Robot 6

Hostess, a little piece of comics history, is going out of business

Hostess Brands, the long-struggling wholesale baker whose offbeat ads for Twinkies, CupCakes and Fruit Pies were a staple of American comics from 1975 to 1982, will close for good next week in the wake of a crippling nationwide strike.

The Irving, Texas-based company, which filed for bankruptcy protection in January, announced this morning it will sell off all of its assets because not enough striking workers met its Thursday deadline to return to work. Plant operations already have been suspended, but Hostess retail stores will remain open for several more days to sell already-baked products.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” CEO Gregory F. Rayburn said in a statement. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after the company imposed a contract that would cut wages by 8 percent and benefits by 27 to 32 percent, leading Hostess to permanently close three plants on Nov. 12. Executives warned that if a sufficient number of employees didn’t return to work by Thursday at 5 p.m. ET, it would seek permission from the U.S. Bankruptcy Court to liquidate the company. ABC News reports that if the motion is approved, the shutdown could begin as early as Tuesday.

Hostess, formerly Interstate Bakeries Corporation, emerged three years ago from a 2004 bankruptcy only to rack up more than $860 million in debt, which the company blamed on high labor costs and rising prices of sugar, flour and other ingredients.

Although the company’s brands include Drake’s, Dolly Madison and Wonder Bread, it’s perhaps best known — certainly to comic readers of a certain age — for its Hostess line. The snack cakes became a hallmark of American comics during a seven-year advertising campaign that featured such characters as Aquaman, Archie, Batman, Bugs Bunny, Iron Man and Spider-Man in one-page adventures in which Hostess products played a key role. Tomorrow’s Heroes has an archive of 204 Hostess ads,

News From Our Partners

Comments

24 Comments

how do you lose money selling cake to America these days?

Hostess demanded worker salary cuts for the third time in a decade, while giving up to 80% bonuses to upper management.
With two hedge funds controlling the bankruptcy proceedings, it’s a triumph for Romney/Bain-style vulture capitalism as the hedge funds and execs will get big payouts and the workers will get zip!

But someone will buy the brand name and formulas, and Twinkies will return to store shelves…

@Ronnie.
No, the union decided it was better for 1,850 employees to lose their jobs rather than take an 8% pay cut, which was going to happen because the company couldn’t stay in business otherwise.

Sorry. Make that 18,500 jobs.

Oh god no, where’s the cream filling?!

Mike, are the 80% bonuses inaccurate?

If not, then your “no” seems to go too far.

I am among those who very fondly remember watching Jack Frost, Spider-Man and the Human Torch, among others, using hostess treats to make up for heir superheroic inadequacies. Fun stuff.

Were any DC superheroes in such ads?

close down, reorganize, then start up again in a right-to-work state.

@West, yes DC Comics featured Hostess ads with their characters. You can go to http://www.tomheroes.com to see these ads featuring characters from different publishers.

It’s too bad about Hostess closing though. The workers were offered an 8% pay cut in the first year but pay increases of 3%, 1%, 1% and 1% in the following years. As well, two union members would have been part of the 8-person board of directors, allowing workers to have a say in the company’s future. I liked this last part as the old style management/worker clashes don’t seem to have get anywhere. In this economy, you need both sides to work together or you’ll have a failed company.

It appears that four executives took 75-80% pay raises prior to Hostess entering bankruptcy, but they were all forced to reduce their salaries to $1 by the person in charge of the restructuring.

Source http://online.wsj.com/article/SB10001424052702303772904577333602976713584.html

Note that even that kind of raise, for only four people, wouldn’t go very far when split among 18,000 workers. Sounds to me like the union was offered a decent deal given the circumstances.

The Teamsters, in addition to several other unions, were willing to work with Hostess and voted against a strike. Everyone needed to be on board for this to work. The paycut applied to EVERYONE, not just union members.

They were going to cut wages and benefits. That’s not right.

There is a massive amount of crazy popping up in these responses. If you are asking for a thirty percent benefit cut, you are actually asking your employee to take a forty percent total pay cut.

Maybe you all want a country where people have no benefits and work for five bucks an hour. I’m not in any hurry to get there.

Sounds to me like poor management is trying to use the strike as an excuse to close things down and point the finger at someone other than themselves. Even if the union had taken the deal, from what I’ve read, the shut down was probably inevitable. It was only a matter of time.

Schnitzey Pretzelpants

November 16, 2012 at 10:11 am

“But Hostess retail stores will remain open for several more days to sell already-baked products.”

Several more days?

Hell, those things are so full of preservatives that they could keep them in business for years.

If we were stuck in a post-apocalyptic world like McCarthy’s The Road, those fruit pies would still be ‘fresh’ and we’d all die of adult-diabetes before we ever died of starvation.

NO more twinkies!?

I hate this century!

Anyone critising the union for refusing to allow an 8% paycut and a 30+% cut to benefits just don’t get it. A pay cut is bad enough, but it happens here in the UK too in these times, and you can accept it as it can/should be temporary, but even if it’s not you cannot ever EVER accept pensions, health plans or any other benefit being ripped away as they will never be returned.

I know there are serious issues at hand here, like whether it was better to work for slave wages/no benefits vs. not having a job at all, but I can’t help but think at the forefront of my mind the same thing Joe said:

No more Twinkies?! Or CupCakes?? Or Yodels?!?

I hate this century already.

I would’ve twisted the arms of both sides if I had the chance. Give me the heads of the union and the company, a nice, cozy interrogation room, a chalkboard, a backscratcher, a pair of Aviators, and a boombox with Paula Cole’s “Where Have All The Cowboys Gone?” on CD, and I would’ve brokered a deal in no time.

At the end of 2011, Hostess had $40.3 million in cash and $1.43 billion in liabilities, including $303 million in debt that came due this year. The pension plan was underfunded by $2 billion. The business was already suffering from society’s shift to healthier foods.

The unions and Hostess worked out a deal where the unions would then own 25% of the company among other terms in exchange for restructuring their contracts. The bankruptcy judge told the unions this was the only option, otherwise the company would shut its doors. Even though that was the only option to keep their jobs, and the Teamsters union agreed, the other union decided to strike anyway, resulting in the loss of everyone’s jobs and the company and Twinkies. It was a lose-lose-lose for everyone. I don’t understand why they would have done that. Are they better off having no job and no company?

It reminds me of that scene in “Do The Right Thing” where Spike Lee burns down the pizza place he works at, and then demands to be paid.

https://www.youtube.com/watch?v=4G7TTDEHl5o

They gave up too soon. With marijuana getting legalized here and there they could have made tons of money off of totally legal munchies…

Get em on EBAY! Truly a tragedy!

Simialr to the Gas situation here in NY, I think Mayor Bloomberg should come up with Twinkie odd/even purchase days (or something like that!). Panic starts again!

Leave a Comment

 



Browse the Robot 6 Archives