According to Washington Post:
“You get a big delight in every bite of Hostess Twinkies,” said Twinkie the Kid in a 1970s television ad after lassoing two cartoon thieves making off with golden sponge cakes packed with “creamy filling.”
But all the fruit pies, cupcakes and Wonder bread in “Hostess Twinkie town” weren’t enough to save privately owned Hostess Brands from filing for bankruptcy on Wednesday, for the second time in the past decade. The company, which has 19,000 employees, will continue operating as it seeks to restructure.
The failure of the brand, for decades a staple of American kids’ diets, is a parable, rife with the problems that have plagued some of the country’s oldest and most famous brands — a combination of pension burdens, labor rules, crippling debt from financial engineers and management’s failure to freshen up a stale product line and keep up with consumers’ changing tastes.
There was plenty of finger-pointing on Wednesday. In the bankruptcy filing, Brian J. Driscoll, chief executive of Hostess Brands, blamed its failure on “restrictive” labor rules and legacy pension burdens. He lamented that the company had 372 collective bargaining agreements with a dozen unions, and that Hostess paid $103 million a year to employees’ pension funds. He said the Teamsters’ contract rules required different workers for making bread and cake deliveries and limited flexibility to serve small outlets.
However, Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, the biggest of the Hostess unions, blamed management. He said executives launched a deli-style bread that “was just a loser from day one.” He said they starved the advertising budget. And he said that the union had been compliant, freezing wages for four or five years as the number of workers fell. As for the pension plan, which is owed $944 million, Hurt said Hostess had not made a payment to the fund since July.
“I have to tell you Wall Streeters don’t give a [darn]about people. Zero. They could care less,” Hurt said. “That’s what’s wrong with this country.”
Meanwhile, Hostess has been nibbled to death by competitors as consumers sought healthier snacks. Its biggest rivals are Grupo Bimbo, which has bought up classic brands such as Arnold, Thomas’s, Entenmann’s and Sara Lee, and Flowers Foods, owner of Nature’s Own.
More of the story here.