Once upon a time there was a company. It was happy and profitable for years an American icon, some said.
But like many things, times changed, consumers changed. The company struggled to keep up.
By the time it filed for bankruptcy protection in 2004, the company had amassed $450 million in debt, despite having to close plants and fire thousands. Financial consultants and hedge fund bankers came aboard and spent the next five years trying to engineer a path to solvency.
By 2009, despite a debt now at $670 million, the company exited bankruptcy protection. Three reasons why, according to Forbes:
An equity infusion of $130 million from a private-equity firm, which, in return, acquired control of the company.
Two key hedge fund lenders forgave half the existing $450 million debt, exchanging the rest for payment-in-kind loans, financing typically used in high-risk situations.
Workers agreed to cuts amounting to $110 million in annual savings; thousands more lost their jobs.
In return, management promised to turn around the company's fortunes. That should've meant past-due upgrades in facilities, equipment, marketing and research. It didn't happen, according to various restructuring analyses.
In July 2011, the now-revolving-door management unilaterally stopped funding an employee pension plan and fired another 10 percent of the workforce while 10 top executives, few with experience in the industry, gave themselves compensation increases from 30 to 80 percent, and one increase of 300 percent, according to employee claims. Those raises weren't rescinded until April, four months after the company re-entered bankruptcy protection.
By January, the company had more than $850 million of secured debt outstanding, $180 million in accrued workers' compensation liabilities, up to $60 million owed to trade creditors, $36 million in lease obligation, plus plans for a $75 million debtor-in-possession loan, according to the New York Times.
"All this from a company with assets of just over $980 million," the Times reported.
The company then asked employees for another 30 percent cut in wages and benefits, calling it a "shared sacrifice." Having agreed to previous pay cuts while watching their workforce of 10,000 in 2003 now reduced by half, workers refused any further givebacks.
The slow bleed appeared to end last week when Hostess Brands announced its imminent liquidation. The CEO, the sixth in 10 years, said management had negotiated in good faith, and he blamed workers of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union for going on strike the week before.
Unexpectedly, both sides agreed Monday to mediation talks. One last CPR effort.
Behind the Sacramento plant last Friday, workers rotating picket line shifts out front huddled under a tarp to stay out of the rain. One worker asked that I not print his name. "I've gotta find myself another job. I don't wanna be blackballed."
Co-workers nodded along as he compared Hostess with other union shops in the region: "We make a little over 20 bucks an hour here. Sara Lee, they make $22; Bimbo, $23; Oroweat, $24. Our pension is $1,850 a month when we retire. Sara Lee's is $2,600; Oroweat, $3,100 a month."
His point: Hostess is at the bottom of the scale. "If they can't make a profit on that while the other bakeries can, where's the problem?"
Others chimed in almost in unison: "Because they have better management!"
A worker who did identify himself, Dave Hodel, chimed in: "They were purchasing things like windows and toolboxes, spent the last year painting the lunchroom, locker rooms and floors. They should've spent money on machinery to run the plant better, not just aesthetics."
Updating the machinery, repairing and replacing delivery trucks, expanding the loading dock there's only one bay would've suggested true investment in the company's long-term future. Why spend money on new windows?
"They want it to look pretty so they can sell it," said Marty Zimmerman, head of the bakers union Local 85.
So while talking "good faith" and "shared sacrifice," execs were sprucing up the decor, as if preparing to stage an open house.
Twinkies are selling on eBay now at ridiculous prices $5,000 for a single one, in one auction, proving that as long as human beings exist, the planet will never run out of Twinkies or nitwits.
Whatever the little lard-log's shelf life, someone will likely produce Twinkies again. Hostess may have reached its expiration date, but their brands still have value, as do the plants and workers. Strikers down from Billings, Mont., told me bidders have been eyeballing the Hostess plant up there to continue bakery operations. Bakeries in the Sacramento region hire experienced workers four or five times a year.
"These guys are ready to go back to work," Zimmerman said.
As for recriminations, Oscar Wilde once quipped, "Conversation about the weather is the last refuge of the unimaginative." Likewise, management blaming unions for corporate failure is the last refuge of an unimaginative, incompetent executive team.