Longform

Was Hostess' Death a Murder, Suicide or Natural Causes?

In the years leading up to the collapse of Hostess — baker of Wonder Bread, Twinkies and Ding Dongs — it wouldn't have required a peek at the company's closely held books to figure out it was in trouble. Ask the guys who baked the snack cakes and bread. Ask the drivers who hauled them to distribution points, grocery stores, gas stations.

They'd say Hostess had been on life support. The plug finally got pulled.

Paul Storz, a Teamster driver, would have told you his old beater of a rig was bleeding oil the way Hostess hemorrhaged red ink in net losses for each of the two full years between this bankruptcy and the last one in 2009. It wasn't just his truck. "It probably looked like OPEC moved into the Lenexa [Kansas] bakery," he said. "There was that much oil on the ground."

Mike Hummel, a bakers union member who clerked on the Lenexa docks, receiving shipments of tons of flour, would have told you he doesn't like to think about how much bread they had to toss. It was always something, maybe a bad conveyor belt or busted oven. "These people got to the point where they're putting Band-Aids on everything," he said.

One of the largest bakeries in the United States was crumbling, but nobody asked him, and that figured, far as Hummel was concerned. The guys running the company from Irving weren't bakers, after all. Hostess imported its last chief executive officer from Kraft Foods. The one before him (there were a handful in short succession over the company's final few years) came from Pepsi. The company itself was owned by a private equity outfit and a couple of hedge funds. In fact, nobody much thought about the rank and file until Hostess filed for bankruptcy in January 2012. Then it seemed like they were all anybody could talk about when it came to the roots of the company's insolvency. Suddenly, Hummel's pension and wages were what were grinding the company into the dirt.

After 14 years on the job, he made $16 an hour — $20 if you count the dough he and the other bakers had voted to sock away into their pensions. With that money, he bought a minivan to ferry his two kids to school, a Toyota Corolla, a split-level ranch in Lawrence, Kansas, and put his wife through college. Hostess brought Hummel, an outspoken bearded and ponytailed 36-year-old, into the middle class. He certainly wasn't joining the country club anytime soon, but he knew what a living wage was, and he wasn't eager to let go of it. That, he believes, was what Hostess was asking of him as it made demands in bankruptcy court throughout most of last year. The pension contributions from the company the unions had negotiated for themselves were gone. His health insurance costs would be tripled. And his pay would fall by 8 percent immediately.

He didn't recognize himself and his coworkers in the portrait of union greed and self-destructive intransigence painted by the company and some corners of the media, portrayals that fingered him for putting the bullet through Twinkie the Kid's cream-filled heart. Hostess had broken too many promises it made to him and his union brothers and sisters. There was a limit to how much he was willing to give. As it happened, he and the rest of the bakers union reached it October 3, when their wages and benefits got cut by roughly 30 percent. His bakery was the first to take to the picket line after the judge threw out the union's hard-won collective-bargaining agreements. A week later, Hostess was dead, sport for the crows on the auction block. With so many of its plants shut down by the bakers union work stoppage, management said the company had no choice but to liquidate. For killing the Twinkie, the bakers became the most reviled union in America. And Teamsters like Storz? Well, sure, they didn't strike with the bakers — Storz even crossed the picket line and hated himself for it — but at the very least his union strangled the company with extravagant wages (Storz made $48,000 annually) and pension benefits. That was the one story, anyway. The unions killed Hostess. Now the guilty parties — some 19,000 workers, mostly union — stood in the unemployment line, and didn't that serve 'em right?

On the other side (usually of the political spectrum), Hostess was seen as a victim of Wall Street rapacity. Wonder Bread? Just another casualty of Bain Capital-style private-equity pillaging. The recipe was by now all too familiar. Snatch up a distressed company for a song, add debt liberally, slash costs, extract generous management fees and, if it can't shoulder the load, hello again, Chapter 11.

Now that Hostess is in the process of being hacked to pieces for the fire sale, the snack-loving American public, in its grief, bewilderment and rage, has been trying to figure out which of the scenarios led to the (possibly temporary) loss of its confection-by-chemistry junk food. It's the black-and-white tale of today's two Americas: Either the bankers plundered Hostess at the expense of the working stiff, or the unions were a leech on its hide, draining the company in a kill-or-be-killed free market. If only the story of Hostess' demise were that simple.


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Brantley Hargrove