Hostess' tough road out of bankruptcy

Employees at the embattled company are being asked to take an 8% wage cut this year.

By Jonathan Berr Aug 23, 2012 1:13PM
Hostess, the maker of Twinkies, Sno Balls and Wonder Bread, is trying to work its way out of its second bankruptcy in four years, and CEO Greg Rayburn told CNBC it's not going to be easy.

"We have a path to emerge, but it's a difficult one and it's a painful one," he says in the following video. "It's painful for the employee because it requires wage concessions and pension concessions. They have been through this wringer once already."

Post continues below.
All employees at Hostess are being asked to take an 8% wage cut this year, Rayburn said. The company's cost structure is the problem, as revenue remains "solid" thanks to the company's powerful brands. Though it may be tempting to blame unions for the company's woes, Rayburn doesn't buy that argument.

"I don't think unions bring down companies," he said. "In Hostess' case, there is plenty of blame for everyone."
448Comments
Aug 23, 2012 2:12PM
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the "problem" is outrageous executive salaries
Aug 23, 2012 9:35PM
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I worked for Hostess for 22 years and lost my job due to outsoursing.  In those 22 years one of the biggest problems that I saw was that there were too many chiefs and not enough indians.  The top level management in recent years made decisions based on no real knowledge of the baking business, but based their restructuring on the "bottom line" only.  One of the former CEO's was given a million dollar bonus to come in and "save" the company.  He, as well as several others since, completely failed to do so.  When is someone going to recognize that the problems start at the top.  The "worker bees" who gave their all were the ones to suffer the consequences of poor management.  It is sad to think that such iconic brand names may become a distant memory in the very near future.   

Aug 23, 2012 2:06PM
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Just if "employees" includes all of the executive and management  structure.
Aug 23, 2012 5:12PM
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My husband works for them, they took a paycut 4yrs ago of $120 per week, now they want another 80-100 per week, havent had a wage increase in yrs. They want to now take another when just in this branch, there is 1 supervisors with 3 extra acting supervisors and only 7 routemen. Can you tell me why you need 4 supervisors for 7 men, PLEASE!! Its things like this that have this company in the shape they are in. Seems to me that some positions in management can be eliminated before you come to the routemen for their share.. I just gave you the most sensible solutions without the millions in yearly salary you are paying upper management for free. Try it, IT WORKS!!!. The last paycut from workers ended in management giving huge bonuses and salary increases within the year of taking our little $120 per week... Cut your expenditures at the top end not the bottom. There are alot of excess in upper positions!!

Aug 24, 2012 5:43AM
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This is ridiculous... 4 years ago they were in bankruptcy and they still can't get it straight?  I work for Hostess and we already give $10 out of our pay back to the company every week to help get the company on back on track.  I make $11.40 an hour as a factory worker, and now they want to cut my health care, retirement, and an 8% pay cut?  Where is all the money going?  It surely isn't to my pocket.  Cut's need to be made higher up in the company, not with the line workers.  I have two children I am trying to raise, I can't afford to support Hostess as well.




Aug 23, 2012 9:22PM
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My dad just had his 20th year with Hostess as a route driver.  This will be the 2nd paycut they've "agreed" to.  He has to go in to load his truck @ 2am to make timed stops, rarely has time for lunch and goes home 18 hours later tired as could be.  Broken down hourly, he makes less than minimum wage.  Union has really not helped; paying dues for nothing.  It is really sad this is happening again as they really have no say and are at the mercy of the negotiations.  If they don't agree to paycuts, they lose their jobs.  He is extremely grateful to have a job, especially in this economic situation but after 20 years, it seems like a huge kick in the gut. 
Aug 23, 2012 5:46PM
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Before you morons comment...."listen" as you watch the video. The man clearly states that cuts will be made from management on down across the board.  The fact that so many Americas are are fat, yes I said fat, not weight challenged...FAT is because far too many spend every spare moment on their FAT "A" playing video games and believing they actually have a life through a social networking site with two thousand "friends" they have never met. Wake the "F" up.
Aug 23, 2012 7:36PM
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Wonder how many of the white collar execs are being asked to take an 8% pay cut to save the company.  Blame the Union because that guy makes $14 an hour and thats a ridiculous wage.  Nevermind that the CEO running the company into the ground makes over $1,000 an hour and thats just 1 Exec.  They also have a CFO (Chief financial officer), COO (Chief Operating Officer), and CMO (Chief Marketing Officer).  Each one of these positions pays over $1 million a year.

 

Alan Mullaly took a $3 million pay raise at Ford and 2 weeks later asked the workers to take a $3 an hour pay cut.  Yep its those darn Unions ruining companies.  LMAO.  Yeah right.

Aug 23, 2012 10:11PM
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Farmers cost go up = employee paycut

Gas prices go up = employee paycut

Maintiance  and towing cost go up= employee paycut

Electric company increases rates =employee paycut

 Insurance rates go up = employee paycut

Health insurance rates go up =employee paycut

Pension funds make bad investments=employee paycut

Ceos and management increase salaries=employee paycut

Advertisement cost go up= employee paycut

Equipment and supplies go up= employee paycut

Supply and demand goes up= employee paycut

Union dues go up =employee pays to keep ther job!

30,000 employees have taken paycuts  and pensions cuts

AND STILL BANKRUPT???????????????????????????????????????????????????

HOME OF THE BRAVE LAND OF FREE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

Aug 23, 2012 6:57PM
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I am retired from this industry. I worked at a family owned Bakery that was in direct competition with Wonder Bread  Since we only made bread the cake portion of their routes was of no concern to us. We too were a union shop and yes the union was not perfect. The problem with Hostess is not the union though. They are a poorly run company. To meet numbers their management would force product increases to their divers that they did not need. This turns into total waste. I have seen product delivered to a store that never left the back room because of overload. This extends the time that a product is on the shelf so the quality naturally suffers. When companies in the food industry stop thinking quality of product and service and only worry about bottom lines they are doomed to fail. This is only one of many errors their management makes on a daily basis.
Aug 23, 2012 1:39PM
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Of course the union had to be part of the problem. As a former union member I know they will never admit to it, so what else is new.
Aug 23, 2012 10:44PM
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One problem with Hostess is they are about double the price of a Little Debbie, whom they regarded too lightly when they first challenged the market. Little Debbie has more than double the selection of snack cakes than Hostess, who is relying on their old stand-bys like Twinkies, Ding-Dongs, etc.  In tough economic times, people are driven by thrift and if given the choice of  "Hostess Twinkies, $3.99 a box of 8, or "Little Debbies Golden Creme Cakes, $1.79 a box of 8, and the taste is comparable, most consumers will take the cheaper item. And this is a cheaper Brand Name, not a generic label item that projects lowest quality on the shelf. And Little Debbies aren't the only ones crashing the party. There are Mickey Cakes and others who are marked well below Hostess. If you're going to charge more than double for something, you better blow them away to justify it and I don't think Hostess has done this.

 

Aug 23, 2012 4:14PM
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How much are the managers and CEO taking in wage cuts?
Aug 23, 2012 5:07PM
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If the union memebers take a pay cut, will management taka a pay cut ?

Aug 23, 2012 8:57PM
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What kind of cut are upper management taking? An 8% cut to an hourly guy is a big deal, an 8% cut to a guy making mega bucks although a lot more money is not a big deal. If everyone is not hurting equally, management is the problem!
Aug 24, 2012 1:24AM
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It's crappy undercutting by Mexican companies like Bimbo that are causing the problem for Hostess. Bimbo comes in and provides inferior products and those that don't know better keep buying the junk put out by Bimbo and others because that's what they're used to.

 

Say it ain't so, Hostess. Please, no Bimbo and their crummy Hostess imitations in the U.S.

 

 BTW, Twinkies, Cupcakes and all their delicious pastries are not what's causing you're health problems.  It's eating too many of them that causes the problem.  Maybe if you didn't make a steady diet of Twinkies, you might be in better health.

 

Aug 23, 2012 6:18PM
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the big shots should take alot bigger pay cut and no bonuses

Aug 23, 2012 5:42PM
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Apparently no one paid any attention to what Mr. Greg Rayburn the Hostess CEO said  "All employees at Hostess are being asked to take an 8% wage cut this year, including Management". and management includes Line Supervisors, Pant Managers and Executives.
Aug 23, 2012 7:26PM
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As a teamster at YRC who has given back 15% of his pay along with medical and vacation time plus no pension contributions for the last 3 yrs. becuse of an inept CEO that went on a buying spree with borrowed money , i feel the pain they are suffering .We have suffered and he walks away with his 10million salery intact  . Sounds like the same story for these wokers , new CEO wont admit it even though he was close , that the old regime made huge errors and now the rank and file must suffer fools
Aug 23, 2012 4:16PM
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Wow cut wages 8%  and the size of that twinkie has shrunk 75% over 10 years. Sounds  like the top dogs are killing the profits.Pay the friggin CEO and President less. 
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