Twinkies

Life without Twinkies?

Hostess Brands Inc. to shut doors
2012-11-17T01:00:00Z Life without Twinkies?The Associated Press The Associated Press
November 17, 2012 1:00 am  • 

Twinkies may not last forever after all.

Hostess Brands Inc., the maker of the spongy snack with a mysterious cream filling, said Friday it would shutter after years of struggling with man-agement turmoil, rising labor costs and the ever-changing tastes of Americans even as its pantry of sugary cakes seemed never-ending.

CEO Gregory Rayburn, who was hired as a restructuring expert, said Friday that sales volume was flat to slightly down in recent years. He said the company booked about $2.5 billion in revenue a year, with Twinkies alone generating $68 million so far this year.

Hostess, based in Irving, Texas, said it was saddled with costs related to its unionized workforce. The company had been con-tributing $100 million a year in pension costs for workers; the new contract offer would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.

Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling. Although some of those executives later agree to reduced salaries, others — including former CEO Brian Driscoll — had left the company by the time the pay hikes came to light.

Then, last week, thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company’s latest contract offer. The bakers union represents about 30 percent of the company’s workforce.

By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels.

The company filed a motion to liquidate Friday with U.S. Bankruptcy Court. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

In Southern Illinois

The signs of an impending Twinkie famine were less pronounced in Southern Illinois, but they were there if you looked closely Friday afternoon.

Twinkie and other Hostess snack cakes were largely snatched up from store shelves at Walmart Supercenters in Carbondale and Murphysboro. Meanwhile, Carbondale Schnucks manager Tom Eakins said things were fairly quiet in his aisles.

“I was quite surprised today,” Eakins said. “We had a delivery, our rows were filled up and I haven’t seen anything unusual at all.”

Whether that stays the same in the coming days, as the world adjusts to the idea of Twinkies and Ding Dongs as a finite resource, Eakins couldn’t say.

Jeff and Tracy Zircher of Peoria were in Carbondale for their son, Ian, a recent transfer student to SIU Carbondale. Ian hadn’t heard the news of Hostess’ demise, and Jeff said he hasn’t personally touched a Twinkie in more than 10 years.

For Tracy, however, her last Twinkie purchase came just recently for her other 18-year-old son.

“Gosh, I just bought a box two weeks ago and brought them home to my son,” she said. “He thought they were the best thing in the world. I guess I’ll have to break the bad news to him now.”

The elder Zirchers said they remember the days when Hostess had stores, selling a variety of products. Facing the prospect the cakes might not even be in grocery stores anymore, the family agreed it may be the end of a significant, if not particularly healthy, era.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(23) Comments

  1. DeeJay
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    DeeJay - November 19, 2012 7:12 pm
    One of my co-workers is an entrepreneur. He made a killing selling Hostess products this weekend. Unbelievable! I guess it's true-there's a sucker born every minute.
  2. JItterBug
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    JItterBug - November 18, 2012 7:29 pm
    Wouldn't you know it. They finally legalize weed and now we won't have twinkies to munch on.

    WTF
  3. madblogger
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    madblogger - November 18, 2012 9:56 am
    I blame Lil' Debbie. Half the price, not as tasty, but close enough. Lil' Debbie is non-union, so her labor costs are lower. I call it the Wal-Mart effect - under-price your competitors out of existence. There are several other bakeries that followed Little Debbie's path too.

    While management shouldn't have been taking increases, I highly doubt their increased pay amounted to much as far as Hostess's debt is concerned. Furthermore, closing the company was probably the last thing anybody wanted to do. Marketing had a part to play, but I would say that the price of Hostess compared to others has been the main factor in their demise. I would rather buy a 2 pack of Swiss Rolls at 50 cents, rather than pay $1.29 for a package of Ho Ho's. Ho Ho's taste better, but not twice as good or more.

    When it comes down to it, the cost of Hostess cakes is probably the number one reason that they couldn't make it. Healthier eating probably has a small part. In other words, management and the unions are responsible - it was the price of the product.
  4. boone76
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    boone76 - November 18, 2012 12:09 am
    USN.....

    So you mean businesses that collapse are not always the fault of their union workers? Who will our friend Mr Anheuser have to yell at about this one? :-)

    Hard to believe but there are just as many dumb a$$es in corporate America board of directors as dumb a$$ union bosses. Who would have thunk it? Just being silly and sarcastic.

    There is a lot of blame to be equally spread around regarding this county's economic mess.......organized labor vs corporate leadership vs state/fed government.....The finger pointing has to stop.
  5. OLD JOE
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    OLD JOE - November 17, 2012 11:22 pm
    I read in another story, a Mexican company is looking at Hostess? Maybe we will lose a few more illegals? Maybe one day Americans will be illegal in Mexico looking for work?

    Give me a day or two and I will figure out a way how to blame this on Obama lol.
    What the hell, it's Obama's fault lol.
  6. USN420
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    USN420 - November 17, 2012 10:47 pm
    Boone... Eastman Kodak is a more sad story than most realize... Did you know they actually developed some of the very first digital photography equipment years before their competitors and had a business portfolio full of valuable digital photography patents at the time of their demise?

    Some of their innovations in digital picture technology were state of the art, but because their corporate culture would not adapt to the changing world... they are now gone.

    My favorite digital camera is a Kodak from about 5 or 6-years ago. I paid about $300 for it, but it has features that even today are not found on cameras costing twice as much.
  7. Diogenes
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    Diogenes - November 17, 2012 9:43 pm
    As much as I disdain too much union power, I also noticed that executives got 80% increases. How tough is it to be an executive in a company that makes sugar filled junk food? I worked for major corporations and was never terribly impressed by "management" types. I was a design engineer and loved the innovation, but "management" was beginning to take the fun out of it by all their insistence on the latest fads and the hoops I had to jump through like a trained seal to satisfy their egos. (end of personal gripe).

    There's lots of blame to go around here. I'd like to say it was at least in part due to people trying to eat healthier but a visit to any grocery store is like taking a tour of Dante's Inferno in nutritional hell. There are a few aisles left that actually offer real food, but most of it is pre packaged stuff that only resembles food in that you ingest it and it makes the trip through your alimentary canal. One would be better off taking a lot of it out of the bag and just flushing it. I find myself agreeing in principle with Mrs. Obama and Mayor Bloomberg, I just don't want anyone to tell me what to eat.

    If I'm going to ingest high sugar, high fat, rich treats I go to Dairy Queen or a fine restaurant with something like Creme Brulee or even a good old fashioned Carrot Cake or better yet talk my spouse into baking me something. Darn it, now I've made myself hungry.
  8. Anheuser6
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    Anheuser6 - November 17, 2012 8:55 pm
    i will agree company mismanagement to a point...but how are you to manage a company when you have to keep up with UNION demands......that UNION is responsible......ask the TEAMSTERS.....they blamed them without actually saying it.....i mean get serious.....the company is on deaths door...yet you would rather lose your job than keep it


    oh wait.......they want the settlement package and sit on their ass for a while.....typical union scrub.......want paid for doing the least amount as possible.......

    oh by the way.......looks like another AMERICAN company.......going to be bought out by foreigners ........Mexico this time.....THANK YOU UNION workers......
  9. redneck hillbilly Jesus man
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    redneck hillbilly Jesus man - November 17, 2012 8:13 pm
    Yahoo Twinkies are gone to that big junk food heaven in the sky! My nick-name was Twinkie Winkie Redneck Hillbilly. I will have to change it to Tip-toe Tulip Redneck Hillbilly. I will eat more rattle-snake meat better protein in my diet.
  10. KaijaJean
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    KaijaJean - November 17, 2012 6:57 pm
    Another Great American Tradition bites the dust! Can't blame Japan or China for this one. We still have White Castle hamburgers for the munchies!
  11. MickeeD
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    MickeeD - November 17, 2012 5:18 pm
    I was trying to find a book I read in graduate school concerning how technological innovation made companies obsolete. Right now we are see this happen with the CD industry and the digital camera industry. We most recently saw this with the LAN line phone. Which in turn will affect the Yellow Pages.

    Hostess is gone but I see some of their product bouncing back. Little Debbie Twinkies?

  12. boone76
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    boone76 - November 17, 2012 4:50 pm
    USN.....

    To your point, take a look at what happened to Eastman Kodak. They are the poster child of how to destroy a thriving business. They have been around for 131 years and had the photography industry by the stones. They didn't see the train coming (because they didn't want to) until it was too late.

    While the photography world was going digital they were doubling down on manufacturing buggy whips (aka camera film that needed developing) thinking that their very recognizable brand name would somehow save them. Their competitors steamrolled them.
  13. bluegill
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    bluegill - November 17, 2012 4:13 pm
    @draco - Keep trying; one of these days you'll actually be funny. Sad to see you fall short time after time but I'm rooting for you. Wouldn't it be wild if you and Romney were funny for the very first time on the very same day?
  14. USN420
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    USN420 - November 17, 2012 3:31 pm
    Boone... You are exactly right. Although I am empathetic with the 18K people who just lost their jobs, this is just another example of a poorly managed company going through what happens to most poorly managed companies.

    The Market continually changes, companies do not respond properly, and they go out of business. Someone else (Nabisco or General Mills maybe), may purchase the brand names from Hostess, and we may soon see "Twinkies" on the shelf again, but those 18K Hostess Brands workers will not be the one's baking them.

    In the past few years this has happened to Circuit City, Blockbuster, Hollywood Video, Borders, Palm (remember Palm Pilots), and may be happening to J.C. Penney as we speak.

    GM and Chrysler were exceptions to this dynamic solely due to government intervention, and it has yet to be determined if they changed enough of their underlying poor management decisions and business model to survive long-term. Financial experts opinion's are mixed on GM right now. Chrysler seems to be in a much better position oddly enough.

    Company management at Hostess Brands gave the workers a choice of taking cuts in pay and benefits to keep the company going. They elected not to accept. Company closed. These worker concessions would not have saved the company, but would have possibly allowed the doors to remain open for a period of time.
  15. boone76
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    boone76 - November 17, 2012 2:38 pm
    1Adam-12....

    With all do respect nobody "missed it". Nobody mentioned the Obama (Michelle) Administration because it doesn't have ANYTHING to do with this situation.
  16. boone76
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    boone76 - November 17, 2012 2:29 pm
    I plucked this fairly informative short read off of the Yahoo Finance page......

    "...... this is not a simple story that anybody should try to slot neatly into their political talking points. It's not just about Wall Street preying on main street, or big bad labor unions sucking a wholesome American company dry. It's about an entire galaxy of bad decisions that will cost many people jobs and money.

    As David Kaplan chronicled at length for Fortune in July, the roots of the debacle go back to when Hostess entered its first bankruptcy in 2004. Not unlike the situation automakers would find themselves in a few years later, the company was collapsing under the weight of flagging sales, overly generous union contracts replete with ridiculous work rules, and gobs of debt. But unlike the automakers, the five years Hostess spent trying to fix itself in Chapter 11 didn't fix its fundamental problems."

    "Suffice to say, Hostess didn't do much growing. It continued to lose hundreds of millions of dollars making and selling starchy snacks that much of the public had lost its taste for, while failing to launch any great new products. The interest on its loans swelled the company's debt. And by January 2012, it was back in Chapter 11, trying to wrestle a new contract with more concessions from its unions."

    http://finance.yahoo.com/news/whos-blame-hostess-bankruptcy-wall-230200630.html;_ylt=A2KJ3CbI8adQVmAAAKGTmYlQ
  17. Draco1192
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    Draco1192 - November 17, 2012 2:01 pm
    What is going to happen to the State Fair? This will shut it down for sure. People can't go without deep fried twinkies.

    I do feel bad for Washington and Colorado state. Legalize recreational use of marijuana and then Hostess goes out of business. That is just cruel. At least Taco Bell is still around, for now.
  18. 1Adam-12
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    1Adam-12 - November 17, 2012 12:47 pm
    You all missed it one this one; This is yet another move by the Obama (Michelle) Administration to keep "unhealthy" foods away from our children. :You children shall eat the grull you are served for lunch and like it!
  19. Gillsburgher
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    Gillsburgher - November 17, 2012 8:34 am
    I know a college student whose mother and father worked at one of the Hostess bakeries. They have been very worried for a while. They voted against the strike. But elections matter. And in this case, that union strike vote caused them to go from a middle class household of two wage earners to being poor overnight with no one in the house working.

    The initial unemployment claim numbers since the general election are already up 20% (it is NOT Sandy, the effected states are only a small part of the increase). But just look at all the jobs that are being lost right now, coal mines, medical device companies, restaurants, they are all laying off as their Plan A of a return to prosperity was outvoted by people who want free stuff without having to work for it.

    And how much have we all lost in the stock market since the election? Good thing I had mostly foreign stocks, but even that is not immune.
  20. DeeJay
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    DeeJay - November 17, 2012 7:17 am
    Settle down, people. You can still buy a Chevy or a Buick. Except now you buy it from General Motors Company instead of General Motors Corporation. They'll liquidate, then come back as "HoHostess Company" or "Twinkies Inc" and we Americans will be as fat and sassy as ever. The grocery shelves will contain plenty of Ding Dongs and Suzy Q's, likely produced by non-union labor, and thus cheaper (able to compete with Little Debbie).
  21. OLD JOE
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    OLD JOE - November 17, 2012 5:55 am
    With the price those cupcakes cost, you would think Hostess was making a fortune. The last cup cake I bought was about $1.59. Add another $1.59 and I can bake a big Betty Crocker cake. I'm sorry to see em go. But I'm not going to miss something I can't afford to buy, or something that is way over priced.
  22. boone76
    Report Abuse
    boone76 - November 17, 2012 1:42 am
    While the union strike may have cost those workers their jobs.......The collapse of Hostess has a few layers. There was much more to their demise....

    Many of the products they sold had fallen out of favor (Twinkies, HoHos, Snowballs, etc). I quit buying that crap years ago. Wonder Bread was always a popular name brand product, but white bread is pretty easy to duplicate.
  23. Anheuser6
    Report Abuse
    Anheuser6 - November 17, 2012 1:19 am
    Unions ....enough said.....

    well the teamsters settled ....it was another union that caused it......when will people learn.....
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