This is a crisis.
Hostess, the maker of all things soft and gooey, decided to close rather than fight with its trucking and baking unions.
This is far more than a clash between national union powers and the company’s Wall Street investment and hedge fund owners. On a pop culture basis, this is about losing food icons on which generations of American kids grew up. In terms of healthy eating, it might be good news. For future, healthier generations, lost will be the chance to share the seminal middle school experience of finding a Twinkie misplaced in September at the bottom of a school locker in June.
But 18,500 workers — all of whom stand to lose their jobs if a bankruptcy court upholds the owners’ decision — will suffer the consequences, including the members of those two major unions. Hostess had annual sales of about $2.5 billion. The company made 500 million Twinkies and 127 million loaves of Wonder Bread annually before today’s shutdown.
This is also a clash of cultures. The first ‘tagonist is a unionized workforce that believes in the right of individual workers to earn a fair wage for a day’s work under negotiated conditions, gain access to paid health care insurance and retire with pension or 401(k) benefits. On the other side is the ‘tagonist that might be called the bad side of Bain Capital that Mitt Romney was saddled with during his presidential campaign. The idea is that profit rules and even if your company produces American icons, they can go away and die if they’re not profitable. The whole is not worth as much as the sold-off parts.
It’s a battle in the class wars.
From all reports, this cannot be stopped or reversed, unless a bankruptcy judge denies the owners’ request to sell and close.
There are multiple levels of crisis here: For the workers, for unions, for management and for consumers. We’re not going to argue that a world without Wonder Bread, Twinkies, Hostess Cup Cakes and Donettes is a health crisis, but it’s surely a sign of the times.
And those times call the bluff on which unions and strikes were contingent: Management needs to keep the company going — or else it dies too. That bottom line has shifted, and will be a crisis for more American workers in the future. If the bottom line isn’t substantial, the company’s not worth owning and the products aren’t worth producing.
This is because the owners are rarely a family in the headquarters town anymore. The owners are not even a corporation whose shareholders wanted to invest in profitable baked goods. The owners manage a portfolio of holdings that seem far removed from products and jobs. The company is reduced to a line on a ledger sheet and if the numbers on that P&L have parentheses around them, then that line disappears.
The content of this blog is about crisis management and mismanagement in a digital age. It originates with Steve Bell, who spent 30 years as a journalist for the Associated Press and in four top editor positions at The Buffalo News. He is now Partner/Director of Public Affairs at Eric Mower + Associates, one of the nation’s largest independent advertising, integrated marketing and public relations agencies, with seven offices in the Northeast and Southeast. Learn more about EMA at http://www.mower.com. Steve’s blog is based on his own opinions and does not represent the views or positions of Eric Mower + Associates.