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A few quick thoughts on the demise of Hostess

November 17, 2012

As you may have heard, Hostess – the maker of such fine foodstuffs as Twinkies, Ding Dongs, and Ho Ho’s – is shutting down all operations and laying off it’s entire 18,000+ person workforce. The company is citing high Union costs and the current bakery strike as the primary cause of this decision. But, I’m calling a little bit of bullshit here.

For starters, the company was already in reorganization due to a bankruptcy filing – for the second time in a decade. This does not strike me as a sign of a healthy business. Also, Hostess has stated that the business “is unprofitable under its current cost structure, much of which is determined by union wages and pension costs.” But it’s not as if the Union simply makes demands and the company has to meet them. Unions negotiate the best deal they can get for their workers. How is it their fault that the company didn’t do the same for its bottom line?

This is not to say that the Union doesn’t bear some blame here. When presented with the option of a pay cut to help the company stay afloat or a total loss of all the jobs in a closure of the business, they might have wanted to at least try the former and see how it worked out. But then again, I’m not that sure anyone is really convinced that Hostess wasn’t doomed anyway.

Maybe folks just aren’t buying as many Twinkies as they used to. I, for one, haven’t eaten one in years. I certainly won’t notice that they’re gone. That said, it really sucks that more than 18,000 people just lost their jobs. Good thing for the CEO that he still got a raise though. Looks like he’ll need that extra money to get by for a while…

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