Twinkies were back in stores last week, which could also mark the unofficial end to post-mortems on why their former maker, Hostess Brands, went bust last year.
The unions blamed incompetent management. Management blamed inflexible unions. Twinkie lovers didn’t care. They were just glad to munch on their sponge cakes . . . .
The real problems at Hostess were no mystery. The company struggled for years before its bankruptcy. Its executives failed to invest in its brands. Despite the legendary status of the Twinkie, the Hostess product line failed to keep up with consumer tastes.
The company’s pension and medical costs were higher than those of its domestic competitors. Union rules made its operating structure unwieldy. When a restructuring expert hired to save the company from liquidation failed to reach a contract agreement with Hostess’ second-largest union, it was bye bye Twinkies. In bankruptcy, it sold off its assets to various buyers.
As a result, Hostess Brands now has a far less costly operating structure. Production has been consolidated. Some of its previous workers were hired back at lower pay rates, under common-sense work rules. Hostess, for instance, now can deliver to warehouses that supply retailers instead of only delivering directly to stores. That will dramatically expand the availability of its products and save labor costs.
The good news: The products still will be produced in the United States. Funny how none of the companies that picked up chunks of Hostess in its bankruptcy seemed terribly concerned about competition from bakeries abroad. Whatever the Labor Department says, the Hostess brands are well-positioned to grow again.
Editorial, Pages 10 on 07/22/2013