It seems the CEO of Hostess, Greg Rayburn, announced today that the Hostess Bakery company was going out of business for good.
Hostess Brands Inc. says it’s going out of business after striking workers across the country crippled its ability to make its Twinkies, Ding Dongs, Wonder Bread and other snacks.
The company had warned employees that it would file a motion with U.S. Bankruptcy Court Friday seeking permission to shutter its operations and sell assets if plants didn’t resume normal operations by a Thursday evening deadline.
The closing would mean the loss of about 18,500 jobs.
Wow, right before Colorado and Washington put legalized marijuana into action. That couldn’t be worse timing for Hostess. Then I thought about it a moment. I don’t eat Hostess snacks. I can’t recall the last time I ate a Twinkie, Ding Dong, or a slice of Wonder Bread, and I am as hard-core stoner as they get. I can’t think of any of my friends who purchase these snacks, either. It’s not as if my stoner friends don’t eat these kinds of snacks. At the convenience store I frequent there was a stand of Hostess products and a stand of Little Debbie’s products. The identical pack of six mini frosted “donettes” cost 75¢ for the Little Debbie version and $1.29 for the Hostess version. Stoners are frugal before brand loyal.
Anyway, this Hostess CEO Greg Rayburn goes on about how he just had no choice but to close the company and kill 18,500 jobs because the gosh darn workers wouldn’t end their strike. Those workers weren’t too happy about a new contract offer that cut their pay by 8%, raised their healthcare costs by 20%, closed 10-12 plants, and reduced their pension and workday benefits.
The workers claim the current and prior mismanagement are to blame for the financial woes of this company doing $2.5 billion in annual sales. Despite being the #2 bread baker in the country, the company has been in bankruptcy court twice since 2004. Workers in Emporia, Kansas, have been fighting for money they are owed since January, when CEO Greg Rayburn said the company did not have the money. The mayor of St. Louis points out that Hostess told him they were closing their St. Louis site months before any strikes.
Part of the reason there was no money was that the former CEO Brian Driscoll had done such a great job with the company that his salary went from $750,000 a year to $2,550,000. The website of the Machinists Union notes “top executives of the company also received massive pay raises, including one who received a pay increase from $500,000 to $900,000 and another received one that brought his salary from $375,000 to $656,256.” So when Rayburn, a “restructuring expert”, took the helm of the company in April, he had four of those top eleven executives at the company agree to reduce their salary to $1 per year, another four agreed to return to their previous six-figure salaries, and three others, along with Dricsoll, took their money and split.
While top executives can go from six-figure salaries to one dollar salaries with no appreciable suffering, an 8% pay cut for a typical District Sales Manager at Hostess works out to $322 a month out of her paycheck. Meanwhile, CEO Greg Rayburn’s firm has been paid $120,000 per month since April to “restructure” the 82-year-old company, a euphemism for “break the unions or break up the company”. Long time employees, however, told Reuters that “the company had failed to invest in new technology, brand marketing and modernization of plants and trucks and had focused instead on enriching owners such as private equity firm Ripplewood Holdings and hedge funds that include Silver Point Capital.” A 35-year employee said, “The people who are running this company are not interested in making bread. They are not in the baking industry; they are just interested in the money.”
The website GlassDoor.com collects reviews of companies by their employees and on a scale of 1-5, Hostess comes in at 2.1, a rating of “Employees are Dissatisfied”. Some typical complaints about Hostess:
“What a Joke” – Poor management. Use of cardboard that is thrown away after one use; there is money for that, but not to pay your workers. real nice. Terrible hours, wage reductions do not make me wanna work any harder.
“Run as fast as you can for this company” - Long Long thankless hours, split days (nights) off, working weekends, no life/work balance at all. Lazy, incompetent managers that hide in the office and send emails.
“It has been a learn on your own type of experience that is laden with lies” - The company is in financial turmoil, upper management is clueless, lies are abundant and the employee is not valued.
“I have been with the company for almost 21 years and in the past five years the company has went down so fast” - The new upper management is clueless as to how a bakery should run, Our plant has lost so many good people due to corp, choices.
For comparison’s sake, stoner food manufacturers generally get good ratings from their employees. Frito-Lay gets a 2.9 rating from its employees. Hershey is a 3.6. Mars Inc. gets a 3.4. Even the stressed-out stoner-serving 2am-drive-thru workers at Jack in the Box give their company a 2.7.
In the end, stoners shouldn’t worry so much about the demise of Hostess as the demise more decent jobs in America, the victim of short-term corporate greed and failure to listen to the employees who know the business. Because Twinkies and Ding Dongs and Wonder Bread aren’t going anywhere; those iconic brands will be sold off to Flowers Foods (which has a 2.9 GlassDoor rating from employees), Bimbo Bakeries (3.5), and Pepperidge Farm (3.6), or some other prospective buyer.