After months of coercive threats, Hostess Brands is filing for bankruptcy for the second time in less than a decade. Hostess has assets galore- 40 odd bakeries with replacement values of $10,000,000 and up, around 400 depots and thrift stores on valuable retail turf that are easily worth at least a million apiece, 10,000 smaller trucks, 1000 big trucks, and 2000 semitrailers worth a few hundred million. Even the odds and ends of the asset inventory are huge- like around a hundred thousand shipping "racks" worth several hundred dollars each and god only knows how many baking pans and such.
Biggest losers in this corporate shakedown are the workers- Hostess owes damn near a billion to the bakers pension fund alone, and there's a bunch of other pension funds Hostess has stiffed as well. These are hard working folks- less than a hundred Bakers can bake enough bread to feed several million mouths, and it takes only another hundred or so Teamsters to deliver it.
Some background... The biggest chunk of Hostess was Continental Baking, formed in the 1920s via the merger of around a hundred bakeries scattered across the U.S. Continental developed a system of highly efficient medium sized bakeries, big enough to use mass production but close enough to markets to provide fresh bread products. Continental's distribution system was similarly efficient and was a leader in the transportation industry. Continental became a profitable "General Motors of baking", and it's union workers shared in that profitability with living wages and benefits. Continental's system became the model for their competitors such as Bimbo and others who continue to earn profits while providing their unionized workers living wages and benefits.
In the 1980s the destruction of this successful enterprise began as Continental was sold to Ralston Purina. Ralston Purina on one hand tried to monopolize the wholesale baking industry with one hand while attempting marketing techniques more suited to dog food with the other. I still remember the time when they dumped a months supply of Beefsteak bread on the market, forcing us to make extra trips to bring the unsold stale bread back for disposal!
Monopoly attempts largely failed, Ralston Purina dumped Continental on Interstate Brands, a smaller and disorganized wholesale baker that was something of a joke in the biz. While Continental used economies of scale, Interstate individual bakeries were fiefdoms unto themselves. For example, while Continental used the same tractor trailer rigs to haul both Hostess cake and Wonder and their other brands of breads, Interstate had completely separate trucking operations that often ran two half full trucks on the same route. But instead of consolidating the two company's operations to improve efficiency, Interstate demolished bakeries like those in Natick, MA and East Brunswick, New Jersey and sold the valuable land to developers. The Natick bakery was replaced by a new one in Biddleford, Maine; A logisticly lousy location far from major markets apparently chosen in an attempt to replace the union workers from Natick with cheap non union labor. That didn't work- the unions went to court and won the right of Natick workers to transfer to Biddleford. In the midwest, after closing a bakery in Detroit to get even with the union, Interstate spent thirty odd million to build a new bakery to make up for the lost capacity in Toledo that ended up unionized too. All the while, the bread got stale quicker as local bakeries were closed and Interstate added an additive that slowed staleness but made the bread less tasty. Competitors had tested the additive but passed on it and Interstate's Bakers sampling the additive infused bread informed Interstate management of the worsened taste. But Interstate persisted with the staleness retarding additive, and after decades as the nations best selling bread Wonder was bumped to number two by Bimbo's upstart Ironkids brand.
And the old problems remained- after buying out more competitors, Interstate often had three or more trucks, each carrying but one of their many different brands, making the same delivery rounds. There has been persistent talk of cronyism- relatives of managers on the payroll, to the point where several crony managers sat around the depot office all day while the hardworking teamsters drivers did the hard work of delivering the bread. Further up the corporate food chain, just one executive alone received over twenty million in stock options before he retired on the eve of the first bankruptcy.
Bankruptcy number one was filed in the fall of 2004 for no good reason. Interstate had assets galore and was current on it's liabilities- I pulled up a bunch of their property tax records then and found that they were not only current, but in fact had paid property taxes six months and more early. The nearly five year long bankruptcy produced little improvements in efficiency, only wage and benefit concessions. And despite having just expanded the corporate offices in Kansas City, on emerging from bankruptcy number one the executives changed the company's name to Hostess Brands and leased some pricey office space in more fashionable Houston.
Hostess has been coercing further concessions around a year now, and the union's membership have rightly rebuked them. Several months ago Hostess quit making contractually and legally obligated payments to the pension plans completely. Having failed to intimidate their union workers, Hostess has filed for bankruptcy, again. Our pensions are threatened, while the company's retired executives relax in the wealthier suburbs of Kansas City and other environments... You can look up their swank addresses and maxed out contributions to the republicans at opensecrets.org.
One bankruptcy is... Enough!
This retired Teamster Hostess worker and her brothers and sisters have had enough of "convenience" bankruptcies. It's time for the bankruptcy courts to say "No" and tell Hostess and similar deadbeat corporations to end the shakedown of their workers and pay up, even if it requires a "clawback" of those millions in unearned executive bonuses. Greedy CEO's will fleece us again and again... Until we stop them!
Made the Rec List... Thanks, everyone!
Update- Just started reading through the bankruptcy filings... Juicy! For example, despite having hordes of empty bakeries and other buildings they've closed, Hostess is spending over $100,000 a month just to warehouse incoming ingredients. And in little Waterloo, Iowa their operation looks to be spread out over five locations- a bakery, thrift stores, and a depot and a warehouse because the bakery isn't big enough now that they've closed the Davenport, Rochester, Sioux City, Omaha, and Minneapolis bakeries. Meanwhile, the closed bakery in Davenport sits largely empty while Hostess is renting depot space just a few miles away. And Hostess is blaming the workers for their problems?
