First Pizza Hut, Now Twinkies maker Hostess laying off people

So ****ing sad.

 

As I have repeatedly said, you cannot know the economic challenges faced by the company without a detailed understanding of the Chapter 11 plan. These plans are not a small deal...they become a new contract with the force of law with the creditors upon confirmation.

With two billion in annual revenues, it is entirely possible that the company could have been profitable under the new terms.

If Wonder is the crux of the problem, the Chapter 11 plan could have been amended to spin Wonder off and allow the profitable business lines to continue operations. We will never know since they were unable to reach a deal with the unions.

 

Has this been posted yet?

http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery

As usual, the MSM is going for the easy story, blaming unions, blaming a culture shift away from sweets, ignoring the "boring details". You know, the details involving pension funds, golden parachutes, and corporate corruption.

 

wow- their pensions were stolen and FoxNews hasn't said a word and right-wing vermin continue to post their bile in here?

 

I just heard that Bimbo the Mexican bakery company, might buy the Twinkies and other snack cake brands. They have been interested in those for a while and see it as a great way to gain more market share in the US market.

My field isn't advertizing but I work closely with some people who do branding and theming which we tie into commercial architecture. I largely agree with your analysis of Wonder-Bread but I don't think it was inevitably doomed for failure. There are other brands that have fallen out of fashion but have survived and even made comebacks. It seems to me that Hostess could've capitalized on the nostalgia and retro chic to have made changes to their marketing that might've saved them. For example many food companies have brought in celebrity chefs to work with their marketing and product line. I don't recall Hostess trying that.

 

That's how typically it goes in big business, the guys at the top can run things into the ground but get bonus or huge severance pay. The little guys at the bottom are screwed.

 

Breaking news - looks like Hostess may have agreed to a mediation with the baker's union. Perhaps the brinksmanship was just a way to make sure every single Hostess product was snapped up off the shelves and put up on Ebay...

 

The CEO of hostess got his salary raised from 750k to 2.5mil even as the company was dying. Shouldn't the CEO also have his salary slashed?

 

http://www.chicagotribune.com/busin...n-agree-to-mediation-20121119,0,2355592.story

Hostess Brands Inc, its lenders and the unions representing its striking workers, agreed to start mediation hearings on Tuesday at the urging of a U.S. bankruptcy court judge.

A hearing on Monday during which the bankrupt maker of Twinkies snack cakes and Wonder Bread was set to ask for permission to liquidate was quickly adjourned until Wednesday after the judge urged the parties to mediate in private.

Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., asked attorneys representing Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International union whether mediation could help the two resolve their issues and avoid the loss of more than 18,000 jobs.

The mediation will begin on Tuesday.

 

Guess the judge has a thing for twinkies.

 

The brand is still enormous, even if it is flatlining. Not all companies need to be growth companies to survive or even thrive.

This simply isn't true. They are losing approx $100MM per year now. They are estimated to try to save $75MM from labor costs. If they can eliminate just $25MM in debt interest costs, that would get them to breakeven - that's without any actual restructuring, improvement to management, streamlining, etc.

Whether they can pull it off or not, I have no idea. But the idea that they simply can't be profitable is just nonsense even with just a surface look at the financials. They have been a highly mismanaged company for a long time. Changing out the management could do wonders for them.

As for the brands, I agree there are problems. But unfixable? That's silly. They are the #2 breadmaker in the country. So whatever market they've lost, they still are enormous. If the #3 breadmaker can survive, there's no fundamental reason these guys can't. They just might need to make a lot of changes to get there.

 

So Hostess is asking labor to take 30+% pay cuts when the CEO tripled his own pay and executives all got gigantic bonuses. All while these executives have run that company into the ground.

They should strike. That's nonsense.

 

Disgraceful.

 

I've actually argued a few cases in front of Judge Drain. SUPER NICE guy. Extremely patient with the parties before him, be they debtors, creditors, large corporations, small businesses or individuals. He will hear you out in situations when most other judges in his district would have told you to go **** yourself.

 

The workers take a paycut just to kick the can down the road and go out of business x months from now instead?

 

If commodity costs keep rising, consumer prices will go up - that would happen with the competition too, so it wouldn't really affect their competitive position.

 

Sure. But Major found a way to break even with just a cursory analysis. I would imagine that the Chapter 11 plan includes more than $25M a year in debt service savings.

Then you overhaul the management and find other ways to cut costs (enhanced economies of scale, etc)...and you have a profitable entity.

 

all respekt........but sweet lou take crazy sides n stick with them no matta how dumb..........