Wal-Mart wants to save the Twinkie
The retailing giant is one of several bidders reportedly interested in purchasing parts of Hostess Brands.
According to Bloomberg News, the largest retailer is making a run for the assets of Hostess Brands, the bankrupt maker of Twinkies, Sno-Balls and Wonder Bread. Other bidders include grocery chain Kroger Co. (KR) and Grupo Bimbo, the Mexican conglomerate whose brands include Entenmanns's baked goods and Thomas' English muffins. Some of the bids are for all the company's assets and others are for lines of business and individual products, the news service said.
The interest is a sign that Hostess, which has begun to liquidate its assets after unionized workers balked at agreeing to additional concessions, will live to fight another day in some form or another.
The 18,000 Hostess employees who lost their job shouldn't rejoice quite yet. Any new owner of Hostess or its businesses will not be bound by any agreements that prior management made with the unions. A new buyer may demand wage concessions as steep, if not steeper, than the ones demanded by the current owners. Sadly, the $1.8 million that the bankruptcy court approved as retention bonuses for top executives will be paid no matter what.
Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union say they are not to blame for the company's demise. Its website argues that its members dedicated their working lives to their work and had to "watch helplessly as the company was run into the ground, over and over again." Ironically, I attended a conference on corporate restructuring a few years ago where Hostess was touted as a success story.
Even if Hostess had the best labor relations in the world, the company would face a tough road ahead. For one thing, the costs for ingredients have skyrocketed this year as U.S. crops withered following the worst drought in more than five decades. America's dietary habits have also changed in the wake of soaring rates of obesity.
Take Twinkies. When I grew up in the 1970s and 80s, parents would think nothing of putting the creme-filled spongecake in a kid's school lunch. Today's parents would think twice before letting their children eat something so unhealthy.
Hostess products such as Twinkies are like newspapers. People like them in theory, but can't remember the last time they bought one. That needs to change if Hostess hopes to survive.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr
I agree with many posters - when I think of the cookies, candy and ice cream and chips and sugared drinks we had as kids...... Yet no one in my family was fat, except for third grade. All three of us kids went through a "stocky" stage at that age before a seemingly overnight growth spurt and back to being scrawny again. But besides the exercise, these snacks were a treat. We didn't have them every day. In fact. my mom bought one bag of cookies for the family - five people - and they had to last the week. Once we ate them all, there was no going back to the store for more junkfood. A bag of Hershey's miniatures lasted the entire holiday season. I'm not sure when the occasional treat became a major food group in this society.
What is the insane obsession w/ Twinkies? I'm a junk food junkie and consider salsa a vegetable but can't understand this silly phenomenon.
“The 18,000 Hostess employees who lost their job shouldn't rejoice quite yet. Any new owner of Hostess or its businesses will not be bound by any agreements that prior management made with the unions”
The new owner of the brands will likely produce the products elsewhere and will not have to deal with the people in that area. Even if the new owner buys the facilities they can still hire, or bring in a whole new workforce, they are not obligated to hire any of the fired Hostess employees.
Wal-Mart already has a distribution system in place and they can easily contract out the production elsewhere. They do not have to buy the facilities or use them, they can produce the snacks any place they want.
Unions, and I mean all Unions, suck. I do not mean the majority of the hard working union members but the parasitical union bosses and the minority lazy parasites that ride on the back of the hard working union members. Why does a union need to spend hundreds of millions of dollars a year on political campaigns? Why don’t they give that money back to its members in the form of better pay, better benefits, better healthcare? All unions require their members to buy health insurance from the union. My nephew would be alive today if the union bosses would have paid his medical bills instead of denying his medical claims. They are all malignant parasites!!!
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