Twinkies Will Liquidate -- Unions Bluffed -- The Strike Lasted a Week -- Big Fail -- 18,500 Jobs

Updates

November 21, 2012: mediation efforts fail; company will ask again to liquidate. 

Later, 3:26 pm: I have a bet with a reader that Twinkies will be with us as long as there is talk of global warming.  My hunch is that a company like Nabisco will buy the better-selling Hostess-branded products and make a killing. I'm hoping to see these products in high school vending machines under some future administration. Or in college vending machines where Michelle's daughters can enjoy them.

Later, 12:34 pm: trying to pin the blame on hedge funds; won't work.  Even Romney/Bain could not have saved it.

The funds, Silver Point and Monarch, are what are known as distressed debt investors. They buy the debt of troubled companies--usually at steep discounts. Some consider them white knights who are willing to take make risky investments in companies on the verge of failure. Others say they are "vulture funds."

Only Silver Point and Monarch could have kept Hostess out of liquidation and kept the Twinkie bakery ovens firing. But they were, ultimately, unable to reach a deal with the unions that represents the workers who make and deliver products like Twinkies, Wonderbread and Ding Dongs.

Without large union concessions -- what some would say, total union capitulation -- the hedge funds decided Hostess would have to die. 

I'm curious if the rank and file felt these particular union bosses represented them?

My hunch: there are a lot more "legacy" brands/companies, if unionized, will find themselves in the same boat next summer. Health care and pensions are busting up companies, especially older companies that did not change with the times.

Original Post

Link here to Chicago Tribune.

Hostess Brands Inc., the bankrupt maker of Twinkies and Wonder Bread, said it had sought court permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.

Hostess said a national strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that began last week had crippled its ability to produce and deliver products at several facilities.

Hostess Chief Executive Gregory Rayburn said in an interview on CNBC Friday morning that Hostess could not avoid liquidation, even if members of its bakers' union ended their strike immediately and went back to work.

The liquidation of the company will mean that most of its 18,500 employees will lose their jobs, Hostess said on Friday.

And so it goes.