Vulture Capitalism — Not Unions — Killed TwinkiesSubmitted by emalvini on Tue, 11/20/2012 - 21:27
Hedge funds took profits and piled on millions in debt at Hostess. They created this bankruptcy, not unions
By Jake Blumgart | Salon.com
As Hostess moved to end its operations last week — a bankruptcy judge asked the company Monday to try mediation with its unions; those talks are scheduled to begin today — commentators were eager to blame the rigidity of unions.
But the story is far more complicated than that — and in some ways, the exact opposite of the tale pushed by those on the right. It’s the story of two bankruptcies, hundreds of millions of givebacks from Hostess unions and hundreds of millions of debt piled onto the company by venture capitalists. It’s a story of management that boosted its own salaries, while failing to make agreed payments into workers’ pension funds. And it’s a story of changing tastes and diets.
To begin with, when was the last time you ate a Twinkie or chose spongy Wonder Bread over an artisanal or organic load? The company simply hasn’t been able to adequately compete due to a stodgy, moribund management that did not act to diversify a product base that hasn’t changed with the times (unless you count 100-calorie Twinkies packs). As the New York Times reported way back on Sept. 23, 2004, “People are still eating Hostess Twinkies and Wonder Bread, but the problem for Interstate Bakeries is that they are eating less of them.”