Posted: November 18th, 2012 by Militant Libertarian
November 16th will, if the news media has anything to do with it, be a day that lives in infamy. By this time next year, we’ll be celebrating a national day of remembrance for the Hostess snacks that were never supposed to die. Meanwhile, though, yet another example of how most humans are completely incapable of even the simplest of research on their own behalf is once again thrown out in a collective forehead smack.
The memes in the news media and the Internet thrive on this latest bit of non-news as our current distraction from world events of actual importance. As fellow freedom fiend Judy Morris points out on her blog, Twinkie-gate is really going strong and everyone has something to say about it, but nobody seems interested in actually just telling the story as it is. The spinmeisters that make up our “journalists” today are, instead, turning the Twinkie Death Meme into their own personal “what’s wrong with America” talking points.
Right now, there are three takes on Twinkie-gate, depending on who you’re listening to. All three of these have been rampant on my Facebook timeline (which, so you know, is what prompted me to say something here).
From the socialists: The evil Hostess decided to close up shop and leave all those workers out to dry because they wouldn’t deal with the union! All after their CEO got a 300% pay raise, that gold digging bastard!
From the neo-conservatives: The evil Baker’s Union refused to talk to the ailing company and instead screwed over its members by staging a walkout and causing poor, bedeviled Hostess to have to close the doors on its American Icon self. Happy now, you commie union a-holes?!
From the natural health crowd: Hooray! The garbage truck in a wrapper Twinkie is now gone and fat Americans will have to find something else to stuff into their GMO-puffed faces. Sucks to be you, processed food suckers!
Funny thing is, none of these are really all that correct. In fact, the closest to being actually factual are the natural health types. Most of what Hostess produced was actually garbage food (that was entirely the point) and they did use a fair amount of genetically modified food in their plants (soy and corn mostly). And yes, those of us who occasionally enjoyed a bit of trash food from Hostess are how SOL. Thanks for reminding us, you underfed yoga vegan SOBs. I appreciate it. (Jokes aren’t fun if they don’t include cliche’s)
As for the left-right false paradigm side of things (aka “liberals vs. conservatives”), neither of them has more than half the story. Since I was able to get the entire scoop on Hostess in about ten minutes’ time, it completely baffles me that anyone with access to the Internet (we can assume these posters on Facebook have access to the Web) is unable to do even the simplest of research before spewing and forwarding the dumbest of litanies about the supposed reason for the company’s downfall.
Here’s how to find out what really happened to Hostess, complete with references and credible links. First, load up your favorite search engine. Next type in “Hostess Brand Company”. Click on the inevitable Wikipedia entry for the query. That will put you here. Now read it. It will take about ten minutes. BAM! Now you know all of the relevant details you need in order to understand what happened to Hostess.
Seem stupid to choose Wikipedia as a source? Well, we’re researching a mentally deficient meme here and unless you plan to write your Master’s thesis on this, The Free Encyclopedia is good enough. Like I said, they have references. Feel free to click on them. Most of the relevant info we need is contained in court filings and publicly-disclosed records from when the company was still traded on the market.
Here’s all you really have to know, though. It sums up in a few paragraphs and shows that Hostess died because of that great American passtime combination – corporate greed meets lost market share meets collective bargaining greed.
Hostess first declared bankruptcy in 2004, citing falling market share in a shrinking market and the huge losses of income that resulted, and came out of that mostly intact and then renamed itself and worked towards solvency in 2009 before finally realizing it wasn’t going to happen and filing for bankruptcy again in January of 2012. From just those three events plus the filing with the court that happened on November 16th when the company finally just gave up the ghost, we can glean everything we need to know about what happened at Twinkie-gate.
First, the company was on the rocks after its 2004 bankruptcy filing and was not recovering. Several things happened during the span of years from 2005-2009 when the company filed for a name change that involved a little bit of corporate restructuring. Some of that involved some very heavy loan payments being made (and often missed or shorted) for a $700 million loan given during that first bankruptcy. It suspended payments on union pensions as well. The complete change of management that many had asked for finally happened in late 2011 when the company put together a bankruptcy filing, which it filed with the court in early January of this year.
Wikipedia says: “In a statement in its filing, the company said it “is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules.” The company said it employs 19,000 people and carries more than $860 million in debt. The company said it would continue to operate with $75 million debtor-in-possession financing from Monarch Alternative Capital, Silver Point Capital and other investors.”
It took until March to oust the CEO many blamed for the problems at Hostess, Brian Driscoll. Part of his departure included a $1.5 million compensation package and outgoing executives had also all received hefty sums. The new restructuring chief was Gregory Rayburn, who took a salary of only $1 along with giving the same to top executives, effective until January of 2013. They then took stock of the company and began holding negotiations with the various unions (Teamsters and Baker’s unions being the biggest). Rayburn and colleagues knew they needed to change compensation plans with employees in order to salvage the company’s finances. Hostess at this point was living on borrowed money and very close to death, but the new CEO and board thought they had a way out of their $860M+ debt.
Workers had been warned that the company was on the verge of death and they were very near to losing their jobs. They had publicly told the employees that this new bankruptcy process was not going to be easy and plant closures were very probable. Rumors spread that some plants were going to be closed no matter what and (false) lists of which ones would see the axe were circulated.
Then, at the end of November, Hostess employees in the Baker’s union walked out. A few days later, with production halted, CEO Rayburn announced the permanent closure of Hostess.
That, folks, is the true story of Hostess’ death. It’s not “greedy executives” or “greedy unions” that killed the place. It’s both. Welcome to modern American capitalism where those on the inside do nothing but fulfill their personal greed and those in workaday jobs feel entitled to more of the company despite their having contributed little to it personally. Twinkies were murdered by short-sighted greed.