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November 28, 2012

Who killed ‘Twinkie the Kid?’

Kevin E. Dayhoff

News spread quickly throughout the known free world before Thanksgiving that an expiration date had been established for the 30 members of the Hostess Twinkies family of culinary treats – along with 18,500 jobs.


Without peeling-away the layers of this pound cake, one may quickly note with resignation that the popular 85-year old Hostess Brands most likely grew stale in a difficult economy and died of old age in the Great Recession. However, the more you turn the pages of this recipe for disaster, the smellier and more rotten the story gets.


It’s a story of a celebrated American tradition and iconic brand name that had fallen on hard times as the result of a perfect storm of business mismanagement, unmerciful macro-economics, and a changing market place.


However the final ingredients to this fallen cake certainly have nothing to do with anyone who could be mistaken for their leadership, foresight, wisdom, and values. Throw-in the leftovers from the hangover when everyone got sick from the sugary high that came with the go-go economy of the 1980s and the individuals with egg all over their face stand out.


Yes, as unbelievable as it seems, in the end, the popular foodstuff of much folklore and legend got burned by the very host that stood to benefit the most from pulling the baked goods conglomerate out of the fire – its own workers. In a cruel Thanksgiving irony, “The Turkey is alive and 18,500 jobs are dead.”


To be specific, the bakers' union, otherwise known as the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, threw salt in the mixing bowl.


Twinkie the Kid” had been threatened to be taken off the menu before. However, just within sight of a successful recovery, efforts to reconfigure the menu failed.


One of the more definitive news accounts of this culinary disaster was written by Rachel Feintzeig, Mike Spector and Julie Jargon, on November 16, in The Wall Street Journal:


“The Irving, Texas-based company, which filed for Chapter 11 for a second time in January, closed all factories and asked a judge for permission to start (liquidation) proceedings…


“The company's burdensome debt traces back to Hostess's first trip through bankruptcy in 2004. Missteps by a private-equity firm, hedge funds and managers since burdened the company, despite its more than $2 billion in annual sales…


“From the start, the company has warned that labor cuts were its only chance to survive.”


You would think that – with 18,500 jobs at stake in a period of high unemployment and continued economic malaise – arriving at an agreement with organized labor would be a piece of cake. Yeah, right! That would be logical. Logic and rational judgment never got near the oven that cooked-up this mess.


“Months of back-and-forth threats and court proceedings ultimately led to delivery-truck drivers and some plant workers represented by the International Brotherhood of Teamsters to agree to deep concessions, but the bakers' union … resisted,” according to The Wall Street Journal account.


“In the end, a bankruptcy judge gave Hostess permission to force the bakers union to accept a new five-year labor contract that featured an 8% wage cut in the first year, new pension plan restrictions and a 17% increase in health care costs for employees.


“The bakers' union went on strike… (on Nov. 9.) The strike affected roughly two thirds of Hostess's 36 plants, and made it impossible for the company to continue producing its baked goods.”


The result of the union’s unbelievable decision surprised no one. The Hostess Brands website did not mince words when on November 21, it said:


“Hostess Brands is Closed. We are sorry to announce that Hostess Brands, Inc. has been forced by a Bakers Union strike to shut down all operations and sell all company assets. For more information, go to Thank you for all of your loyalty and support over the years… The wind down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs….”


To be fair, according to various media accounts, too many cooks spoiled the broth and many fingers were at work to mess-up the icing on the cake.


However, Adam Bitely, writing for Daily Grind, cut right to the chase.


“As Bill Wilson, President of Americans for Limited Government put it, ‘it is common for parasites to kill their hosts, but it rarely happens in a way where so many people can see it. This union did what many others have done outside of the spotlight; they have forced a company to go out of business directly due to their irresponsible actions.’


“And what is most ironic in the downfall of the cupcake king is that Dick Trumka, head of the AFL-CIO which is one of the largest labor organizations in the country, blamed the Hostess closure,” in part on Mitt Romney and … ‘Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price.’ Get full story here.”


Hopefully, for the sake of sanity, the economy, and the families of the 18,500 workers, the liquidation process will bring forth a buyer who can bring Twinkie the Kid back from the dead. After all, tradition, brand name recognition, and $2 billion in annual sales can go long way to fixing stupid.


I’m just saying… with my mouth full of Ho Ho’s.


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