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> Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement"

It's surprising that the union would actually let the company fall apart. Was there some lapse in communication? Did the unions think the company was bluffing when they said "we're going to go bankrupt"?

Also, their downfall probably had more to do with a change in social perception that they couldn't do anything about. Everyone knows that Twinkies are "bad for you". It's almost stereotypical for a fat person to be eating Twinkies, and this makes everyone want to avoid them.

>>>> their downfall probably had more to do with a change in social perception that they couldn't do anything about.

Agreed. When I was growing up, I ate a LOT of these snack foods and regularly had twinkies in my bag lunch I brought to school.

Nowadays, there's a much better emphasis on nutrition and making sure kids avoid getting obese.

Back in 2005, the same thing happened to Krispy Kreme. They flooded our city with stores, but within a few years, they were all gone. There were a victim of the health food craze taking off.

As much as I hate to see them go, it's a good sign.

I don't hate to see them go, and not for health reasons.

This is what is supposed to happen when a company can not perform efficiently with the resources it has. I realize the strike killed this company, but it was severely wounded and bleeding already. No guarantee it would have survived much longer, strike or no strike.

In these situations, it is good for the company to fold. Sell off it's assets and let another business that can make better use of these resources do so.

If a company is squandering resources, that is a drag on the economy. Much better to let someone new withe better ideas and better execution come into play. Bankruptcy and Liquidation lets this happen. It's a good thing.

If a company can pick up these resources and use them more efficiently, they will hire people. And maybe all the things that Hostess fell short on with the union contract will not be a problem for a company that can execute efficiently.

While that is certainly not the only possible outcome, I think it is a likely one.

The Krispy Kreme situation is quite different. They had an accounting scandal that actually caused them to contract, in addition to the health craze reasons that many people assume.


This is off-topic, but I really hate the term "health craze." People caring about something does not make it a "craze." When people put on their seat-belt, we don't say they have a "safety craze." For the same reason, we should stop using the term "health craze."

Donuts in moderation are fine. Seat-belts in moderation are not a good idea.

That's why your analogy doesn't really work.

I said "craze" because the anti-carb mood is somewhat of a fad, so I think the word "craze" is perfectly suited.

In Krispy Kreme case it was in fact a "craze" - the Atkins "eat no sugar" diet wave, followed by South Beach diet wave, followed by the derivatives. All of these have subsided now, but they were nothing less than a sudden craze. I was one of many how jumped on the bandwagon only to jump off it few months later.

Their total sales were down 11%, but Twinkies remained their best seller. It's possible that the whole business was dragged down by other house brands that needed to be killed, but couldn't be without shedding more jobs.

(Twinkies are gross.)

>Also, their downfall probably had more to do with a change in social perception that they couldn't do anything about. Everyone knows that Twinkies are "bad for you".

My anecdotal experience says otherwise ;)


The company had played the "liquidation" card before. I don't have a reference, but it was mentioned in one of the articles I read today.

I believe the strike was "the straw that broke the camel's back", although a strike carries more weight than the proverbial straw, it certainly is not the sole thing to blame.

But it is a factor, and a helluva big one. If the company you work for is in dire straits, and you want to recover and for you to keep your job, striking is probably not a wise choice.

It's interesting that they didn't do a re-organizational bankruptcy, which would say "get us out from under (union and other) contracts and we can compete again." They are doing a liquidation bankruptcy.

The name brands may well survive, like the pets.com dog did, but it will be at other companies.

EDIT: as child comments point out, they were in re-org and have now collapsed into liquidation

My understanding is that this was a re-org bankruptcy but that the unions rejected the contract that was agreed to during the re-org and went on strike. Nothing left after that other than to liquidate.

This sounds to me like a game of brinksmanship in which neither side blinked.

They've been in re-org bankruptcy since january. Part of the re-org was a new contract with the union. The union rejected and went on strike.

I suspect (with no specific knowledge of the situation, just pattern recognition) that a problem was that the contracts were negotiated when times were good. But since food has very little IP protection besides the brand name, they eventually lost out on ways to distinguish Hostess® Twinkee®s from Generic Snake Cake With Cream Filling that can be just as good but made more cheaply.

I'm not sure it's fair to assume the result would be any different if the union had acted different. Hostess had plenty of unrelated financial problems.

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