Hostess, maker of the Twinkie, pushed into liquidation by Private Equity firm and Unions

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    Nov 21, 2012 12:51 PM GMT
    q1w2e3 said
    riddler78 said
    Your explanation is disingenuous. The timeline I referred to was what you posted rather than your revised set of postings. You posted a union press release dated about a week ago when they would have already been fully aware of the changes in salary. You claim that the pay change was to mend a PR gaffe but it was even more likely this was in large part because of the creditors that pushed the article out in the first place.


    BTW, the executives did get the salary changes for a while until the new CEO (Rayburn) assumed his job. The raises were approved in 7/2011.

    http://www.snopes.com/politics/business/hostess.asp

    And if it weren't for the WSJ article and bad PR, I doubt the new CEO would have even bothered.



    Which is again, fine, but the union was disingenuous with respect to posting their press release that did not acknowledge these changes in April when they were already clear and known. You are being disingenuous now claiming that irrespective of the changes, the substance is still true when it's not and not acknowledging that the union lied in their most recent press release by not acknowledging these changes.

    Did the salary changes happen? Yes. That they occurred as a result of the creditors making a fuss about it is irrelevant - given that certainly the CEO was under no obligation to reduce his salary to $1. And this isn't just about Hostess or Apple for that matter - there are a number of CEOs who have large holdings who pay themselves a dollar - like Kinder Morgan as I recall when I held their shares a few years back.
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    Nov 21, 2012 12:55 PM GMT
    The union's statement is perfectly correct. It mentioned the initial salary changes as a matter of comparing the cuts the union workers have already agreed to before. That they did not mention the Rayburn $1 salaries when making their point with the press release is irrelevant to the point at hand, i.e. the bad faith of the executives when negotiating cuts with the unions.

    Here's the full context of the salary quotes in the union statement:

    sacbee article"Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars."

    Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

    BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

    Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO's with no true experience in the wholesale baking business have left this company unable to compete or survive.



    And how do you explain the bonuses proposed under the new CEO for the most recent bankruptcy?
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    Nov 21, 2012 2:03 PM GMT
    q1w2e3 saidThe union's statement is perfectly correct. It mentioned the initial salary changes as a matter of comparing the cuts the union workers have already agreed to before. That they did not mention the Rayburn $1 salaries when making their point with the press release is irrelevant to the point at hand, i.e. the bad faith of the executives when negotiating cuts with the unions.

    Here's the full context of the salary quotes in the union statement:

    sacbee article"Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars."

    Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.

    BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

    Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO's with no true experience in the wholesale baking business have left this company unable to compete or survive.



    And how do you explain the bonuses proposed under the new CEO for the most recent bankruptcy?


    Why did they not point out as well that these increases were radically reduced? Again, the press release is deceptive and disingenuous on its face - even if it is technically correct. Why point out what happened over half a year ago, if what you had an issue was, was addressed? You can say it's because of bad press, etc, but it was addressed.

    As for bonuses proposed now? The sad reality is that there is a supply and demand issue. The people with the best skills are in demand, while the relatively unskilled laborers in the union are not - and there are plenty of people who are can be trained to replace them fairly quickly. Are you better off to let the executives who you believe are crucial to an effective turnaround leave?

    I have no skin in the game and have no idea what the qualifications or importance of given executives are. But it's kind of like saying you can just replace a nurse with a surgeon and expect everything to be ok. Maybe in some cases you can, but in many cases you can't.

    Ultimately the real issues of uncompetitive operations have yet to be addressed. I note that even in the press release by the unions they make the point that they see this as a wholesale bakery rather than brand management - and to a certain extent that's true, but they're really separate businesses. An example is Coca Cola which previously found that it was cheaper not to own their own bottling facilities (they have since been buying them up because their cost of capital has fallen).

    I am however a believer that if you hire the right team, you can get a lot more done. To make a judgement call as to whether or not an executive is worth it based solely on a number on a press release however seems ridiculous at best.
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    Nov 21, 2012 2:29 PM GMT
    q1w2e3 said
    Chainers said
    Also, you guys need to learn the difference between "I dont like this" and "I am glad this is happening." No one buys a twinkie for the health, but this is a free country and they have the right to buy it. To celebrate the death of a national company because you dont like the product personally is selfish and wrong. Get off your high horse, this company employed thousands who are now out of work. Think of their families! Think of the children!!!

    Thats all Im saying.


    Replace "twinkie" with "cigarette."


    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!
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    Nov 21, 2012 2:34 PM GMT
    maxferguson said
    ConfederateGhost saidJust claim you aren't gunna do it after you already have.

    Lie, cheat, steal, and keep 'em poor...that's the Republican way, right Riddler?


    Well, atleast Hostess EVPs and SVPs won't be able to ride off into the millionaire sunset on the backs of their hard workers anymore. Serves 'em right. And let every other greedily ran company face the same fate.

    I'll say it, bring on the fall. 'Cus I'd rather we all be in chaos then those filthy fucking pigs who try and screw people over every chance they get continue to successfully use, abuse, and take advantage of the working class.

    Here's a big fuck you to every single one of you who think it's acceptable what big box companies do to their workers. Or should I say neo-indentured servants.



    You know who is riding off the backs of those hard working bakers too? Union Bosses. They perpetuate taking advantage of the working class - the duration of unemployment is over 40 weeks now. So a baker earning $30K (after tax) is going to have to find a job that earns $600 more per week (extra $125/day) (50 week work year) and work for about 1 year just to catch up. They were earning roughly $125/day to begin with..... And the unemployed labor pool is so large that striking to the point of liquidation just opens the door for even cheaper labor to walk in once the assets are reorganized...



    Who are these union "bosses" of whom you speak? What huge salaries are they drawing?

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    Nov 21, 2012 2:48 PM GMT
    Upper_Cdn said
    maxferguson said
    ConfederateGhost saidJust claim you aren't gunna do it after you already have.

    Lie, cheat, steal, and keep 'em poor...that's the Republican way, right Riddler?


    Well, atleast Hostess EVPs and SVPs won't be able to ride off into the millionaire sunset on the backs of their hard workers anymore. Serves 'em right. And let every other greedily ran company face the same fate.

    I'll say it, bring on the fall. 'Cus I'd rather we all be in chaos then those filthy fucking pigs who try and screw people over every chance they get continue to successfully use, abuse, and take advantage of the working class.

    Here's a big fuck you to every single one of you who think it's acceptable what big box companies do to their workers. Or should I say neo-indentured servants.



    You know who is riding off the backs of those hard working bakers too? Union Bosses. They perpetuate taking advantage of the working class - the duration of unemployment is over 40 weeks now. So a baker earning $30K (after tax) is going to have to find a job that earns $600 more per week (extra $125/day) (50 week work year) and work for about 1 year just to catch up. They were earning roughly $125/day to begin with..... And the unemployed labor pool is so large that striking to the point of liquidation just opens the door for even cheaper labor to walk in once the assets are reorganized...



    Who are these union "bosses" of whom you speak? What huge salaries are they drawing?



    I think we should all pretend that this quoted post is just a huge troll post.

    I mean, come the fuck on, you dont know that unions are organizations that force all employees of these companies to join, pay a monthly due, and then they hire people who dont work for the individual companies (as in the hostess bakers werent represented at the negotiations, but the bakers from ALL the companies were) and then make decisions based on what is best for the union and not the individual members?

    Shock!

    I think everyone needs to be a part of a union so they can realize how bad they are.
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    Nov 21, 2012 8:19 PM GMT
    Looks like the company is going to be broken up and the old employees will be left without jobs. The buyers will hire new without having to pay the legacy costs as expected.

    http://www.pehub.com/174105/reuters-hostess-talking-dozens-interested-parties/

    Scherer did not identify the party by name, but said interested entities included regional bakery companies, national competitors, retail customers, private equity firms and consumer products companies.

    Earlier this year, Hostess received six bids for the whole company, Scherer said, but “none of them was actionable.”

    Beginning in the summer, a sale process was begun, he said, to see whether individual brands could be sold to raise funds to help exit Chapter 11 bankruptcy protection.

    But in the last couple of days, since Hostess said it planned to liquidate, it has received over two dozen inbound calls, Scherer said, adding that more than 50 parties have signed non-disclosure agreements.

    As for the value of Hostess, Scherer said Hostess could be worth $2.3 billion to $2.4 billion in a normal bankruptcy, an amount equal to its annual revenue. But he said he would expect a discount in this case since plants have already been closed.
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    Nov 21, 2012 8:24 PM GMT
    Chainers said
    q1w2e3 said
    Chainers said
    Also, you guys need to learn the difference between "I dont like this" and "I am glad this is happening." No one buys a twinkie for the health, but this is a free country and they have the right to buy it. To celebrate the death of a national company because you dont like the product personally is selfish and wrong. Get off your high horse, this company employed thousands who are now out of work. Think of their families! Think of the children!!!

    Thats all Im saying.


    Replace "twinkie" with "cigarette."


    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!


    Yeah, maturity enough to call people names. Sigh, it's so hard to have discussions which do not involve name-calling and aspersions on other people's integrity or goodwill. icon_confused.gif

    And if I hear the word "disingenuous" one more time I'm going to go nuts.
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    Nov 21, 2012 8:39 PM GMT
    q1w2e3 said
    Chainers said
    q1w2e3 said
    Chainers said
    Also, you guys need to learn the difference between "I dont like this" and "I am glad this is happening." No one buys a twinkie for the health, but this is a free country and they have the right to buy it. To celebrate the death of a national company because you dont like the product personally is selfish and wrong. Get off your high horse, this company employed thousands who are now out of work. Think of their families! Think of the children!!!

    Thats all Im saying.


    Replace "twinkie" with "cigarette."


    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!


    Yeah, maturity enough to call people names. Sigh, it's so hard to have discussions which do not involve name-calling and aspersions on other people's integrity or goodwill. icon_confused.gif

    And if I hear the word "disingenuous" one more time I'm going to go nuts.


    Perhaps then you shouldn't post news releases that don't reflect current realities but are designed to put what they see as their opponents in the worst possible light because that's... disingenuous.
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    Nov 21, 2012 8:42 PM GMT
    riddler78 said
    q1w2e3 said
    Chainers said
    q1w2e3 said
    Chainers said
    Also, you guys need to learn the difference between "I dont like this" and "I am glad this is happening." No one buys a twinkie for the health, but this is a free country and they have the right to buy it. To celebrate the death of a national company because you dont like the product personally is selfish and wrong. Get off your high horse, this company employed thousands who are now out of work. Think of their families! Think of the children!!!

    Thats all Im saying.


    Replace "twinkie" with "cigarette."


    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!


    Yeah, maturity enough to call people names. Sigh, it's so hard to have discussions which do not involve name-calling and aspersions on other people's integrity or goodwill. icon_confused.gif

    And if I hear the word "disingenuous" one more time I'm going to go nuts.


    Perhaps then you shouldn't post news releases that don't reflect current realities but are designed to put what they see as their opponents in the worst possible light because that's... disingenuous.


    Black kettle...whoops, I just cast an aspersion. Sorry.icon_lol.gif
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    Nov 21, 2012 8:44 PM GMT
    q1w2e3 said
    riddler78 said
    q1w2e3 said
    Chainers said
    q1w2e3 said
    Chainers said
    Also, you guys need to learn the difference between "I dont like this" and "I am glad this is happening." No one buys a twinkie for the health, but this is a free country and they have the right to buy it. To celebrate the death of a national company because you dont like the product personally is selfish and wrong. Get off your high horse, this company employed thousands who are now out of work. Think of their families! Think of the children!!!

    Thats all Im saying.


    Replace "twinkie" with "cigarette."


    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!


    Yeah, maturity enough to call people names. Sigh, it's so hard to have discussions which do not involve name-calling and aspersions on other people's integrity or goodwill. icon_confused.gif

    And if I hear the word "disingenuous" one more time I'm going to go nuts.


    Perhaps then you shouldn't post news releases that don't reflect current realities but are designed to put what they see as their opponents in the worst possible light because that's... disingenuous.


    Black kettle...whoops, I just cast an aspersion. Sorry.icon_lol.gif


    And how would this apply I'm curious - as I have not posted any management press releases. I've only posted the irony that the PE firm in this case is well connected among Democrats despite their aspersions cast on Mitt Romney and Bain.
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    Nov 21, 2012 8:47 PM GMT
    Chainers said

    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!


    Are you kidding me?!?! q1w2e3 is *just about the only person on this entire forum* that bothers to think carefully, use logic and present evidence. It's ridiculous that you hurl abuse at him!

    I don't think the fact that people are free to make their own choices is even in dispute.
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    Nov 21, 2012 8:53 PM GMT
    TigerTim said
    Chainers said

    Thanks, I have already. See, unlike you I am mature enough to realize that people have the right to make their own choices, and those choices are not always the best.

    Now replace your screenname with "Fuckingtard" so people know not to deal with you. K, thnx, bai!


    Are you kidding me?!?! q1w2e3 is *just about the only person on this entire forum* that bothers to think carefully, use logic and present evidence. It's ridiculous that you hurl abuse at him!

    I don't think the fact that people are free to make their own choices is even in dispute.


    And yet he deliberately posted a press release that attacked management for policies they had already changed months ago. icon_rolleyes.gif
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    Nov 27, 2012 1:12 PM GMT
    http://www.bakingbusiness.com/News/News%20Home/Opinions/2012/11/In%20final%20terrible%20Hostess%20chapter%20Hurt%20stands%20out.aspx?cck=1

    Fully recognizing a wide array of forces contributed to these events, one individual deserves special singling out for propelling Hostess to this disaster. The behavior of Frank Hurt, president of the Bakery, Confectionery, Tobacco and Grain Millers International Union, in the period leading to this dissolution could only be characterized as careless and heartless. Unwilling to negotiate, Mr. Hurt spearheaded a strike knowing the only possible result would be the liquidation of the company.

    Rather than address this inevitability or even its possibility, Mr. Hurt was consumed in the final days before operations were halted with finding as many ways as possible to lay blame for the company’s demise on a series of what he characterizes as inexperienced and incompetent c.e.o.s and greedy Wall Street vultures. While the Wall Street accusations ring hollow (vast amounts have been and will be lost by investors), he surely is correct that management missteps were central in bringing this company low, to the point Hostess made a best and final offer requiring painful cuts of everyone working there.

    Still, the inability of the company’s chief executives to lift Hostess upward over the last several years does not mean others are free from culpability during this period. And Frank Hurt was in a position of influence, ineffectively exerted, through the entire period of the company’s decline – what could be called the Sullivan/Elsesser/Alvarez/Jung/Driscoll/Rayburn era.

    Frank Hurt, who has been president of the B.C.T.G.M. since the early 1990s, is not free from responsibility when it comes to the failure of Hostess to retool during the last 20 years. But it is in the last several months in which Mr. Hurt’s behavior has become most egregious. It’s difficult to imagine a more serious issue to bring to his membership than the company’s final offer, but the manner in which the B.C.T.G.M. vote was conducted drew stern criticism from the International Brotherhood of Teamsters and prompted the bankruptcy judge to disqualify the results.

    Defending its decision to strike in the final hours before the liquidation filing, Mr. Hurt claimed solidarity from unions all over the world. But the claim was laughable in view of the response from the bakers’ “brothers” at Hostess – the Teamsters, who say they were not consulted before the bakery workers went on strike and pleaded with the bakery workers to end their walk out.

    The Teamsters, in their announcements in recent days, have tried bravely to maintain solidarity with the B.C.T.G.M., but Mr. Hurt simply made that impossible. Establishing Mr. Hurt’s motives throughout this process has been difficult, but Hostess c.e.o. Greg Rayburn finally put into words what has become an inescapable if horrendous conclusion – “I believe the leadership of the (B.C.T.G.M.) is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions.” Mission accomplished.

    It is possible, perhaps likely, the Hostess reorganization plan would have failed even if approved. But the plan was the last remaining opportunity for Hostess Brands to remain intact, giving the best hope for a large number of Hostess workers to retain their jobs. One individual – Frank Hurt -- snuffed out that hope.