Ding Dong's,.. Ho Ho's,..Twinkies ----> Gone ? ? ?
Digesting the lessons of Twinkies
And also brands, the gods of the marketplace. Earthquakes may strike, dynasties may fall and locusts may devour the crops, but Oldsmobile and Pan Am are forever. Never mind.But about the death of Twinkies : Write obituaries in the subjunctive mood. Like Lazarus, but for a reason more mundane than miraculous, this confection may be resurrected.
In any case, the crisis of Hostess Brands Inc., the maker of Twinkies, involves two potent lessons.
First, market forces will have their way. Second, never underestimate baby-boomer nostalgia, which is acute narcissism. The Twinkies melodrama has the boomers thinking — as usual, about themselves: If an 82-year-old brand can die, so can we. Is that even legal ? The late Daniel Boorstin, historian and librarian of Congress, said Americans belong to “consumption communities.” Are you a Ford or Chevy person? Sears Roebuck or Montgomery Ward? Camels or Chesterfields? Wooed by advertising, people plight their troths to brands in marriages that often are more durable than boomers’ actual marriages.
Hostess, which had 18,500 employees making and distributing more than 30 brands made in 36 plants, had been in and out of bankruptcy several times since 2004. Its terminal crisis began Nov. 9, when thousands of members of the bakers union went out on strike to protest wage, health-care and pension cuts imposed by a court. The bakers objected to a 17 percent increase in their contribution for their health-care benefits.
Amazingly, Washington did not offer Hostess a bailout. This discriminatory policy may be a constitutional violation — denial of equal protection of the laws.Since the onset of the financial crisis, the government has decided that some SIFIs are TBTF — some systemically important financial institutions are too big to fail. Why, any fair-minded person will ask, was Hostess not TBTF ? Granted, it was not big in the technical, crabbed, hairsplitting, narrow-minded way that “big” is normally understood, as a boring matter of mere size. It was, however, big in what matters most — in boomers’ minds. They fondly remember opening their Roy Rogers or Hopalong Cassidy or Davy Crockett lunchboxes at school and finding Twinkies nestled next to peanut butter and jelly sandwiches made of Wonder Bread (another endangered Hostess species). Stendhal said that the only way ice cream could be better is if it were a sin. Boomers, a generation of food scolds, became adults who considered Twinkies and other sugary things sinful. They should be shedding scalding tears of remorse.
Anyway, why GM and not Hostess ?
The Troubled Assets Relief Program, a.k.a. TARP, was passed to rescue financial institutions. But Washington reasoned: “What’s legality among cronies?” So soon TARP was succoring GM, which was not a financial institution. It was not even a car company. It was a health-care provider unsuccessfully trying to sell cars fast enough to generate enough revenue to pay health benefits for its employees and approximately twice as many retirees.Hostess had in its far-flung operations 372 collective bargaining agreements with various unions that had sought and received — shed no tears for complicit management — some interesting benefits. The Teamsters liked the rule that bread and pastries might be going to the same place but must go in different trucks.
The bakers rejected management’s final offer by a voice vote. The Teamsters, who favored a compromise, wanted there to be a secret ballot. This is insouciant insolence by the Teamsters, who are situational ethicists. In Washington, operating from impressive headquarters on prime real estate at the foot of Capitol Hill, the union’s leadership has lobbied Congress for the Employee Free Choice Act. That is the Orwellian title of legislation that would effectively abolish employees’ right to secret ballots in unionization elections, replacing them with “card check,” whereby individuals confronted by union organizers sign a card indicating support for the union.The market said that Hostess as configured made no sense. If, however, Twinkies and perhaps other Hostess brands retain value, the market will say so, and someone will produce them. Probably in a right-to-work state, which is how “entrepreneurial federalism” (another Boorstin phrase) should work: Business moves to states that make it welcome.Whatever else a hospital ought to do, supposedly said Florence Nightingale, it ought not to spread disease.
And whatever else unions should do, they should not put employers out of business.
The baked-goods company Hostess Brands Inc. is unlikely to survive the next stage of the bankruptcy process, but the future is still looking plenty bright for many of its iconic brands, such as Twinkies.A sign taped on the door of a Hostess plant is seen in St. Louis Friday. If Hostess Brands Inc. wins U.S. Bankruptcy Court approval to liquidate its assets, it is likely to encounter substantial demand for its portfolio of iconic baked goods such as Twinkies and Wonder Bread.
Hostess announced Friday it will be seeking U.S. Bankruptcy Court permission to liquidate its assets, which include its many popular brands, such as Ding Dongs, Ho Ho’s, and Wonder Bread, as well as Twinkies. Even as the company itself shuts down, however, these brands are likely to survive."Can you imagine what Twinkies will go for ? Jiminy ! " a person who wished to remain unidentified because his firm planned to bid to be the liquidator told Reuters. "And Wonder Bread? These are 100-year-old brands. They have to be worth a lot."
In a bankruptcy filing this year, Hostess assessed the value of its intellectual property and trademarks at about $135 million, Reuters reported. With the recent uproar over Twinkies possibly disappearing from the marketplace, it is appears likely Hostess will be able to find a suitable buyer for it."The brands are valuable and will certainly be sold," David Pauker, an executive managing director and restructuring specialist with New York-based Goldin Associates LLC, told Reuters.
Pauker, who has considerable experience in the food industry, added: "They will most likely be purchased by a competitor that will bolt the additional sales to a better and more efficient delivery system. The company itself won't survive."Hostess executives blame the impending liquidation on a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that they say would drain the company of resources.While Hostess and the International Brotherhood of Teamsters were able to come to an agreement, the company and the bakers’ union were unable to do so. More than 18,500 Hostess employees are likely to lose their jobs as a result of the liquidation.
Pauker told Reuters some of Hostess’ bakeries will likely remain open after being sold to a buyer (or buyers), but most will probably be closed for good. He noted prospective buyers are likely have plenty of bakeries themselves.