The food industry was shocked last week when giant Hostess Brands Inc. announced they were declaring bankruptcy.
The baker, best known for such snacks as the iconic Twinkie, seeks reorganization under Chapter 11 as it struggles to come up with enough bread to meet union obligations and service its mountain of debt, estimated at $860 million.
Hostess had previously declared bankruptcy in 2004, and just emerged from that reorganization in 2009. At that time, industry analysts had said it was dollars to Donettes that the reorganization would have any lasting effect without deep cuts in expenses, primarily crippling labor costs, which are filling the balance sheet with more red than a jelly donut. Analysts say their prior bankruptcy has led to an increased cost of borrowing, leading to more debt and creating a Sno Ball effect on company finances.
President Stan Leaven had this to say: “Our inability to raise the dough needed to service our debt forced us to take this step. The biggest problem is dealing with 12 labor unions’ constant demands for an ever-increasing piece of the pie. Trying to reason with them is as useless as Dunkin Stix in a bucket of water to start a fire. We sweetened the deal on our counter offer to their unreasonable demands, and what was their response? Ho Ho.”
That got a rise out of the head of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), Fred Crisco, who replied, “Instead of blaming everything on labor, President Leaven should be buttering us up. Leaven has some crust asking our members to contribute toward their own health insurance. Our salaries (excluding benefits and lifetime pension and health insurance for anyone who has ever worked here) are a modest fraction of total expenses. That’s just icing on the cake compared to management’s lavish salaries. And the 4% cost of living increase they proposed is nothing but crumbs from management’s table.”
“Trading Zingers won’t get us out of this mess.” Leaven said ryely, “It’s time for labor and management to work together or soon we’ll be out of the pan and into the fire.”
One reporter asked the union head, “Wouldn’t it be better to make modest concessions, rather than lose all these jobs when yet another American manufacturer is forced to close up shop and move overseas to stay competitive?”
Crisco replied, “Labor is what makes this company great. Instead of blaming everything on us, Leaven should work to eliminate the triple layers of management who just sponge off the company. If I brought a raw deal like what they propose to my members, it would fall flat as a pancake.”
At a follow-up question by the same reporter asking what the heck tobacco was doing in with the food industries in the BCTGM, Union boss Crisco said, “Mind your own Ps and Suzy Qs.”
Pundits agree; no matter how you slice it, with two bankruptcies in 10 years, if Hostess survives this it will be a Wonder.