For a week now, much of America has been obsessed with two questions. These questions are not “What has happened to Mitt Romney?” (he has hardly been seen since the election) nor “Will Barack Obama’s second term be different from his first?” No, what many Americans want to know is: Will they still be able to buy Twinkies? And if not, whose fault is it?
Twinkies are yellow, tube-shaped cakes that are filled with whipped cream. Their manufacturer, Hostess, refers to them as “snack cakes”, which gives them a status halfway between dessert and junk food. Twinkies are often found in school lunchboxes, college dormitories and any location where computers are used or programmed. Deep-fried, the cakes are a favorite at state fairs and baseball games.
Well, until now. The last of the Twinkies rolled off the production line last week. Hostess has gone bankrupt — not in the “under protection so the company can be restructured” sense, but in the “we’re selling all our machines and furniture and going out of business” sense. The company had been bankrupt in the first sense twice before, in 2004 and in January 2012. In between, it was bought by a private-equity firm.
Unable to reduce the company’s $860 million debt, the private-equity firm tried this fall to get employees to agree to massive concessions: an 8 percent pay cut (not the first), the elimination of their pensions (which Hostess had already stopped paying), and a significant shift of the health-insurance costs toward the employees. Only last year, the firm had nearly doubled the salaries of Hostess executives.
The bakers’ union responded by going on strike on November 9. A week later, management said it had no choice but to close all its factories. So while Twinkies are selling on eBay for $100 a box, 18,500 workers are out of a job. The finger-pointing has begun in the comments section of every newspaper article on the subject.
More than half of the commenters blame the unions for their “greed” and state that the employees should have agreed to continue working under worse conditions and broken promises, reasoning that a bad job is better than no job. Others fault the bakers’ union for forcing the whole company to close even though the union represents only a third of the employees.
Some commenters blamed management for being incompetent enough to get into bankruptcy in the first place. Twinkies have been around since 1930, and for decades, packaged baked goods sold well. The company neither invested in its future nor planned for hard times.
Sales started to decline a decade ago, when Americans began eating healthier food and fewer “snack cakes”. Some commenters said that a change of ingredients, made around 2002 to increase the shelf life of Twinkies, gave the cakes a sour taste, turning off customers.
As is the custom nowadays, a number of commenters blamed Barack Obama for, in their view, promoting a culture of “entitlement“, in which people feel they can make demands and expect to get what they want without working hard for it. (They might have thought to blame Mitt Romney instead, since it was the owners making demands, not the union.)
“Where’s the Twinkie bailout?” someone asked humorously. “Too delicious to fail,” wrote someone else, echoing the mantra “too big to fail” that justified the bank and automobile-industry bailouts by the federal government.
Although Twinkies are in some ways a national treasure, the bailout probably won’t be necessary. Grupo Bimbo, a Mexican firm with production facilities in the US, has expressed interest in buying Hostess. If that falls through, Hostess can still sell its brands and recipes to other bakeries. (One company already owns the rights for Canada.) Lastly, the Internet has become full of recipes for making Twinkies easily at home.
The story is still developing, and it will be interesting to see whether more than a, um, half-baked solution is found. The right product, at the right price, will always sell. People’s work shouldn’t decrease in value because of their company’s bad decisions.
