Video: Hostess chief on the labor dispute that killed Twinkies
posted at 11:12 am on November 16, 2012 by Allahpundit
What’s clear is that a worker strike isn’t the only headache for Hostess.
PrivCo, a company that researches privately-held firms, estimates that at the end of 2011, Hostess had $40.3 million in cash and $1.43 billion in liabilities, including $303 million in debt that came due this year. PrivCo CEO Sam Hamadeh calls these figures a “recipe for a disaster in the making.”
Hamadeh says the company’s “onerous union contracts and its massively unfunded pension obligations” are a big part of the problem. “As of January 2012, Hostess’ pension fund was approximately $2 billion underfunded,” he says.
Toss in a broader social trend towards calorie-counting leading to lower demand and it’s a perfect storm. But don’t despair: Someone’s bound to buy the brand in liquidation and resume production. The question is whether tomorrow’s bland spongy lowbrow eclairs will be as tasty as yesterday’s bland spongy lowbrow eclairs. I can’t deny it — reading the news today, I’ve already got a craving for one.
Update: A solid summary from Mark Hemingway of just how insane the union’s behavior was here. Some workers took to crossing the picket line because they realized the union was on a kamikaze mission. Too late.