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Hostess to go under
- Thread starter ScottySkis
- Start date
ScottySkis
Well-known member
drjeff
Well-known member
Let's be honest, who could possibly stare at a package of twinkies on a shelf for more than a month without eating them??
Johnskiismore
New member
I remember when Hostess operated a factory in Natick, MA not far from where I grew up, the wonderful smells it produced. Ah, the memories....
riverc0il
New member
I fondly remember eating way too many Drake's Coffee Cakes as a teen. There was a thrift bakery around the corner from my home and they'd sell the boxes with four or five 2-packs for like a buck a box. Probably haven't bought a box of those in well over a dozen years. Sooooo good, with no redeeming health benefit at all.
I didn't realize how many brands are under Hostess until visiting their web site:
http://www.hostessbrands.com/brands/RegionalFavorites.aspx
Many of these brands will find buyers, no doubt.
Was the reason for the collapse purely the labor dispute? That would be ironic if the union fighting for their employees killed the goose that laid the golden egg by not being team players and getting on board.
I didn't realize how many brands are under Hostess until visiting their web site:
http://www.hostessbrands.com/brands/RegionalFavorites.aspx
Many of these brands will find buyers, no doubt.
Was the reason for the collapse purely the labor dispute? That would be ironic if the union fighting for their employees killed the goose that laid the golden egg by not being team players and getting on board.
Not to get too political here but Hostess is owned by a Venture Capital company like Romeny's Bain ... buy up a business, leverage the hell out of it and pay off the venture business and execs and then go into bankruptcy because of the debt and get many concessions from the employees. This is the second go around on bankruptcy and they were trying to get even more concessions from the employees. I think it's way too simple to blame this on the Union. It seems when VC gets involved sometimes they save the company sometimes they don't, but either way the VC company makes a crapload of money.
riverc0il
New member
Good point on the venture capitalist. I guess some might argue that this would have already happened if a capital company wasn't there to step in and work it. So the VC still makes money even when they buy a company and can't get it to stand up? That is screwed up. Seems like there should be more risk involved for them.
I think there is going to be a lot of knee jerk reaction of "you can't blame this on the union". But I think the thought still deserves consideration that if concessions were agreed to, thousands of people would still have jobs. Upon a further review of the news, it seems that the Teamsters were on board with concessions but the bakers union wasn't which is interesting to think about...
I guess the moral of the story is that if a venture capital company takes over a company you work for, start looking for another job, lol. Perhaps there needs to be a bigger conversation about venture capital companies. Do they need regulation (uh oh, maybe too political there, lol)? If they succeed and stand a company back up, they could be saving jobs and local economies. But if they are just doing the often called "vulture" thing, then that of course is only self serving.
I think there is going to be a lot of knee jerk reaction of "you can't blame this on the union". But I think the thought still deserves consideration that if concessions were agreed to, thousands of people would still have jobs. Upon a further review of the news, it seems that the Teamsters were on board with concessions but the bakers union wasn't which is interesting to think about...
I guess the moral of the story is that if a venture capital company takes over a company you work for, start looking for another job, lol. Perhaps there needs to be a bigger conversation about venture capital companies. Do they need regulation (uh oh, maybe too political there, lol)? If they succeed and stand a company back up, they could be saving jobs and local economies. But if they are just doing the often called "vulture" thing, then that of course is only self serving.
Geoff
Well-known member
Hostess had almost a billion dollars in unfunded pension liability. The company wanted to stiff the workers on their pensions as part of worker concessions. I imagine those factories are mostly 50 years old and have a very old employee base. If you're a 50-something union worker counting on that pension for your retirement, that is a royal screwing. From the union point of view, if the company goes bankrupt, the Federal government steps in and honors the pension obligation. We've seen this over and over in other sectors like the airlines. The private capital guys who actually own the company don't care. They made sure Hostess is debt-financed with all their assets as collateral. Their money is the senior debt so they get their money out first (including interest at junk bond rates) and everybody else gets screwed. This is what happened to the American Skiing Company with Oak Hill Partners. Oak Hill laughed all the way to the bank when ASC was liquidated.
So.... what this really was is playing games with bankruptcy law so the private capital guys get to ditch an enormous unfunded pension liability. Hostess will spring back to life as a brand. You'll be able to buy Twinkies. They'll be made with the same production equipment as last week. There's a good chance they'll be made in the same factories by the same workers. Our tax dollars will be propping up the pensions of the older employees and the "new-improved" retirement deal is likely to be a 401-K with no employer match just like everywhere else in the private sector.
riverc0il
New member
Good discussion points, Geoff! This seems less like a topic of current events but rather a perverse systems issue in which every side is playing for maximum take at the expense of the "other". Fascinating stuff on a morbid level.
Regarding pensions, that is interesting that the federal government honors pensions. How does that work? Full value or reduced? That would create a lack of accountability on the business to plan for long term benefits. What would a company care if they go under, it is done, nothing to loose and everything to gain by over extending.
Federal government might say that the worker shouldn't be penalized for that type of business decision making. Some might say you should look at the long term financial solvency of a business before taking a job in which a pension was a deciding factor. Where is the accountability ultimately? Seems like lots of people involved. It certainly would speak towards employee controlled retirement funding (e.g. 401k, IRA, Mutual Funds, Index Funds, etc.) rather than pensions that are subject to risky decision making.
I could definitely see a union of mostly older workers deciding it is better to loose a job than take lower retirement benefits if the government will honor the original deal. Is that really how it works? Tax payers hold up bad business decisions? That is crazy.
Regarding pensions, that is interesting that the federal government honors pensions. How does that work? Full value or reduced? That would create a lack of accountability on the business to plan for long term benefits. What would a company care if they go under, it is done, nothing to loose and everything to gain by over extending.
Federal government might say that the worker shouldn't be penalized for that type of business decision making. Some might say you should look at the long term financial solvency of a business before taking a job in which a pension was a deciding factor. Where is the accountability ultimately? Seems like lots of people involved. It certainly would speak towards employee controlled retirement funding (e.g. 401k, IRA, Mutual Funds, Index Funds, etc.) rather than pensions that are subject to risky decision making.
I could definitely see a union of mostly older workers deciding it is better to loose a job than take lower retirement benefits if the government will honor the original deal. Is that really how it works? Tax payers hold up bad business decisions? That is crazy.
ScottySkis
Well-known member
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They just showed on the news people raiding all those products in the store, I need to get off my as* and go shopping and sell this stuff on eBay I could buy a season pass.
They just showed on the news people raiding all those products in the store, I need to get off my as* and go shopping and sell this stuff on eBay I could buy a season pass.
riverc0il
New member
So Geoff was incorrect in stating that our tax dollars were funding it, but rather it is insurance paid by all pension plans that will pay out? That seems a sound way to secure them... until there is a bubble from too many coming due and failing at the same time. :-?
The money going into the fund is not enough to cover all the pension liabilities so we are paying for a lot of this with tax dollars.
You guys know way more about hostess than i ever hope to know..
I just hope someone keeps making the apple pies.
We were in a convenience store today and they had a sign up for the last twinkie in the store
I just hope someone keeps making the apple pies.
We were in a convenience store today and they had a sign up for the last twinkie in the store
Geoff
Well-known member
The Pension Benefit Guaranty Corporation was in the red $26 billion in 2011. It has run in the red 30 out of 37 years. Guess who made up the difference? Anybody? Anybody? Bueller?
riverc0il
New member
Seems like yet another bubble waiting to burst. Add that to college loans. Yay!
Quite right.
Geoff
Well-known member
The Pension Benefit Guaranty Corp is the FDIC-like government guarantee organization that swallows up underfunded pension plans when a corporation goes bankrupt. For the most part, these are pensions for union workers. The maximum benefit is $50-ish thousand and they can't collect until age 65. Right now, they're paying pensions for 600-odd thousand people but that number is going to jump significantly.
Like I said, I object to the financial slight of hand where private capital companies can use debt financing to jump into failing companies with huge unfunded pension funds, use debt financing at extremely high interest rates where it's senior debt secured by the assets of the corporation, and then take the company chapter 7 a few years later. They're getting 10%+ interest on their money and get it all back including accrued interest at liquidation. The taxpayer is stuck with the pension liability. In my opinion, the law needs to be rewritten to put pension liability ahead of these guys. It's not fair to the rest of us.
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