Last updated on February 8th, 2013 at 02:26 am
While the right has been blaming unions for the closing of Hostess, Newt Gingrich and George Will admitted that they expect the company to return without union workers in a right to work state.
RADDATZ: Can we have — can we a very quick thoughts of Twinkies in your life? Just — not you, Jon Karl. You’re too young. You’re the youngest member of this roundtable. Did you like Twinkies growing up?
WILL: I liked Hostess cupcakes, but don’t despair. Someone’s going to buy — someone’s going to — the brand has value. Someone will buy it.
RADDATZ: It’s not the…
WILL: And they will go and manufacture it in a right-to-work state, where Hostess does not have to operate under 372 collective bargaining agreements.
RADDATZ: OK. OK. Quickly, just Twinkie memories.
BRAZILE: I remember when it was 25 cent a pack, when my grandmother — it was two for five cents. It’s $1.69. I would like the original Twinkie back.
RADDATZ: Twinkies…
KARL: But I just have to say very quickly, I mean, what about Wonder Bread? Wonder Bread’s going, too.
RADDATZ: Yeah, that’s…
KARL: And this is not just about Twinkies.
RADDATZ: You brought that with you, because you like it so much.
BECERRA: I’m a chocolate fiend. Hostess has a company in Sacramento where I was born and raised, saw it every — almost every day of the week.
RADDATZ: Five seconds?
GINGRICH: I’m with George. Twinkie will survive in a new corporate framework.
All of the blame of unions by Hostess and the right wing media is a bunch of malarkey designed to further the conservative agenda of destroying organized labor. The reality is that by closing the company, the investment bankers that run Hostess can suck even more profit out of an already twice bankrupted company. The door is open for someone to buy the company, and relocate it to a right to work state.
According to Fortune, this is how Hostess emerged from bankruptcy in 2009, “Hostess was able to exit bankruptcy in 2009 for three reasons. The first was Ripplewood’s equity infusion of $130 million in return for control of the company (it currently owns about two-thirds of the equity). The second reason: substantial concessions by the two big unions. Annual labor cost savings to the company were about $110 million; thousands of union members lost their jobs. The third reason: Lenders agreed to stay in the game rather than drive Hostess into liquidation and take whatever pieces were left. The key lenders were Silver Point and Monarch. Both are hedge funds that specialize in investing in distressed companies — whether you call them saviors or vultures depends on whether you’re getting fed or getting eaten.”
Hostess was a distressed company that was taken over by Bain style management that had one eye on closing the company the whole time. Hostess had already stopped contributing to employee pensions, was swimming in debt, and demanded that workers take an additional 27%-32% pay cut.
The vulture capitalists don’t care that 18,500 people just lost their jobs. Like Mitt Romney, to the job killers running Hostess profit is king. The Hostess brand will resurface. It is likely to come back in a Southern red state with a labor force earning a bit above minimum wage and no benefits. The Twinkie will be back, but those 18,500 decently paying jobs with benefits will never return.
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