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Thread: So who really killed the Twinkie
12-02-2012, 07:37 PM #1
So who really killed the Twinkie
So all this talk about "it's the unions fault" it's management, blah,blah,blah. So I asked my Dad who killed the twinkie. My dad has been business consultant for about 60 years now. He writes a news blog for the computer/manufacturing sector.
What follows is his response to my question
Who killed the Twinkie? - The fall of the ubiquitous Twinkie is truly an American business tragedy. From junk food to junk finance, another iconic brand has fallen to changing times and economics. Ironically, it’s a company that’s starving to death. Not surprisingly, blame for the demise of Hostess Brands Inc. has gone around like a bad case of the stomach flu. Was the demise the fault of the Unions? Economy? Management? Obamacare? WHAT?
Too many, it seems like the blame rests with the greedy unions who struck because of the low $10-an-hour wage with benefits. After all $10 bucks an hour is only a smidgen better than food stamp money. Or, perhaps the
demise was due to Ben Bernanke and his QE3 or maybe it was the massive US $16 trillion dollar debt and fear of the fiscal cliff hangover.
Others blame a series of bad managers and their alleged 300% raises. Or perhaps it is really due to the recent recession and overseas competition?
There are those who point to the owners, Ripplewood Holdings LLC, for creating unsustainable conditions by piling on $700 million in debt when they initially bought the company. There is a lot of blame to go
around for the demise of the Twinkie! Anyway, if you are still looking for a bad guy Try the American consumer who’s changing eating habits moved to getting healthier.
Hostess just wasn’t growing; its costs were high at a time when the public has its diet. Was that the cause? Nope! There is Reality to blame. What we are dealing with here is less than black-and-white than a trumped-up labor battle or cultural health shift. It’s the story of too many interests trying to milk the dwindling profits of a brand that had it too easy for too long.
Twinkies did not survive that complete apocalypse. The company was hurting from self-inflicted economic wounds and other inflictions that had little to do with marketing or sales. Hostess, after all, still had $2.5 billion in annual revenue. The company’s woes began really where they should have ended -- at the first bankruptcy reorganization in 2004! Hostess was known back then as Interstate Bakeries who spent more than four years consolidating and rightsizing (it closed 54 bakeries and hundreds of stores),
selling assets, negotiating with its unions and battling takeover attempts. But instead of emerging cleaned up and ready-to-go in 2009, Hostess emerged as smaller and less competitive; and with the union holding a position in the Company. It was also still burdened because private equity and hedge funds owned half of Hostess. Worse, the US was plunged into a recession.
Admittedly, one of the bigger problems was a $700 million loan that couldn’t be repaid. Result, Hostess was back in bankruptcy court earlier
this year, seeking to reorganize yet again. But that action was a bad situation made worse. The unions, including the Teamsters and bakery workers, felt they had been lied to and misled by new management. The situation got nasty. In the first bankruptcy, a court ordered 8% wage cuts and a 17% increase in health-care costs for workers. The unions pointed to huge management contracts. The CEO is paid $100,000 a month. Its
former CEO, Brian Driscoll, was making $1.5 million annually, but they were miniscule compared to the Companies losses and besides, CEO Rayburn rescinded the pay and made them take $1 for the year. The New management was led by restructuring whiz Gregory Rayburn. He’s worked with companies including WorldCom (sold to Verizon Communications), Muzak (eventually went bankrupt), and Sunterra Corp (became
Diamond Resorts Holdings). So who’s to blame for the Twinkie’s demise? All of the above but the unions were the trigger and biggest loser. Rayburn has already asked for permission to sell the pieces..”No law ever prevented a crime.”
12-02-2012, 08:18 PM #2Professional Member
- Join Date
- Aug 2006
Bruce killed the twinkie.FEN
12-02-2012, 08:29 PM #3
BWHAHAHAHAHA.”No law ever prevented a crime.”
12-02-2012, 10:18 PM #4
So basically this is a generic explanation we could use describe many other companies.
12-03-2012, 02:24 AM #5Regular Guest
- Join Date
- May 2006
- Ft. Worth, TX
It's obvious who is to blame--Ripplewood Holdings LLC. 700 MILLION dollars in loans that was pissed away by executives at Ripplewood Holdings. I'm sure huge portions of that 700 million were stuffed into their own personal swiss bank accounts. This has happened many times over the years. Company execs load up a company with debt, and bleed it dry. Then they delcare bankruptcy and the stock gets delisted. And, the worst part about it? There are no repercussions to the multi-millionaires that raided the company by loading it up with huge debts. This is the exact same thing that Romney's partners did back in the 1990's. I remember a prosperous company called Dan River that was a textile distributor. They were doing great until the greedy executives loaded her up with debt and that sunk the company. Again, a lot of that borrowed money went into their own bank accounts. What happened to Dan River exec's? Not a thing. This is why capitalism can not exist in a vaccum. It can only prosper among a moral and preferabley Christian people. Otherwise, socialism takes over.
12-03-2012, 08:44 AM #6
I think I have bought one twinkie my entire life I think it is my fault.
12-03-2012, 09:07 AM #7
Its not good IMO for just a few companies to get too big and control too much of our lives. Morality as you suggest would be nice but in reallity, unfortunately we do need the government to keep an eye on business.
12-03-2012, 12:56 PM #8
12-03-2012, 01:50 PM #9
12-03-2012, 01:52 PM #10
12-03-2012, 10:15 PM #11
Following the line of thought of the op- Dan River went out because of outsourcing of the textile business. Plenty of others textile mills have shut down because of that as well.
And going on strike when a company is going bankrupt isn't exactly a good business move, either.Col 3:23
questions asked, answers received, ignorance abated
12-03-2012, 11:11 PM #12Professional Member*
- Join Date
- Sep 2005
- North GA
The textile business is labor intensive... literally NOBODY can break even competing with overseas manufacturers.
So to say this VC or that PE co destroyed a textile co... well that is IMO parroting political rhetoric without examining the facts.
BTW: Political rhetoric started by the DEM party to destroy the competition, because they knew their candidate did not have track record to run on.
The pathetic thing is... The American people believe the lies... and as such got what they deserved... 4 more years of BAD government.GA-HVAC-Tech
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01-30-2013, 05:59 PM #13