Monday, November 19, 2012

The Twinkie Mafia

When Elvis died, I was shocked and saddened. Shortly afterward, I mourned the demise of Overton Square. I internalized my pain when they closed Borders Book Store, but I can't live in a world without Twinkies. The Hostess Company made a surprise announcement that after 82 years, they were going out of business and liquidating their assets. Perhaps underestimating the popularity of their products, Hostess caused a Black Friday type rush on grocery and convenient stores across the country. Every cupcake and Ho Ho in sight were crammed into grocery carts and whisked into the vaults of end-of-the-world preppers and panicked mini-muffin addicts. I would say the snacks were flying off the shelves like hotcakes, but they're not hot, and the percentage of what constitutes actual cake is questionable. I wanted to pick up a case of Donettes, but the hoarders beat me to them. And that shrill, wailing sound you heard last week came from stoners all over Colorado and Washington who just got gobsmacked by Newton's Third Law of Motion: For every action, there is an equal and opposite reaction. What an evil karmic trick: to finally legalise recreational marijuana and then eliminate your Ding Dongs.
 
The general panic that gripped the public looked like food riots in impoverished countries, fed by rumors of a growing black market where fortunes could be made in discontinued Hostess products. I found it ridiculous until I found that sellers on eBay were offering Twinkies for $5,000 each. One optimistic entrepreneur was offering a box of Twinkies for $200,000, no doubt looking to finance a summer home. Being a person who occasionally enjoys an orange frosted cupcake, I lurched for the kitchen, plundering through the pantry, thinking that if my wife bought a pre-bankruptsy announcement box of Twinkies, we could pay off the mortgage and tell Bank of America to kiss our ass. I use Twinkies for medicinal purposes, so the nutritionists are wrong to say they have no reason to exist. If I have medicine that is not to be taken on an empty stomach, what's better than a Twinkie to soften the blow. I can recall times in my wild past when I was awakened with a queasy stomach due to too much fun and drink the night before, and the only conceivable thing to eat was a Twinkie. The soft, vanilla cake can absorb anything, not to mention the delicious cream filling that's never seen a cow. However, I must have eaten the last box, never imagining that I was consuming diamonds and rubies with every bite. Now, I'm conflicted over whether to eat this last loaf of Wonder Bread, or vacuum-seal it, put it in a display case, and see if it appreciates in value.
 
Hostess' management blamed the Grain Millers Union who have been on strike since November 9. Immediately, right-wing propagandists heaped scorn on those selfish workers and their uncooperative union bosses, and conservative bloggers and social media trolls followed suit. Their message is, "If you miss your Ho Hos, blame the unions," but like Paul Harvey used to say, "And now for the rest of the story." Hostess is owned by a private equity firm, Ripplewood Holdings, and two hedge funds, Silver Point Capital and Monarch Alternative Capital. Since 2002, Hostess has had six CEOs. When Hostess emerged from its first bankruptcy in 2004, the unions agreed to concessions that saved the company $110 million dollars. Rather than investing in modernization, the company's board voted to raise the CEO's salary to $2.55 million per year, tripling the compensation payed to the previous executive. In addition, other executive salaries were increased by as much as 80 percent. According to the New York Times, "private equity backers loaded the company with debt, making it difficult to invest in new equipment." In 2011, the company again filed for bankruptcy, unilaterally imposing wage and benefit cuts and ceasing pension payments for their employees. When the union went on strike, management demanded more concessions and gave workers a deadline to return to the job. Hostess employees responded by saying there wasn't a "Sno Ball's" chance in hell they would return under those conditions and filed a complaint with the NLRB. So management announced liquidation, filing papers prepared well in advance of their demands to the union.
 
This was a real Mitt Romney/Bain Capital kind of deal. The new CEO is a liquidation specialist hired months ago while union negotiations were still underway, and although Ripplewood Holdings wanted to preserve the brand, the hedge fund boys refused to put up any more cash. In the event of bankruptcy, the equity partners and their investors walk away with millions of dollars, leaving 18,500 workers unemployed and 33 plants shuttered. If they can place the blame on the unions, they'll get away clean. One laid-off sacker who had worked for Hostess for 35 years said, "The people who are running this company are not interested in making bread." At least, not in the sense he means. Hostess revenues are estimated to be $2.5 billion per year, with Twinkies alone earning $68 million so far this year. The brand is so popular that a petition has been circulated urging President Obama to "nationalize the Twinkie Industry." If Hostess is allowed to go the way of Kay Bee Toys, the black market underground in sugary treats could give rise to a Cupcake Mafia, with Twinkie the Kid as the cappo di tutti capi. I would hate to see bloodshed and violence erupt over contraband Dolly Madison cakes, even though some are to die for.
 
All is not lost for the Twinkie Nation. Hostess has a suitor from Mexico named Grupo Bimbo who tried to buy the company after their first bankruptcy. At first, I laughed at the thought of mothers sending their kids off to school with Bimbo cakes, but as it turns out, Bimbo Bakeries own Sara Lee, Entenmann's, Ball Park Buns, and Thomas' English Muffins. Here all along, those pesky Mexican job-takers were making our delicious breakfast pastries right under our noses. I hope Grupo Bimbo succeeds in their efforts to purchase the company. I would hate to see an iconic American brand like Hostess, serving up empty calories for eight decades, fall victim to vulture capitalists, even if they have to move to Mexico. I'll volunteer to be the first to try a Mexican Twinkie, or even a Hostess Taco. It's often been said of the spongy treat that archaeologists in some future millenia will stumble across a once vital civilization that has crumbled into dust, and the only thing remaining entact will be the cockroaches and a box of Twinkies. In fact, the shelf-life of a Twinkie is about a month. But if a buyer doesn't step forward soon, before the private equity firm sells of the company in small lucrative pieces, the entire Hostess product line may have finally met its expiration date.
 
 

7 comments:

Craig Fuller said...

It takes brave soul these days to rise to defense of the oft maligned Twinkie. Bravo! Just don't touch my Cheetos!

Steve in DC said...

"I expect someday they'll find me, just stretched out on my bed, with a handful of Pringles Potato Chips and a DingDong by my head..."

Anonymous said...

Gee, do you lend no creedence to capitalism? If there were no capitalism we would still be serfs living in the dark ages on some wealthy baron's manor. It's hard to overcome the reality that some are smarter and work harder and therefore create class stratification, whether its 2012 A.D. or 912 A.D. I guess there is no way to reconcile the situation, but a world without capitalism would be a world in poverty. America will find that out after we descend further into socialism and kill the goose that lays the golden egg...the capitalist economic engine. I guess the upside to liberals is that we will all be impoverished and they will feel that egalitarian poverty is somehow a good thing. Misery loves company. We tend to forget that this is a hard ball world and those that play soft ball become impoverished and oppressed. Oh well, we tried. Makes me glad I had no children.

performs said...

" but a world without capitalism would be a world in poverty."

We are so fortunate that in our world run by the crony, cutthroat, vulture capitalists we have no poverty.

Right :o)

Feudalism had its age as has capitalism. It is time to move on. Surely when capitalists began to take over the feudalists spoke in similar terms as you Anon speak. We need to give democracy in business a whole-hearted try. We need to treat one another more as one family or one team, rather than as strangers, enemies, or overly serious competitors.

The success of cooperative businesses as seen in the film "Shift Change" are very inspiring as long as one can let go of the conventional every man for himself value system.

Cary Wolfson said...

Leave it to Anonymous the Cowardly to remind us of all the wonders of capitalism we'll be missing out on with our recently re-elected socialist pres.

I don't recall Jefferson, Madison, et al, proclaiming the founding of a Capitalist nation. In fact it was T-Jeff himself who -- precursing Eishenhower's remarks about the military-industrial complex -- said: "I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country."

Steve Spear said...

Anon don't try to explain it to them (the libs). They hate capitalism and they hate America. If they claim to be ok with capitalism it's a form so tightly controlled by big brother you wouldn't recognize it.

Theodore Roosevelt said...

"I hold that a corporation does ill if it seeks profit in restricting production and then by extorting high prices from the community by reason of the scarcity of the product; through adulterating, lyingly advertising, or over-driving the help; or replacing men workers with children; or by rebates; or in any illegal or improper manner driving competitors out of its way; or seeking to achieve monopoly by illegal or unethical treatment of its competitors, or in any shape or way offending against the moral law either in connection with the public or with its employees or with its rivals. Any corporation which seeks its profit in such fashion is acting badly. It is, in fact, a conspiracy against the public welfare which the Government should use all its powers to suppress.

"If, on the other hand, a corporation seeks profit solely by increasing its products through eliminating waste, improving its processes, utilizing its by-products, installing better machines, raising wages in the effort to secure more efficient help, introducing the principle of coöperation and mutual benefit, dealing fairly with labor unions, setting its face against the underpayment of women and the employment of children; in a word, treating the public fairly and its rivals fairly: then such a corporation is behaving well. It is an instrumentality of civilization operating to promote abundance by cheapening the cost of living so as to improve conditions everywhere throughout the whole community."

--Autobiography (1913)