I find myself quite divided over the news that Hostess Brands Inc. is shutting down, ostensibly because it could not reach an agreement with its striking union, and I’m not sure where to direct my sympathy and/or derision.
On the one hand (and I am working with rather limited facts here), there’s the “blame the union” angle in which selfish, entitled workers refused to take one for the team and accept a reduced standard of living so that an iconic American brand could survive in this punishing economic environment. They deserved to be thrown out of work, all 18,500 of them. Greedy, short-sighted communist buggers.
Hostess blamed burdensome wage and pension obligations for its financial woes. It said a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which began November 9, was the latest in a series of labor troubles that had crippled the company’s ability to produce and deliver products at several facilities. (source)
On the other hand, there’s the “blame the company” angle in which Hostess leaders didn’t do a good job of steering the company toward profit, and decided to take it out on their workers by cutting wages and benefits. They deserved to fail. Greedy, short-sighted corporate buggers.
But union officials and line workers said the company had failed to invest in new technology, brand marketing and modernization of plants and trucks and had focused instead on enriching owners that included the private equity firm of Ripplewood Holdings and hedge funds that include Silver Point Capital. (source)
Update, November 24, 2012: Here’s a well-informed explanation of the whole situation from Michael Hiltzik at the L.A. Times
And then there’s my view as a consumer: Hostess Brands products are sugary, chemical-laden, artificially colored and flavored crap that does nobody any good. Twinkies and Ding-Dongs and whatnot are just garbage, not real food by any measure. They are direct contributors to obesity, diabetes, and a host of other physical maladies one might expect from eating something from a test tube rather than a farm or field. To them I say, good riddance to bad rubbish, no tears here. (Although, it should be noted, all HB assets are now for sale and given the inexplicable enduring popularity of that foam-filled faux cake that is called a Twinkie and is synonymous with junk food, it and its brethren will probably remain with us until the apocalypse and well beyond.)
Hostess Brands has been struggling financially for years, forging ahead with a product line that never changed to adapt to the changing awareness of the American consumer that such products are grossly unhealthy and have only a single redeeming feature: They are cheap. Might HB have retooled its lineup at some point to include healthier offerings? Would that have saved them? Are they making the union the scapegoat for their own poor understanding of the changing marketplace and/or bad business decisions?
I don’t feel sorry for Hostess Brands or anyone in the ranks of its corporate leadership, but I do feel sorry for all those now-unemployed workers. One thing is certain in all of this: The economy bites.