MORE

Return of the Twinkie, Sans Union Labor

Return of the Twinkie, Sans Union Labor
Catherine Downes

Twinkie is risen from the ashes of its liquidated parent, Hostess, and will visit the shelves of grocery stores and gas stations once more on July 15. That means Ho Hos and Ding Dongs will return in what its new owners have dubbed "The Sweetest Comeback in the History of Ever."

Private equity firms C. Dean Metropoulos, owner of hipster-legacy suds Pabst Blue Ribbon, and Apollo Global Management, which bought and flipped Chef Boyardee and Bumble Bee tuna, snapped the snack cake brands out of bankruptcy for $410 million. Now they apparently plan to reinvent the brands in a way Hostess never could (or should have?). Think Cup Cakes made with dark cocoa and crunchy Twinkies. Think about dietary qualifiers: added fiber, gluten free and low sodium, according to this AP report.

Don't think labor, though. That wasn't baked into the deal. The shedding of all union obligations definitely was. Some of the original employees have returned, but they don't pay dues anymore. From bankruptcy to union-slamming bankruptcy, this was always inevitable. Interstate Bakeries, as it was known then, was a Frankenstein, cobbled together out of smaller bakeries until it had hundreds of different union contracts, several dozen bakeries and more than 2,000 distribution centers and outlet stores. The company was making good money, but more of it was going out the door.

Interstate filed for bankruptcy in 2004, and there it remained for five years until a private-equity firm with $130 million to burn came along and persuaded the unions to agree to eliminate 10,000 jobs, close bakeries and outlet stores, in the process saving the company $110 million. Meanwhile, top management received big bonuses, to the dismay of the rank and file that had sacrificed so much.

But as part of the deal, the private concern known as Hostess would invest its savings from labor concessions into new products and equipment upgrades. That didn't happen. Hostess somehow managed to come out of bankruptcy with more debt at around the time the recession hit. Management came back to the unions, asking for more sacrifice. The unions told management to piss off. Hostess stopped contributing to their pensions while top executives again received substantial raises.

By now you can see where this is going. The baker's union went on strike, Hostess declared bankruptcy and now the new company is utterly devoid of union labor.

The company, however, appears to be making some good moves. It's trimmed down. It's tweaking its venerable (but stale) product line. It's delivering to warehouses instead of directly to stores, reaching more shelves, cheaper. I don't know if there's a lesson here. Is this about getting out from under bad management? Or are these kinds of middle-class, pensioned jobs simply anachronisms in the global economy?

America's favorite cellophaned confection is returning to the shelves. Odds are, that won't be what its consumers think about when they sink their teeth through that creme filling for the first time in months.


Sponsor Content

Newsletters

All-access pass to top stories, events and offers around town.

Sign Up >

No Thanks!

Remind Me Later >