National view: Why no bailout for the Hostess Twinkie?
November 24, 2012 at 6:00 pm in Duluth News Tribune
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National view: Why no bailout for the Hostess Twinkie?
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Blaming the union is the best way to go, not the ceo salary :. In early February, Hostess had asked the bankruptcy judge to approve a sweet new employment deal for Driscoll. Its terms guaranteed him a base annual salary of $1.5 million, plus cash incentives and “long-term incentive” compensation of up to $2 million. (Driscoll-ceo of hostess)
Hot debate. What do you think?
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OK, OK, think this through all you finacial wizards: how many days of Hotstess Corporation operations can you pay for with the $2 million ceo’s salary? If the ceo took no salary at all, could the comapany exist, operate and pay the salaries/benefits they are bound to in their ‘union contracts’ ???
Well-loved. Like or Dislike:
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Hostess operated under the “Bain capital” model of raping a companies assets, all to create extreme wealth for it’s upper management team. Really, what have we, the general public, lost? An extremely un-healthy food source is all. Fat, carbs, sugar, and chemicals. Not such a big deal after all. Unless you are a job-losing employee, anyway. They were the true victims of this corrupt business policy. The rest of us: you’ll just be less fat. Good for you.
Hot debate. What do you think?
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Greed and mismanagement killed this company. Why would existing management be given more money to allow continuance of the same old thing? And, both management and some of the union folks were partners in the company’s demise. This was a joint venture failure. Perhaps the sale and reorganization of the company’s assets and brand names will result in something better for all…if not, then it is not the public or government who is to blame. All this is/would have been fixable with the appropriate levels of cooperation amongst all.
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Apparently those thinking a $1.5 mil salary is extravagant forget that GM’s bailed-out CEO made a cool $7.7 mil in 2011. Have the taxpayers been repaid all of their hard-earned money yet? How soon we forget . . .
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Yes, actually they were. GM paid back the loan portion that was given to it, and paid back in full.
What you are thinking of is the Treasury’s ownership stake in GM, which to date still fully exists. Will it Repay in 2015, perhaps, I doubt this but perhaps, but it did in fact pay back the loan.
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The noted baseball writer has once again stepped out of his competence zone to weigh in on matters of finance, union-bashing, and social matters of the baby-boom generation. Scarcely older than the generation he castigates, he decides that he knows all about an economic situation he has never been in. When was the last time he ever worked a factory job for an hourly wage? Never… hmmm. what can he possibly know or understand about contract negotiations between labor and management? Nothing… I thought so. Hostess has been through bankruptcy proceedings several times, by his own admission. He should have also admitted that such a thing was an indication that management was incompetent. Failure of the company’s board of directors to take decisive action to correct its management problems was the direct cause of the company’s shutting down. The labor problems were just another symptom of the management breakdown.
tom koehler
Hot debate. What do you think?
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“They” can`t stand the truth. You hit the nail on the head.
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Making tasty nutritious Hostess Twinkies a part of a school lunch program would do a lot to ensure survival of the company and to protect jobs vital to the nation.
Hot debate. What do you think?
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George is suffering from early onset conservative degeneration. He might just as well reminded us that 47% of us are lazy, there are different types of rape, and that Karl Rove is the allmighty.
“Whatever else a hospital ought to do, supposedly said Florence Nightingale, it ought not to spread disease. And whatever else unions should do, they should not put employers out of business.”
You bet, the unions took over the businesses and forced management to make unsustainable decisions while holding knives to their throats. Can’t wait to hear this all again in three years.
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George Will has been columnist figurehead for conservatives for 4 decades now. How fitting he seems like the conservative movement, out of touch, ill informed, clueless and biased and stuck in a time that has passed them by.
Like the conservative movement in general, he really doesn’t know what talking about but like most conservatives THINK they have a reason to whine and complain and blame unions.
Hostess first went bankrupt in 2004 and went thru a court reorganization and emerged from that bankruptcy 5 years later in 2009. During that period they not only had bankruptcy protection but got a huge influx of cash from GE Capital. So what they do when exit the 2009 bankruptcy? At that time they decided to move their headquarters and operations to Texas. Admittedly without more details, it nonetheless on surface appears to be huge plunder of someone with rocks for brains. Whenever companies move they usually lose about 80% of their talent in all positions including upper management not to mention you’re struggling with being solvent is not the time for paying for move, new buildings and equipment etc. The mindset of the talent a company has when does this is~~~Gee, if have to move anyway, why not at least look for another opportunity and see what’s out there.
So not three years later they are going bankrupt again and before did were clearly in enough financial mess again to ask the unions to take a 17% pay cut, and of course this must be, just has to be, the unions fault that they went on strike and Hostess closed?
Tom Koehler was essentially correct above, it’s a management problem and a clearly glaring one and George Will comes off like a crackhead on this, some of his article was almost gibberish nonsense.
Hostess has/had about 3 billion in sales revenue a year. They don’t have to redesign anything, in fact they’re essentially making the exact same products they did about 80 years ago without any real changes. If you have 3 billion in sales, never have to do continual product redesign or roll out new products every 2 years and in 80 years you can’t figure out how to be profitable, you deserve to be closed because you’re clearly incompetent and it’s clearly NOT the bakers unions fault.
The above information was culled from a one minute search on history of Hostess. Something George Will didn’t bother to do before shooting off mouth and whining with a bunch of nonsense obviously, but then again, he’s the perfect spokesperson then for conservatives who don’t check their facts, don’t know what talking about and just whine and try to blame anything they think means “Democratic party”. They most certainly shouldn’t have been bailed out, it’s clear their problems are root team and not temporary, it’s clear that they already got a 5 year grace period with protection from Bankruptcy, already got influx of a lot of cash, and STILL couldn’t come up solvent. To bail them out would have been a terrible investment and waste of money. To blame the unions, just shows one is more interested in promoting their bias then getting the facts right and using common sense but then he’s a conservative figurehead.
‘People seem not to see that their opinion of the world is also a confession of their character.” Ralph Waldo Emerson
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Three people were sitting at a table with 12 twinkies on it. One was a company C.E.O., the other a union employee, and the third was a stockholder.
They were discussing the reasons the Hostess company was about to fold.
The C.E.O. reached out and grabbed 11 0f the twinkies just as the conversation was about to begin. Then turning to the stockholder said, “you`d better grab that last one fast, because those union thiefs are about to take the other half of your twinkie pal”!
Gezzzzz….go figure.
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Why no bailout? Michelle Obama and her silly, stupid program to force people what to eat. That’s why!
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Thanks for the supportive post, I did say that conservatives have no idea what talking about, that it was clearly totally incompetent management but that conservatives will try to find away to somehow blame Dems for a total mismanagement of a 80 year old company with 3 billion in sales, again, thanks for the support.
Mmmm…I thought conservatives were all for less government intervention, total free enterprise and free market capitalism. Well…that’s exactly what this case is…but now conservatives want to blame that there wasn’t government intervention, whine that a company operating in free market for 80 years couldn’t figure out how to survive so the government should have intervened? Huh?….and that of course, it’s the unions fault, or Obama’s, or Democrats…or whatever conjured up mess.
Free market capitalism means not everyone survives. there’s winners and losers and conservatives need to pick or choose what they are supportive off. Either for total free enterprise or not and NOT just as suits needs for some convulted excuse to whine about something that think can twist up to blame Dems or liberals for. It matters not whether a companies employees are union or not, management of company means the management of talent and labor needed to accomplish goals. If your market changes as in your example blaming Michelle for promoting healthier eating habits..~rolls eyes~…, you either figure a way around it, find new market to penetrate or adapt to change. None of those things Hostess clearly was able to do…so the alternative in a free market capitalist economy is…bye, bye. A free market capitalist economy means that companies are also free to fail.
“Now, look, baby, ‘Union’ is spelled with 5 letters. It is not a four-letter word.” Dorothy Parker
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Fastone … good posts.
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Tips cap…thanks for kind words. I found this piece by George Will extremely odd. Though didn’t always agree with views he usually could at least articulate them and make sense. It’s like epitome of whole GOP, he’s just losing it and lashing out trying to blame something that thinks isn’t the GOP. His ranting is void of facts and common sense and just baseless rhetoric and finger pointing which seems to be what the GOP has degenerated into it. They think the Dems are their enemies and don’t recognize they’re their own worse enemy…oh, well…thanks again for kind words.
“When people who are honestly mistaken learn the truth, they will either cease being mistaken or cease being honest.” Unknown
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Funny thing is, the guy who runs the private equity firm that bought Hostess is a huge Obama donor. His firm works with union-involved companies because he believes in organized labor. His firm also brought in former House Speaker and labor sweetheart Dick Gephardt (D), and placed Gephardt’s son on the board of directors at a “fee” of $100k per year.
Bain Capital? Hardly. This was a bunch of incompetent liberals pretending to know how PE is done.
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Since Tim Collins owns and runs a 3 billion PE firm and is self made guy and on cover of Fortune magazine for some of his successes, not really sure that classifies as being incompetent? He is a Democrat granted, and he did bring in Gephart whose runs consulting firm dealing with Union and labor disputes. But there were over 20 other lenders that also sunk more money into this deal then Collins and the biggest were ex-Goldman Sachs partners so suspect they were Repubs and clearly not all a gaggle of liberals as you claimed.
Yes, I picked on Will for being a conservative because his whining about bailing out Hostess made no sense and goes completely against free enterprise in capitalist economy conservative mantra. Repubs whined when Gov bailed out firms, then whine when they don’t and it’s all Dems fault…arrghh..seriously, conservatives need to stop with all the finger pointing blame to Dems…it’s so overdone it’s like the boy who cried wolf.
You should have read the post of mine before one responding to…clearly said conservatives just look for reasons to blame Dems no matter how convulted their excuses. Thanks for the support on that btw as don’t see what Collins being a Obama supporter has to do with this.
They were already in trouble long before Collins showed up and were in Bankruptcy protection for 5 years before he did. Collins not involved until they emerged from Bankruptcy and maybe they should have gone under before, looks like the right call now certainly. Bad call on his part and the other 20 lenders thinking could save it but that’s what PE and investment firms do, take risks hoping for the big kill but sometimes they get killed. Collins didn’t run it per se, he hired CEO’s to do that and hired a string of them apparently that couldn’t save it. Maybe he didn’t hire right ones? Maybe with shape in wouldn’t have mattered? But for certain I don’t think him being a supportor of Obama means he’s incompetent. You claimed was a bunch of incompetent liberals that don’t know how PE is done….he’s the owner of very large PE with about 3 billion in holdings, I think he might have a clue how to do it. Free Enterprise, you win some you lose some and it’s not because of political party support…but you keep believing that…cuz I know you will…
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