Hostess Brands to close in face of strike

The announcement that Hostess Brands will liquidate itself in the face of a potentially long strike will cost 18,000 people their jobs, and close the maker of Twinkies, Wonder Bread, Drakes Cakes,  and other unhealthy yet iconic baked goods.  The only surprise for me is that the company has lasted this long, its life prolonged by bankruptcy and restructuring. Now it is closing, and its assets - including facilities and brand names - sold off. We can expect some of the brands to reappear as specialty items, probably at a higher price than now, as nostalgic specialties.

I have been watching the commercial baking business for many decades, as a former involuntary member of the American Bakery and Confectionary Workers Union and the Teamsters (paying initiation fees and dues was a condition of working in a competitor of Hostess during the summers of my college years). Even back in the 1960s, producing supermarket loaves of bread and snack foods in factory bakeries was a terrible business - a low margin, semi-commodity, fiercely competitive industry. Interstate Bakeries, as Hostess was then known, was a publicly traded company, and its profits were microscopic, among the lowest on the Fortune 500 list as a ratio to sales, assets, or even per employee.

But it was a great job for a college kid, because those two unions, both of which eventually were taken over by the feds as corrupt, extracted high wages in return for work in the horrible conditions. Even after the rake-off to the union, the paycheck was a lot higher than anything else I could find. My job consisted of substituting for workers who took their vacations, so every 2 weeks I would rotate to a different job. The absolute worst job as working the mouth of the travelling oven, loading cast iron bread pans, 5 loaves per unit, onto a conveyor that fed into a block long oven. The heat at this work station was almost unendurable, the pans weighed close to 30 pounds, and the pace was unrelenting. The expression "hydration break" was unknown. Dominic, the man who normally did the job, was illiterate and seemed addled, his fellow workers speculating that the job had starved his brain of oxygen. They may have been right.

These experiences help me sympathize with the unions, which refused to accept pay cuts. But this sentiment does not mean agreement. Wages can only be paid by viable businesses, and Hostess was stuck in an industry that has been declining for half a century. Food trends have not favored products based on refined grains and sugar, and it does not appear that the quality of management in the industry has improved from its low levels in the 1960s.

The only saving grace might be the possibility that some unions, or their members, will better appreciate that their livelihoods depend on the viability of their employers. But I wouldn't bet on it.

The announcement that Hostess Brands will liquidate itself in the face of a potentially long strike will cost 18,000 people their jobs, and close the maker of Twinkies, Wonder Bread, Drakes Cakes,  and other unhealthy yet iconic baked goods.  The only surprise for me is that the company has lasted this long, its life prolonged by bankruptcy and restructuring. Now it is closing, and its assets - including facilities and brand names - sold off. We can expect some of the brands to reappear as specialty items, probably at a higher price than now, as nostalgic specialties.

I have been watching the commercial baking business for many decades, as a former involuntary member of the American Bakery and Confectionary Workers Union and the Teamsters (paying initiation fees and dues was a condition of working in a competitor of Hostess during the summers of my college years). Even back in the 1960s, producing supermarket loaves of bread and snack foods in factory bakeries was a terrible business - a low margin, semi-commodity, fiercely competitive industry. Interstate Bakeries, as Hostess was then known, was a publicly traded company, and its profits were microscopic, among the lowest on the Fortune 500 list as a ratio to sales, assets, or even per employee.

But it was a great job for a college kid, because those two unions, both of which eventually were taken over by the feds as corrupt, extracted high wages in return for work in the horrible conditions. Even after the rake-off to the union, the paycheck was a lot higher than anything else I could find. My job consisted of substituting for workers who took their vacations, so every 2 weeks I would rotate to a different job. The absolute worst job as working the mouth of the travelling oven, loading cast iron bread pans, 5 loaves per unit, onto a conveyor that fed into a block long oven. The heat at this work station was almost unendurable, the pans weighed close to 30 pounds, and the pace was unrelenting. The expression "hydration break" was unknown. Dominic, the man who normally did the job, was illiterate and seemed addled, his fellow workers speculating that the job had starved his brain of oxygen. They may have been right.

These experiences help me sympathize with the unions, which refused to accept pay cuts. But this sentiment does not mean agreement. Wages can only be paid by viable businesses, and Hostess was stuck in an industry that has been declining for half a century. Food trends have not favored products based on refined grains and sugar, and it does not appear that the quality of management in the industry has improved from its low levels in the 1960s.

The only saving grace might be the possibility that some unions, or their members, will better appreciate that their livelihoods depend on the viability of their employers. But I wouldn't bet on it.

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