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Posted by on Nov 16, 2012 in Business, Economy, Featured | 25 comments

Good Bye (For Now) Twinkies: Hostess Is Going Out of Business

Good bye (for now) Twinkies, that delicious and tempting, nearly addictive packaged cream-filled cake snack of generations that makes you say “good bye” to your diet as you eat one after another. Its parent company Hostess is going out of business. And if Twinkies are sweet, the debate over why the party’s over for Hostess is bitter, indeed:

Hostess, the makers of Twinkies, Ding Dongs and Wonder Bread, is going out of business after striking workers failed to heed a Thursday deadline to return to work, the company said.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “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.”

Hostess Brands Inc. had earlier warned employees that it would file to unwind its business and sell off assets if plant operations didn’t return to normal levels by 5 p.m. Thursday. In announcing its decision, Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products.

The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers’ pensions last year.

NBC’s Savannah Guthrie read a statement on “Today” from the bakers’ union that said: “Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and the union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers.”

By most accounts, some other company could well buy the rights to make Twinkies. The Washington Post’s Alexandra Petri pleads for them to live on as long in the marketplace as they can on a shelf:

Twinkies were supposed to outlast us.

Worlds and civilizations and all the greatest works of mankind would pass away, and all that remained of this planet would be a lonely cockroach, chewing meditatively on a Twinkie.

The Twinkie was supposed to outlast the cockroach, too.

So now that Hostess, in the face of strikes, has announced that it is liquidating and will start selling its assets, including its inimitable Twinkie, I have to reevaluate all my fundamental assumptions about life. If Twinkie can fall like this, to strikes, then is it truly possible to create a work that will stand the test of time? Maybe I should chuck it all and go live on a sailboat.

I feel, surveying the wreck of Twinkies, the way Ozymandias would probably feel gazing on the vast and level sands stretching far away. So much for human effort. So much for humanity’s one lasting monument! You might smash the David with a giant sledgehammer. You could paint over the Mona Lisa. But I defy you to do anything to a Twinkie that will get rid of it. No, the only way to get rid of a Twinkie was to eat it. And consequently the Twinkie was guaranteed to linger.

I thought it would be nutrition standards that did the Twinkie in. I thought it would be — sheer carelessness on the part of the human race, ending ourselves by accident by hitting the wrong button. I thought we’d be hit by an asteroid. I never thought the Twinkie would be the first to go. No parent should have to bury its Twinkie.

In general, I defy you to rid yourself of a Twinkie. They linger like meddlesome, high corn-starch ghosts. They outlive parrots. And parrots outlive everyone. I had a Twinkie sit ominously on the edge of my desk croaking “Nevermore” all through college. I nuked a fridge containing Twinkies and Indiana Jones, and only the Twinkies survived. My point is, these things are indestructible.

Meanwhile, there is speculation (or hope?) that the Mexican bakery “Bimbo” — which believe it or not is not named after any candidate who ran for office in the last U.S. election — will keep the treat alive. Forbes:

Hostess sweet treats have tempted the sugar-starved among us for more than eight decades. Now, the company, pumped full of debt by private equity buyouts, is going out of business. That moves the focus on Hostess’ brands—Twinkies, Devil Dogs, Wonder Bread, Ho Ho’s, to name a few—from the store shelf to the auction block.

It seems quite plausible that the next Twinkie maker could be a Mexican company run by a billionaire family.

Meet Daniel Servitje Montull. He and his family are worth more than $4 billion by our tally. Servitje runs Grupo Bimbo, a publicly traded bakery concern that ranks as the world’s largest bread maker. (Seated close to Servitje is his uncle, Don Roberto, and his father, Lorenzo. Papa Servitje founded Bimbo with three others in 1954.) Daniel Servitje assumed control of Bimbo in 1997, setting the company on a course of rapid growth. This included a battle with Mexico‘s tortilla don; positioning white bread in Latin American markets; and careful management of Bimbo’s fleet of white delivery vans.

A period of substantial expansion—profits doubled and revenue more than tripled—that also included several flirtations with buying Hostess

Acquisitions are at the very center of Bimbo. Indeed, Bimbo has gobbled up companies, and this was initially confined to South America, and Servitje, a thin man with deeply set eyes, worked to extend Bimbo’s reach from Mexico to the tip of South America, in Patagonia. Thereafter, his attention turned north. He bought Fort, Worth-based Mrs. Baird’s Bakeries of Fort Worth, Texas for $200 million shortly before 2000, then Heiner’s and Earth Grains. And just last year, Bimbo bought the U.S. bakery business of the Sara Lee Co. for $709 million, as well as the Spanish and Portugal portions in a separate transaction.
Today, Bimbo is a $10 billion sales business with $200 million in cash on its balance sheet. (By contrast, Bimbo posted $3 billion in sales a decade ago; annual profits have more than doubled to roughly $400 million.) It competes with U.S. companies like Kellogg, Hershey and General Mills, and with privately held operations such as McKee Foods, the maker of Little Debbie’s snacks. Supermarkets stock Bimbo staples like Entenmann’s and Thomas’ English muffins. And, significantly, the Sara Lee acquisition suggests that Bimbo’s appetite for U.S. bakeries is hardly satiated.

So, perhaps Twinkies will take their place in Bimbo’s white vans.

Hostess cupcakes may vanish. Hostess Devil Dogs may be put to sleep forever.

But Twinkies — like the package you might not know you have had in the bottom of a box in your attic for 20 years – could still live on.

MUST READ: A collection of the funniest eulogies to Twinkies.

And here’s how to make Twinkies at home..

Click here for reuse options!
Copyright 2012 The Moderate Voice
  • PATRICK EDABURN, Assistant Editor

    No more Zingers either………….

  • casualobserver

    The good news is there is so much preservative in Twinkies, you could go out and buy a carton today and still have soft twinkies 10 years from now.

  • zusa1

    The good new is we have one less greedy corporation to deal with.

  • zusai,

    Greedy corporation? Not sure I agree. They’re in bankruptcy (for the second time) and more than 18,000 people are losing their jobs. It’s possible that some of the takeover artists were greedy and sold valuable corporate assets leaving Hostess struggling to make ends meet, but I don’t know the particulars. This looks less like corporate greed and more like inability to negotiate between management and labor, the fault for which is rarely one sided.

    I feel sorry for the people losing jobs and the kids who won’t have Ding Dongs to assist in maintaining those cherished American traditions of childhood obesity and expensive dental work.

  • PATRICK EDABURN, Assistant Editor

    Maybe the Mayans were right after all………..

  • ordinarysparrow

    As the dust settles there are no winners…18,500 job loss…the top four corporate heads did agree to take one dollar as salary until the company could emerge out of bankruptcy…

    Not for sure it is wise to continue to sat up division between corporation/business and employees/unions….

    Why play into the big falsehood that the problem is greedy businesses such as this and low wage moochers that strike for a living wage?

    Bush siphoning the wars and big money contracts into the military complex and the oil buddies, along with the Wall Street Gang that got by with the biggest heist/flush in American history seems to have been completely ignored as to how all of this got dumped on the American people.

    Why are we not asking the Bushes, the military complex, the oil barons, and Wall Street how they are going to take care of the mess that they brought upon the American people?…

    I did not support or even like Romney but am not against business/corporation. Hope we can separate Romney as the face from those that have the ability to provide jobs.

  • sheknows

    Patrick, I have tried to leave a comment on your article about unemployment but there is no place to leave one. Contacted tech support, but haven’t heard back in several hours. Anyone else having a problem?

  • slamfu

    ” Now, the company, pumped full of debt by private equity buyouts, is going out of business.”

    This is the part I want more information about. How much of the Hostess revenue was tied up in paying off loans taken out by equity firms to pay off themselves as soon as they assumed control of the company? Before selling it off to the next guys to rinse repeat the process? Private Equity firms are a hell of a scam if you’ve got the right connections.

  • Patrick in Michigan

    Oh Noes! What will we fat people do?! 😉

  • zusa1

    “how all of this got dumped on the American people”

    Does Clinton bear any of the responsibility? Didn’t Bush inherit China’s entrance into the WTO, Clinton signing Gramm, Leach Bliley, not to mention Clinton’s failure to take out OBL when he had a chance?

  • sheknows

    Maybe instead of Devil Dogs, we will have Burrinkies 🙂 However you look at it, the huge market for these pasty, high calorie, sugar bombs will always be there.
    REALLY sad about all those people losing their jobs, and pensions.

  • sheknows

    Hey guys, has anyone else tried to leave a comment on Edaburns Unemp. article?

  • “Maybe the Mayans were right after all………..”

    Can we have a Comment of the Week award nomination process? This one is mine …

  • zusa1

    Gets my vote too.

  • casualobserver

    automatically assuming Gordon Gekko and Dennis Koslowski are in charge of every US Corporation?

    While my knowledge of Interstate/Continental is not immense, it is enough.. there were never any successful hostile takeovers scenarios, no harvesting of assets by corporate raiders and the debt accumulated was incepted as the only way out of a prior bankruptcy court. You may not realize this, but no one lends to a bankrupt company at LIBOR plus one. So, yes, commercial debt is obviously some drag on earnings and cashflow.

    Nonetheless, .. in the alternate universe that I live in, the drag of unfunded pension benefits, now without expectation of getting reduced, is causing the third filing for bankruptcy.

    ***from Editor: CO, stick to the topic, not other commenters mindsets nor TMV. Thanks. Read the commenters rules if need be.
    archangel/ dr.e

  • casualobserver

    By the way, Patrick, you are aware the end of the Mayan calendar was considered by them to be no more fatal than what we consider December 31st to be.

    • DR. CLARISSA PINKOLA ESTÉS, Managing Editor of TMV, and Columnist

      CO is correct. When speaking to Rigoberta Menchu Tum [Mayan Indian and Peace Prize awardee] about it last year, she said that the North Americanos didnt bother to ask those who use the calendar ritually. It means the close of a time period of years, like we might say a centennial or far long brace of decades, or years. It means a new door opening. It does not mean the end of the world. That’s a pop fantasy that circulates apparentely

  • ShannonLeee

    Well, this is the problem of striking…you might strike yourself out of a job. This is a sad reality. Worker rights and fair wages are important, but we must accept that certain businesses may find it better to shutdown and sell out because they simply cannot stay in business under their current model. It is a balancing act that both sides must carefully play. Apparently, neither side played it well.

    I wonder how many of those 18k would now elect to take their jobs back, but with less benefits? How many of those folks are going to have a really hard time finding a new job?

  • ordinarysparrow

    Zusai…..If i remember correctly President Clinton had the largest budget surplus and debt pay down in history..That is why he did not make my list…:)

  • PATRICK EDABURN, Assistant Editor

    Problem on articles fixed, not sure what it was

  • zusa1

    OS, In looking at his economic legacy, don’t you think the bad far outweighs the good. He may have had a “surplus” (not really though since he was still using social security money to make up the budget shortfall) but he planted seeds that would damage the economy to the point of making it far more difficult for those who came after him to balance the budget again.

  • adelinesdad

    Unions are good for leveling the bargaining table between management and employees. However, in a time when safety regulations are a matter of government regulation rather than negotiation, I don’t see much use for a union when a company is struggling to stay alive. What good is leveling the bargaining table when there’s nothing left on the table to bargain over?

    The union blames mismanagement for the company’s financial trouble. Maybe they are right, but that’s a bit like the Army Corps of Engineers blaming Katrina for the levees breaking. Ultimately, the union could have saved them, and they didn’t. Companies come and go all the time, but the fact that this was entirely avoidable is a real shame.

  • EEllis

    Quite a bit of the problem is that if the unions gave in to Hostess then other companies might use the number as a bargaining point in their negotiations.

  • EEllis

    By the way the sell off would most likely screw the private equity firm that bought Hostess in 2009 to bring it out of bankruptcy. The debtors would get first crack at the money before unions or Ripplewood and most of the money, tho possibly not all, Ripplewood invested would be lost.

  • ordinarysparrow

    Slamfu you might find this link of interest… it goes into considerable explanation on some that you are wondering about…

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