COMMENTARY: Hostess Too Small To Save?

Posted: November 24, 2012 at 3:16 a.m.

With the approval of a federal bankruptcy court, the Hostess company, maker of one of the most popular snack foods in America, will liquidate its holdings, throwing upward of 18,000 employees out of work. As President Barack Obama prepares his second term agenda, does he have the political skill to save those jobs by moving a Twinkie bail-out bill through Congress?

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Opinion, Pages 5 on 11/24/2012


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Mr Shaffer makes this claim about "half-billion-dollar government guaranteed loans to embryonic companies in industries, such as solar power... Far too many of them have gone bankrupt, with the loss of taxpayer money."
Bit in fact the bankruptcy rate for these loans has been surprisingly small.
"According to Bloomberg News, even with the losses from Solyndra, the default rate for the DOE’s loans to solar, wind and bio-energy projects is less than 3.6 percent, less than a third of what the White House anticipated."
College professors should check their facts before making assumptions based on partisan talkling-points.

Posted by: Coralie

November 24, 2012 at 11:48 a.m. ( | suggest removal )

Another strange idea is this:
"Let the unions ...buy the company with a guaranteed loan from Uncle Sam. ...The unions would have to put up their pension funds as collateral."
Unions are supposed to represent their members, not become corporations themselves.
Several companies have been purchased by their employees--Harp's is one example--but I don't think the union itself has made the purchase.
Also, why should the union members have to risk their main asset?

Posted by: Coralie

November 24, 2012 at 12:38 p.m. ( | suggest removal )

It is probably worth noting that while investment in renewable energy during a transitional period is vital to environmental preservation, our energy security and maintaining "the American way of life", the continued availability of the Twinkie and Ding Dong-- being a matter of pop culture-- is likely assured. Durable snacks are proven technology, and new investors will take up the slack.

Posted by: AlphaCat

November 24, 2012 at 5:48 p.m. ( | suggest removal )

@Coralie, Ralph Shaffer sent the following response and asked that I post it in the comments:

Coralie, citing Bloomberg, notes that bankruptcy for renewal energy companies that have received federal loans is rare. That depends on whether you are referring to manufacturing or generating companies. The generating companies get loans only after they have contracted with utilities to take their power, so financial failure is unlikely. But the manufacturers of solar panels don't have a guaranteed market. Four such companies have received federal loan guarantees. Two of the four have gone bankrupt, with a potential loss of $800 million. As noted by Coralie, a history professor should have the facts before writing. We had them, but space limitations prevented putting all of them into the article.

Coralie also wonders why unions should have to risk their pension funds to obtain the federal loan that would enable them to buy Hostess. I can think of no greater incentive for the workers to make a success of the purchase than knowing their pension depends upon it.

And, yes, unions do represent workers. How better to represent them than to empower workers through ownership of the product they make?

Ralph E. Shaffer
Professor Emeritus, History
Cal Poly Pomona

Posted by: cfort

November 26, 2012 at 11:43 a.m. ( | suggest removal )

hey, hey, you drew a little blood from a Stephens' spokesman.

>> Coralie also wonders why unions should have to risk their pension funds to obtain the federal loan that would enable them to buy Hostess.<

I'm sure you may have the major creditors' interests somewhere in there. Is your retirement fund related to any such creditor?
Why should a union fund be required to bail out 20 yrs of poor management decision-making?

Posted by: cdawg

November 26, 2012 at 12:21 p.m. ( | suggest removal )

RE "I can think of no greater incentive for the workers to make a success of the purchase than knowing their pension depends upon it."
As opposed to the lack of incentives for executives who were paid very well, regardless of results. As the company went through some eight years of bankruptcy, the general public has paid, and will continue to pay for their debacle, however indirectly. I was not aware that there should be separate sauces for geese and ganders.

Posted by: AlphaCat

November 26, 2012 at 2:37 p.m. ( | suggest removal )