For John, BLUF: The fact is it was time for Hostess to go, with the Twinkie being rescued by some Mexican firm. Nothing to see here; just move along.
Here at The New Yorker writer James Surowieki makes an excellent point about the Hostess Company (and their product, the Twinkie).
Hostess's management certainly bears some of the blame for its failure to successfully adapt, though the company made numerous (and failed) attempts to introduce healthier products. But the simple truth is that this kind of failure is endemic to the system—there are always going to be companies that are unable to change in response to the marketplace. And those companies are supposed to go out of business. Not to be too clichéd about it, but this is what creative destruction is all about."Creative Destruction". There is a word that helps us understand capitalism. Old companies go under and new companies are born. It is the way of the restaurant business and the aerospace business. Vultee became Consolidated Vultee which became Convair which became part of General Dynamics and was part of the breakup that went to Boeing and Lockheed. The alternative is stagnation and collapse—think Soviet Union.
One item that I thought was incomplete was the author's putting up part of a Tweet by John Nolte—"Hostess strikers had pensions. PENSIONS! What is this, 1962?" Turns out that John Nolte is a senior editor at Brietbart (I didn't know that until I started digging) and the full Tweet was:
Hostess strikers had pensions. PENSIONS! What is this, 1962? And now they got nothing. All part of the union plan, create economic chaos.Not very uplifting, but it gets to a point. This collapse is, as Mr Nolte notes, going to be painful for the 18,000 employees of Hostess. I wonder though, don't we have a Federal system for dealing with collapsed pension systems? A Federal Agency?
And, I doubt there is a "union" grand plan to create economic chaos. We are not talking Cloward and Pivon here, or are we?
Regards — Cliff
1 comment:
This "pension" thing is a pure red herring, played for all it's worth by the hedge funds looking to deflect attention from their dirty dealing in failed paper.
Here's some early analysis from Fortune back in July: http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/
Here's some more recent analysis from CNBC: http://www.cnbc.com/id/49853653
The pension plan has been unfunded for years, and one of the primary objectives of the liquidation is to attempt to get out of the legal obligation to pay for it.
For better or for worse, pensions are legal obligation owed to workers who agree to forego other compensation in order to EARN them via their labor. My company bought ours out and transferred our stakes (with full IRS and SEC scrutiny) into a "defined contribution" type plan. Hostess would have been free to do the same. They did not. They are attempting to retroactively renege.
The real scandal is the lack of documentation on the discounts agreed by Silver Point and Monarch hedge funds for their stakes. The obvious point is that they are MAKING money on the liquidation, BIG money, and that is the reason they bought their stakes for pennies on the dollar in the first place, and fought off the $580M acquisition bid during the first bankruptcy years ago from a group who actually wanted to run it as a business, and not dismantle it as a giant bankruptcy swindle.
The paper trail is out there. Jawboning about pensions only aids the perpetrators of the planned collapse and corresponding looting via bankruptcy forgiveness of the vast majority of the legal liabilities owed to both creditors and employees.
Post a Comment