On Nov 16, 2012, Hostess Brands announced they are seeking permission to close its operations in a a federal bankruptcy court. CEO Gregory Rayburn claimed Hostess does not have “financial resources to weather an extended nationwide strike” by 5,000 union employees of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.
18,500 employees lost their jobs as Hostess shut down 33 bakeries and 565 distribution centers nationwide, and closed 570 outlet stores. Before Friday’s shutdown, Hostess baked 500 million Twinkies and 27 million loaves of Wonder Bread annually for yearly sales of about $2.5 billion.
According to CNN, 6,700 Hostess employees of the Teamsters union ratified their own concession deal while the Bakery Union voted against the concessions.
Was the demise of Twinkie Town also related to the ‘Twinkies Tariff’ imposed by Congress? According to the Christian Science Monitor, economists believe the Sugar trade tariffs passed by Congress in 1934 forced US confectioners to pay almost twice the global market price for sugar. Apparently, Hostess decided unions were easier to fight versus the sugar lobby when they needed to cut costs to stay in business.
Mr. Edwards, an economist at the conservative Cato Institute, believes Congress and the Obama administration need to use Hostess as Case study for Policy reform and he asks, “We’ve got to understand why manufacturing in a lot of cases doesn’t seem to be profitable anymore.”
Policymakers need to reform lobbying regulations and union laws to free labor markets in order for America to be competitive in the global marketplace.
Obama’s Twinkies Cliff?
Thanks to Obamacare and Unions, you can keep your job with a pay cut or drive your company out of business and reap the fruits of unemployment benefits…
USA today reports Hostess is trying to lose the fat like many Americans by taking a bite out of high costs. The demise of Hostess may also be related to the increased consumption of healthy snacks. USA today also noted the majority of Hostess employees are unionized resulting in high pension and medical benefit costs whereas most of Hostess competitors are not unionized.
Twinkies, the Snack that could survive the apocalypse(1) didn’t have the energy to survive the union
Ding Dong: The Twinkies Fix Reaches the End of the Line
Twinkies Commercial by Buffalo Bob of the Howdy Doody Show in the 1950s
For Music Monday, R.I.P. Twinkies: A Tribute Song to the Legendary Angel Food
Related Tweets to Hostess Twinkie Kneads Your Dough…
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- President Obama will save the Economy in 2012
(1) Twinkies have a shelf life of twenty-five days due to their lack of dairy ingredients. The banana filled ladyfinger-shaped spongecakes were created in 1930 and named after a Twinkle Toe Shoes advertisement on a St. Louis billboard. Hostess changed the filling to vanilla cream when the global banana trade was grounded during World War II.
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