprise there.  Neither is the bosses trying to give themselves bonuses.

I am just waiting to see who buys up the pieces and how much of each chunk they are going to buy.  Also I am curious how many people will end up jobs with the new companies that were laid off.

My friend's dad is in that union and I was told that none of them expect to get their jobs back.  There's maybe a 10% chance that the facilities that Hostess used will be brought back online.  At least in the Chicago area.  He is not one of the ones happy that they pushed too hard and lost everything.

Lost everything seems like a mischaracterization. Lost current job to save (already earned) pension. Not sure that's a bad trade, but I'm not in that position.

The problem is they lost the job and the pension. In liquidation pension is in the unsecured debt category so if they get any of the pension money it will be pennies on the dollar.

Hm, that is not what I gathered from Goumindong's earlier post about the payout order.

Yeah, I've seen a number of people in this thread say somebody is going to buy the factories and rehire everybody, but that's not what I'm reading.  Consensus seems to be some companies will buy out the brands and then just expand production at their current facilities, with minimal hiring at those places.  General consensus seems to be that almost all the hostess factories are going to be shuttered for good, along with the employees who worked at them.

Part of it was that it was following a script that the unions have seen before.  Management pushes a company to the brink, demands concessions from unions, loads on more debt and sucks more money out of the pensions, lather rinse repeat until there's nothing left but the brands, the debts, and the fat wads of cash management extracted.  And it wasn't like the process had just barely started with Hostess, it was well along.

So the unions put on the brakes when there was still something left for the worker's pensions.  Hostess was going to die, in 5 or 10 years, no matter what.

--Dave

In one of the articles I read a "unnamed potential buyer" was touring one of the factories and asked about hiring the people that were currently working there.  I suspect at the very least a few bakers will be offered jobs.  Due to the fact that they need somebody experienced in showing people the proper way to make these products.  However I imagine there will be very very few people that get jobs from that.

Teamsters most likely will be better off due to the extremely high demand for truck drivers right now.

There's a high demand for truckers, there's a very, very low demand for teamsters.

Any business would have to be high to consider taking on the union employees and history\debt that comes with it, especially since Hostess management painted them with the brush of "these guys forced the company out of business."  No, what is for sale is the IP and recipes for the brands, that actually has intrinsic value.  Same with the plants and factories, those are real estate and have an actual value.  The employees and their pension?  Not something another company is going to buy unless they feel sorry for them and we all know that doesn't make good business sense.  At best some people from the union and management will find other jobs in the companies that buy the remaining brands, but chances are it won't be anything like what it was.  It will be starting over again.

http://www.npr.org/2012/06/07/154519830/which-workers-need-unions-and-which-dont

If yall have some time, that's a great piece on the union situation in the united states done by NPR from several angles. It's essentially a transcript that I found very informative.

He was talking out of his ass.   That may be how stuff is liquidated in a textbook voluntary wind down, but this is a Chapter 7 bankruptcy. There is no such thing as "input costs funds" in the bankruptcy liquidation process. The issue is the priority of the claim  under Section 507.  Unfunded pension liability is generally treated as an unsecured creditor which is pretty far down the list of who gets paid in a Chapter 7. The PBGC has tired to get their costs of scooping up the underfunded pension included as priority administrative expense but courts have generally shot it down.  This shit gets really complicated here because of the multi-employer plan and that it is also covered by ERISA. The pensions are likely going to be paid in some form or fashion but it may be reduced or even terminated depending upon how the MEPP and PBGC want to handle it.

From an article I read the bakeries themselves are somewhat efficient and useful , while the distribution side of the business is the one that will be done away with. This is why the Bakery union went this route in hopes that a buyer will be able to pick up the production facilities (and it's already trained workers) and not the distribution side making it a worthwhile purchase. I guess we'll see.

There's certainly a need for skilled labor. And a need for Ho-Hos around the holidays.

fify

I am a total Ho-Ho hoe.  Particularly around the holidays.  The little Debbie version just doesn't cut it. 

(http://freshchocodiles.com/images/chocodiles_top_450w.jpg)

I used to love these but they never really sold in my area.

This.  Now I'm craving Ho-Hos.  I wonder if there's any in the vending machine here.  I haven't had lunch yet!

I like these at Christmas for some reason. Probably the tree colors http://www.littledebbie.com/products/ChristmasCakes.asp

sugar crack!

Those things...those things are evil.

Those two last thingies must never have sold in any area I ever lived in because I've never seen them before!