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 5:01PM
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Yeah two things come to my mind that is huting their bottom line, it is excessive bonuses and people eating healthier.
Aug 23, 2012 5:01PM
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I have see good products go under because of poor management.

This is another one.

Obama will not bail out this one

Aug 23, 2012 5:00PM
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I grew up on Wonder Bread and loved it...but its not sold in south Central

Texas cos HEB owns everything

Aug 23, 2012 4:55PM
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Entermanns cupcakes is the new twinkies.  The flavor I remember..
Aug 23, 2012 4:53PM
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As long as the execs are taking equal or bigger cuts, afterall they are running the company.

I agree with other here though, their snacks are so full of overprocessed garbage it's not even funny. Let alone not even having any real good flavor or taste. Couple that with a growing segment that is trying to eat better and is also getting tired of these companies filling our foods with all this artifical crap (alot of which is banned in other countries) and this is not a surprise. Like others have said, we know its a twinkie and is not going to be good for you, but drop the fake crap and go back to real ingredients. Being one of a handful of items that would still be around after a nuclear war is not a positive marketing feature when it comes to food. The solution (while not a complete cure all) is obvious, just whether or not they want to implement it.

I think its time

Aug 23, 2012 4:51PM
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people eat differently now ...and they will go bankrupt anyway....folks need to look for another job NOW....who the hell eats this rat poison still
Aug 23, 2012 4:50PM
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Has the company ever offered an 8 percent pay raise?

 

Aug 23, 2012 4:48PM
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they used to be good like in the 70s now tiny and expensive no wonder they're  suckin air  quality and value used to matter now  greed is bitin them in the ****  way to go hostess!!
Aug 23, 2012 4:46PM
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The good news is that Twinkies inventory will live beyond them.  It is rumored that Twinkies have a thirty year shelf life. 
Aug 23, 2012 4:38PM
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I purchased some Twinkies for old times' sake and I found them to be horrible.

People will pay for a good product. The way Twinkies taste now I don't think they are worth saving.

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They need to go back to the days where Hostess snacks were actually tasty.  Twinkees used to have a shelf life of 2-5 days because they were made with actual cake and real cream filling--something that current versions of Twinkees could only dream of. 

 

Two years ago when my wife was pregnant with our little girl, I got a chance to try all the various Hostess products and I couldn't stand any of them.  Cupcakes, Ho-Ho's, Twinkees, Ding-Dongs, Donettes (chocolate and powdered versions) and Snow-Balls were all sickly sweet, bland and flavorless, hollow and empty tasting.  The chocolate (if you want to call it that) drizzle on top of the cupcakes and donettes, for instance, would flake off like paint and it tasted terrible as well.

Hostess needs to go back and start over with all of it's products.  Ingredients and preservatives need to be completely reformulated.  Use adults as taste testers instead of children.  Kids will eat anything sweet and tell you it's good.  That's not an honest assessment of the products if you ask me.

Aug 23, 2012 4:30PM
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How about the top executives' wage and pension concessions?  hmmm?  SOMEBOY SAVE THIS INSTITUTION FROM THE PEOPLE AT THE TOP WHO ARE KILLING IT TO BE RICH NOW!
Aug 23, 2012 4:27PM
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My husband used to work for Wonder Bread for 10 years in Indianapolis.  I was dirty, roach infested; but he did his job.  They let him go on a "technicality" they say.  They never told him that he was terminated...they said they sent him a letter: NOT!  For the way they treat there employees...I hope the company sinks!!
Aug 23, 2012 4:24PM
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The stock markets took all of the gains for the next forty years in the 1990s. Everyone knows the Fed is propping it up now big time. Profits are not unlimited, they are constrained by true competition of which there is little for many of these companys now. dow will be at 10,000 in the year 2040 and by then due to inflation it will be fairly valued.
Aug 23, 2012 4:22PM
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Unions are ok for some things, but not for keeping companies alive.  Some companies have a tendency to ship their jobs out of the US to get away from unions.  Think about what companies have done this and you will understand.

 

Aug 23, 2012 4:20PM
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Of course unions are part of the problem.  Route Sales Reps belonging to the Teamsters have a 30 year and out pension, in most locals it is 2500 per month. Inside baking and shipping employees are hitting 20-25 per hour with full benefits.

But this is only a small piece of the problem. When Wonder/ Hostess was purchasd by Interstate Baking some years ago, Interstate was 1/3 the size and overpaid dramatically for the company. So much so, they could not service the debt they incurred. It was a power play by the CEO of Interstate, and not to be missed, it was his parting gift to a company he had worked for 30 years that had never been more than marginally profitable it's entire existence. They misused the Brands of Hostess and Wonder to the point they lost value.

Little Debbie is the low cost producer in the snack cake industry because they have Superplants and ship all over the US. Debbie also owns no route trucks as they are distributed by independent contractors, non union, they are business owners. Interstate tried to stay with many regional bakeries based on the old adage that bakery products could not be shipped long distances. Wrong again.

I speak with authority on this subject as I spent over 35 years in the industry as a manager and Regional VP

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. 
Aug 23, 2012 4:14PM
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How much are the managers and CEO taking in wage cuts?
Aug 23, 2012 4:13PM
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i need twinkies coworker came back with a box of twinkies from florida first twinkie i had in ten years or better more twinkies.
Aug 23, 2012 4:13PM
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They'll never make it. They history of a successful  reorganization  involving the Teamsters

union is poor at best.

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