Hostess Twinkies and Your Pension

Forbes has the "untold story" of how Hostess Twinkie was resurrected:

Twinkie's Miracle Comeback: The Untold, Inside Story of a $2 Billion Feast

Really?  Exactly what would happen was widely predicted, even I got it right.  And your pension is at risk the same way if circumstances are similar. Today:

But the liquidation had washed away everything. Yes, the company was gone, but so were the pension costs, the union contracts and the debt. It also unbundled the brands, allowing investors to carve out the best businesses. “We didn’t have to take on the factories or the routes,” says Metropoulos. “We didn’t have to take all the historical drags on the company.”

Yes, We all saw that coming.  Bust the unions, repudiate the unfunded pension liabilities, pawn off the unemployed to the welfare rolls, socialize the loss, pocket $2 billion. The earlier vulture funds bought Hostess to loot it, and when when the company was bankrupt, another set came in to "save" the company.

Moreover, the new business plan called for the same output using a fraction of the labor. The old Hostess dessert division required 9,000 employees and 14 factories to pump out just under $1 billion worth of cakes a year. The new plan called for 1,000 people and five plants (that number was soon cut to three as one was sold, another shuttered). William Toler, a veteran of Metropoulos turnarounds, was brought in as CEO.

8000 on the public dole, at least for a while.  Industrial bakers, replaced by robots. As long as usury is legally enforced, then all of this is absolutely legit.  Hostess would probably not exist except for usury, so the out-of-work employees ought not complain, but without usury we'd have a different allocation and investment pattern, one more stable.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post