Twinkies safe; employees aren't
Angry bakers are burning their own (and others') future.
Don't be fooled by news reports into making a desperate dash to the grocery store — the venerable Twinkie will survive.
It's Hostess Brands — the makers of Twinkies, Ding Dongs and Wonder Bread — that is on life support. Hostess is scheduled for liquidation unless a federal bankruptcy court judge can hash out a settlement between managers and their warring bakers' union.
"Many people, myself included, have serious questions as to the logic behind this strike," said Judge Robert Drain, who is presiding over the Hostess bankruptcy case.
Judge Drain is right. Hostess' request to liquidate the company's assets comes after members of the bakers' union rejected management's request for wage concessions and went on strike. That move pushed Hostess over the edge, and the company and its 18,500 employees face a hard landing if the liquidation process goes forth.
The bakers' union is not only at odds with Hostess' management but also with other union members. The Teamsters had accepted wage concessions as the price of saving jobs.
So the result is not just a plan to liquidate the company but a pointless argument about who is to blame. Management blames the union for not accepting wage concessions to keep the company going while union leaders blame poor management for the company's problems.
They're both right. But that's irrelevant if 18,500 people lose their jobs.
The parties to this dispute need to set aside emotion and look at the big picture.
What matters is not who's right or wrong, but the facts on the ground. Hostess, a $2.5 billion-a-year business, can't make it under current circumstances. Employees may be unhappy to concede part of their earnings to keep the company afloat. But, as they say, 80 percent of something is better than 100 percent of nothing.
Hostess has filed bankruptcy twice, in 2004 and again in 2009. It's been a victim of bad management, changing tastes and high costs, including those for labor.
Hostess might fail even if it wins concessions from the bakers' union. But it's hard to see the wisdom of its employees opting for failure now rather than trying to win the future.
A few years ago, Fannie May filed bankruptcy. The brand has since been reborn under other management, and Fannie Mae candy is just as good as ever. The same thing will happen to Twinkies and other popular brands that Hostess' competitors purchase in liquidation. They will still be around, but that won't be the case with Hostess employees.