Hostess Brands, the maker of Wonder Bread and Twinkies, asked a federal bankruptcy court for permission to close its operations on Friday, after more than 80 years of production, blaming a strike by bakers for sinking the company. Hostess had annual sales of about $2.5 billion, making 500 million Twinkies and 127 million loaves of Wonder Bread annually before Friday’s shutdown.
Shallow and dishonest commentators, largely pandering to the “capital” crowd and their 47% world-view, will paint this as another “greedy union” chestnut of moochers and takers and freeloaders dragging down good, honest, moral job creators, but the workers that chose not to grab their ankles again had valid contracts that management wanted to walk away from, so it’s hard to paint the unions as the villains here. Frank Hurt, president of the bakers’ union, said Friday “They decided that they were not going to agree to another round of outrageous wage and benefit cuts and give up their pension only to see yet another management team fail and Wall Street vulture capitalists and ‘restructuring specialists’ walk away with untold millions of dollars.” Damn the Twinkies, prepare to ram!
You see, Hostess Brands had been acting like a zombie, relying on pretty much the same mix of products for decades. Over the years consumer tastes changed, but Hostess Brands (and their previous corporate identities) didn’t change with them. This failure to adapt to the marketplace was the main reason that the company, then known as Interstate Bakeries, first went into bankruptcy in 2004. Interstate Bakery’s stock fell to $2.05/share (from a high of $34/share), and during the 2004–2009 bankruptcy period, the longest in U.S. history at the time, Interstate closed nine of its 54 bakeries, more than 300 outlet stores and laid off 10,000 workers.
In 2009 the company was brought out of bankruptcy as Hostess Brands, with unions making heavy concessions in exchange for some equity and Ripplewood Holdings (backed by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding) taking a heavily leveraged 50 percent stake. Hostess exited bankruptcy with nearly $670 million in debt, almost 50 percent more than the $450 million it owed when it went into bankruptcy. What could possibly go wrong?
But Wall Street’s best and brightest just didn’t run the bakery very well, so they stopped payments to the pension fund in July of 2011 and again hounded the unions for further concessions. In fact, management wanted the unions to agree to the closure of 10-12 plants as part of a new contract, meaning many of the company’s 18,000 workers would be laid off even if they accepted management’s rapacious terms. When they balked at being bent over yet again after such a short time, management took Hostess Brands back into bankruptcy in January 2012 and got the bankruptcy court to impose a new contract that cut union salaries by 8%. The bakers’ union said enough was enough, and they went on strike.
But here’s the punchline: while management was filing for bankruptcy in January 2012, it actually tripled the CEO’s pay and increased other executives’ compensation by as much as 80 percent. That’s right, the Captain of this sinking ship saw his pay upped from $750,000 to over $2.5 MILLION. Some would call this the worst negotiating position to take while demanding unions take deep cuts in wages and benefits, but I like to think of it as just another tactic: they wanted nothing more than to create an impasse.
It was a “Springtime for Hitler” move: seven of Hostess’ eight largest unsecured creditors were union pension funds, and bankruptcy just wipes that out. This is the usual M.O. for Wall Street jackals: having sex with the corpse before plundering its organs, selling off the product lines and branding to the highest bidder. Getting to smear union workers for striking while screwing them out of their pensions is just the icing on the cupcake for them.
Beachcomber illuminates a thought-provoking historical note, found scribbled in the margins of a certain copy of Historia rerum ubique gestarum by Aeneas Sylvius Piccolomini (later to be known as Pope Pius II), published in Venice in 1477. Here it is:
Homines de catayo versus oriens venierunt. Nos vidimus multa notabilia et specialiter in galuei ibernie virum et uxorem in duabus lignis areptis ex mirabili persona.
Or, in the vernacular:
Men from Cathay [China] come towards the west. We saw many remarkable things and particularly in Galway in Ireland a man and a woman on two pieces of drift wood of the most extraordinary appearance.
Beach dates this marginalia to 1481. The Gulf Stream is known to wash up American plants, American animals and American driftwood on the shore of south-western Ireland, so if this man and woman came from anywhere it was more likely America than China, but nobody had heard of America at the time. This note would be considered just an unremarkable sea-man’s tale if it weren’t for the fact that the man who wrote it is remembered by history as Christopher Columbus.
Ever been told to put on your thinking cap? Well, there’s a new Kinect math game that lets you do just that and shows you how well it works.
So BP is pleading guilty to High Crimes and Misdemeanors related to the 2010 Deepwater Horizon explosion and oil spill? Let’s see, there’s manslaughter (plain and involuntary) for the 11 killed by the blast, lying to law enforcement officials, misleading investors, a felony count of obstruction of Congress, a pair of misdemeanor counts under the Clean Water Act and Migratory Bird Treaty and 23 criminal counts for the two highest ranking BP supervisors at the scene of the crime. BP’s total fines amount to $4.5 billion, which. compared to the $43 billion in BP profits since then, looks like a tiny slap on the wrist. If that “corporations are people” theory was anything real, BP would be doing life without parole instead of just getting a speeding ticket.
Sheriff Joe Arpaio, Maricopa County Arizona’s own Uncle Fester, rants that he’s going to give his deputies automatic weapons so they can shoot Mexicans in the back. Repeatedly.
Louisiana’s unrepentant GOP zombie-Governor Bobby Jindal recently urged his Republican Party to “stop being the stupid party.” Well, the glassy-eyed gov has got that half-right: the GOP keeps pissing away their chance to rule by pandering to the ignoramus vote. Science? Pshaw, all lies from the pit of Hell! The settled issue of Roe v. Wade? Nothing that a little forced vaginal ultrasound won’t fix! Pregnancies from rape? It’s just God’s plan, you see!
No, Gov. Jindal, the Stupid is only part of your party’s problem: you’ve got to represent the American people and quit pimping the country out for corporations. Remember how GOP Rep. Joe “You LIE!” Barton told BP “I think it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown” during the House Energy and Commerce subcommittee hearings?
If ever there was a time for the Republican Party to develop a sense of shame, it’s now. The Citizens United ruling brought almost unlimited funds to this election cycle, with upwards of USD $5 BILLION spent… and the GOP still couldn’t close the deal with the voters. There is a message there: a party whose primary loyalty is to corporations and that espouses the retrograde notions of a bygone age while being a collective asshole in every way possible just isn’t going to survive.