Hostess, whose roster of brands dates as far back as 1888, hadn't invested heavily in marketing or innovation in recent years as it struggled with debt and management changes.Among the casualties: Ding Dongs, those chocolate hockey pucks; Snowballs, a special lunch treat back in elementary school; and Wonder Bread, building strong bodies twelve ways. It's that last item that lent itself to the mild pejorative implied in "whitebread": namely, without much style, originality, or soul.
As larger competitors inundated supermarket shelves with an array of new snacks and variations on popular brands, Hostess cakes seemed caught in a bygone time. The company took small stabs at keeping up with Americans' movement toward healthier foods, such as the introduction of its 100-calorie packs of cupcakes.
The failure of the company? Check for the usual cast of characters.
Hostess, based in Irving, Texas, said it was saddled with costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs for workers; the new contract offer would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.The product brand names and recipes probably still have some value, and Twinkies and many of the other products will likely be back, under new ownership. Once upon a time, Hostess was part of the Continental Baking division of the notorious conglomerate ITT, which also owned a vending machine company. And therein hides a tale. One summer a vending machine in the lobby of the old Mackenzie Hall at Wayne State University failed, and an unfortunate customer (not me) discovered that Twinkies can, indeed get moldy.
Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling. Although some of those executives later agree to reduced salaries, others including former CEO Brian Driscoll had left the company by the time the pay hikes came to light.
Then, last week, thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company's latest contract offer. The bakers union represents about 30 percent of the company's workforce.
By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.
The company filed a motion to liquidate Friday with U.S. Bankruptcy Court. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
In a statement, the bakery union said Hostess failed because the six management teams over the past eight years weren't able to make it profitable not because workers didn't make concessions.