LAST EDITED ON 11-17-12 AT 02:43 PM (EST)

My brother-in-law delivers delivered for Hostess. They were informed Tuesday of the possibility that the company would be closing. Not too sure what he'll be doing now (he's in his late 50s, so a new career is a tough nut). Another major concern is the status of his pension (rumors of a 50% cut).

Kind thoughts appreciated.

eta: Today (Saturday) was his last day. 17+ years with the company and nothing to show for it but a couple of metal Wonder Bread trays & a Twinkie The Kid poster hanging on the kitchen wall.

Yes, if the company's pension fund is underfunded, retirees only get the amount of pension guaranteed by Penny Benny, which may be much less than the negotiated pension.

But this is just corporate victim #1. There are a lot more dominoes to fall during the next four years.

There are a lot more dominoes to fall during the next four years.

Such is the gravity of the situation.

Some good news --

He qualifies to receive his pension next month (hitting age 59), and there appears to be funds available. Not too sure at this time how long it will last...

The bad news -- his penultimate unemployment check got lost somehow and they are reluctant to replace it. Fortunately family members (me & my dad) will be able to kick in something to fill the gap.

Not the cup cakes! please save the cupcakes!

over 18,000 unemployed; really tough time to be out of work.

but? can you blame a company for closing when they are losing money? Companies don't exist just to provide jobs, right?
They need to at least break even.

I know it is always hard when employees are given wage cuts, hour cuts, pension cuts.
But if it means taking a cut vs no job at all?

http://www.nbcdfw.com/news/national-international/NATL-Twinkies-Maker-Hostess-Going-Out-of-Business-179643161.html

Up until today, I didn't know Hostess existed as its own company. I always thought they were an absorbed brand line for a larger manufacturer -- if I thought about it at all, which wasn't exactly often. (There is a Hostess outlet within a few miles of me -- or was: I've never been in there and don't know if it's still around. Last chance to see...) So news that Hostess was losing money would have been met with a shrug and 'Giant Food Company can afford it' plus the assumption that Tastycake was kicking their rears, at least on the local scale. As part of a multi-billion dollar conglomerate, they probably would have survived. And I'm surprised no one's taken this dark opportunity to make an assimilation attempt.

But they were on their own. And if a company that size had lost, say, five million dollars last year? They're Hostess. Make a couple of tweaks and tough it out.

The last number I saw was $340,000,000 in the red.

No, they are not under any obligation to stay open just so people can keep collecting paychecks. The strikers may have legitimate gripes about salary and benefits, but here we have a company which can't afford to increase either one. Years of sports lockouts and teams claiming to lose money have made me look at declared loss as an aggressive negotiating tactic: we're eight digits in the black, but not on the books you're going to see. But then the Teamsters took a pay cut. That kind of made the ownership side look as if it had a legitimate point.

(Yes, I'd be curious to see what the executives pulled out during that period. No seven-digit bonuses, please.)

I don't know what the employees were making on the baking side of the factory. Maybe they were at that Walmart level of full time being just enough to die on. But that wasn't going to change because the company couldn't afford to alter anything. All striking did was pull the plug that much faster. Good luck explaining that to some of the union heads.

No profit, no hopes for same coming soon enough to save anything, no investors, and no government bailout. They exist to make money. They couldn't. And now they don't exist.

The cupcakes. Eat two in the morning and your body won't digest anything else for the rest of the day.

And I'm surprised no one's taken this dark opportunity to make an assimilation attempt.

Bimbo tried to buy Hostess the last time Hostess was bankrupt.

I feel that I should mention that this is in regard to the Twinkee news today, not the General Patraeus news. *snicker*

Hostess and Wonder Bread were part of Ralston Purina until 1995, when Ralston sold the lines to Interstate Brands, who owned Dolly Madison. Interstate Brands went bankrupt in 2004 and then again this year.

"We made pet food and snack cakes."

"You mean 'We make dog food and food a dog wouldn't touch'."

"...sell it."

Basically, that's right. Ralston was actually in the process of purging all of its "human food" operations by setting up a new subsidiary it called Ralcorp (which held Chex cereals, Uncle Ben's rice and a lot of other food brands), which it then sold to General Foods. It also purged its Eveready battery business (along with Schick, Playtex, Hawaiian Tropic, Banana Boat, etc.) by spinning it off into a new corporation called Energizer Holdings. That left it just as a pure animal feed business, and then it spun off its international animal feed business to Cargill in 2000. The reamining company was a pure U.S. animal feed business, which was promptly acquired by Nestle S.A. in 2001.

Did you know that the two largest animal feed businesses in the U.S. are Nestle and Mars? I thought chocolate was deadly to dogs.

Is it okay to ask workers to take pay cuts while increasing the pay of the top executives just before filing for bankruptcy?

http://online.wsj.com/article/SB10001424052702304072004577323993512506050.html

Raising the CEO's salary from $750,000 a year to $2,550,000 a year when the company is going bankrupt? But ask the workers to cut their own pay 30% for the good of the company. Hostess has been a poorly managed company for years, two bankruptcies in the past ten years.

And just when sales were going to soar in Colorado and Washington.

LAST EDITED ON 11-16-12 AT 12:18 PM (EST)

Thankee: that's part of the information I was looking for. So the CEO is personally responsible for about 0.5% of that loss. Percentage-wise, not a lot. Perception and understanding-wise, sickening. He may have seen it coming and decided to rip out some safety nets to build his own parachute.

And just when sales were going to soar in Colorado and Washington.

*snicker* Yeah, this would be a really good time for Tastycake and Drake to get aggressive with a brownie recipe. How national was Hostess?

What it says to me was the top executives put their own self interests ahead of saving the company. But it's all the unions fault.

I'll put it in rumor until I see better data, but apparently they've gone through a string of CEO's who had no experience in running a baking company, but lots of experience in taking companies apart for the highest bidder.

LAST EDITED ON 11-16-12 AT 11:23 PM (EST)

The high pay was supposed to attract someone who knew enough to fix the company. In response to the controversy over the pay, the guy (and the company's other top 3 execs) agreed to take a salary of $1 for a year. So he'll never see the high pay, because the company folded first.

But, hey, having the company broke and everyone out of work is consistent with making everyone pay their fair share, right?

The high pay was supposed to attract someone who knew enough to fix the company

It was a raise, not a salary offered to an incoming CEO. A month before the bankruptcy filing because once they filed for bankruptcy all the incentive and bonuses built into their employment contract couldn't be paid under the current bankruptcy laws, so the execs raised their salaries to make sure they got theirs while asking for concessions from others.

In response to the controversy...

So if there wasn't a controversy, they would have taken a $1 salary anyway? They weren't being benevolent.

No, it was a replacement of bonus compensation with salary. It's illegal under U.S. law to pay retention bonuses in a bankruptcy situation, and most companies respond by trying to turn all bonus compensation into salary.

It's another example of a supposedly consumer-friendly law having the reverse effect. What companies used to want to do (as the consultant recommended here) was pay incentive compensation for turning the company around. But, if the turnaround was accomplished in an acrimonious situation, as would be the case here, interest-holders in the company (such as unions) would later sue and allege that the compensation was a retention bonus. Generally, the executive would agree to take a "haircut" on the amount paid to end the litigation costs. As a result, executives in general will no longer accept such bonus arrangements; the only way that the payment is exempt from the risk of future lawsuit is if it's included in base compensation (i.e., salary).

Paying this is sub-optimal from a corporate viewpoint, because the executive gets the higher pay whether or not the company turns around. But it's all that's left, based on the current legal situation.

Stupid? Of course. But so are many of our so-called "worker protection" laws.

Then the argument is that there is a minimum salary level that businesses must pay for a CEO or they won't take the job. Maybe they should expand the pool of CEO candidates to include people willing to take the lower salary.

>Is it okay to ask workers to take pay cuts while increasing the pay of the
>top executives just before filing for bankruptcy?

Did you ever work for a large company that went bankrupt? I did. Within 6 months, everyone higher than a production scheduler and younger than 60 was gone (including me). Two years later, the company closed for good, having lost more than 50% of its business because of delivery problems (which were directly tied to the enormous "brain drain").

You know who got screwed? The people who worked for the company for decades. I felt tremendously sorry for them. But when I had to choose between supporting my own family and helping them, the choice was simple.

Just so far it seems more of a fine we will just take all the balls and send you home with nothing rather than we are in a no win situation and we are all going to bare the costs of this together type of thing.

Yep, on the one hand a company can't just keep losing money hand over fist and stay in business just to keep paychecks coming from loans.

On the other hand, you can only punish your employees for so long and so hard before they force your hand. Going on strike and closing down the company because of it has always been the last resort of the working man. And sometimes just making sure the executives have a few less yachts before they declare bankruptcy anyway is at least a small victory.

I'd like to think that the employed and the employer will always work for a win-win situation in which CEO's and janitor's all end up doing pretty well for themselves. But too often those at the top just want to make sure they get as much of the tasty individually wrapped pies as possible before shutting the whole thing down.

tasty individually wrapped pies

...you've actually eaten a Hostess product, right?

Oh, were the sarcasm font tags missing from that?

LAST EDITED ON 11-17-12 AT 00:53 AM (EST)

On the other hand, you can only punish your employees for so long and so hard
before they force your hand. Going on strike and closing down the company because of it has always been the last resort of the working man. And sometimes just making sure the executives have a few less yachts before they declare bankruptcy anyway is
at least a small victory.

Very strange thought. I hope the bakers union enjoys its small victory, then, while it begs the bankrupt US of A to give its former members a few handouts.

As Estee pointed out above before she got seduced by the class warfare herein, even the Teamsters realized how poor the company's economic condition was. But the Bakers Union, fresh off their victory in November, thought that unemployment was better than working.

They got their wish.

As Estee pointed out above before she got seduced by the class warfare herein

I'll have you know that class warfare bought me a very nice dinner and told me it loved me!

LAST EDITED ON 11-17-12 AT 08:36 AM (EST)

Well I don't see that employees should just be happy the CEO is enjoying his millions and be happy with whatever crumbs they get and never complain no matter how hard they are being screwed. Sometimes the serfs didn't fire the first shot.

I suspect the strike only changed the date of selling it off for parts, not if the company was going to be sold off for parts.

ETA: I always thought one of the risks/goals of a strike was to bankrupt the company? That is why you don't go on strike all willy-nilly for no reason. I thought it should be part of the risk/benefit analysis that is done before going on strike.

From Zombieland - "There's a box of Twinkies in that grocery store. Not just any box of Twinkies, the last box of Twinkies that anyone will enjoy in the whole universe. Believe it or not, Twinkies have an expiration date. Some day very soon, Life's little Twinkie gauge is gonna go... empty."

and they never thought it would happen...

On a serious note - There's a Hostess/Wonder bread factory in Tulsa. Workers have been on strike - some did cross the picket line. Most were picketing, not because they were asked to take a paycut, AGAIN. But because of the article Kid referenced.

I mean

I don't really have any: the closest I get was using a Drake's pound cake package as an emergency breakfast. But one circlemate did describe her Three A.M. Apocalypse Snack from her freshman year in college:

"Two Red Bulls, two Twinkies, two hours to live."

I had to declare a box of Twinkees when clearing customs in Australia.

They don't have them there and I was bringing them upon request of a friend who had often seen them in U.S. television shows but had never had one.

The customs agent laughed that I classified the Twinkees as "food."

Well, coincidentally "Hostess" is an answer in the Times Sunday acrostic (clue: "brand name on a Ding Dongs box" -- it tactfully avoided mentioning bankruptcy.)

Nostalgically, this makes me sad. No more twinkies!

Besides being poorly managed, I'm not surprised they are going bankrupt. I grew up on snacks like these, but I rarely bought them for my son - too much crap (preservatives and such) in them. They never tasted as good as I remembered when I was younger. Like Estee, I didn't realize that Hostess was wholly owned. I expect some of the names to be bought up though (although I bet very few Hostess workers will be rehired).

Never realized I was more of a Drake's girl: Ring Dings and Yodels!

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