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Hostess Bankruptcy: What Role Did Policy Play?

Booksense Wrote: Nov 19, 2012 7:26 AM
A significant factor in the demise of hostess is the fact that the sugary snacks market is shrinking rapidly. Customers are looking for foods that contain ingredients that are at least marginally related to actual food. Ever look at the nutritional chart on a sno ball or a twinkle? A snack can be tasty without having a shelf life of 100 years yet hostess refused to understand and serve a changing market.
DH58 Wrote: Nov 19, 2012 9:19 AM
WRONG. You'd like to believe that, but it's simply not true. Having to pay union workers roughly $100 per hour in pay and benefits is what killed Hostess. Despite the desires of Bloomberg and others who want to control our every move, people are still buying junk food enmass. Just look at shopping carts while you're standing in line at a supermarket....
Dr_Zinj Wrote: Nov 19, 2012 10:15 AM
Gee. I have a master's degree and work for a hospital as a quality analyst and database administrator and it only costs them $40 an hour even if you include benefits. Plainly, the union is exactly what killed Hostess. Driving up costs for relatively low skilled workers with a high school diploma to an average of $100 an hour? That's an Obamination if I ever saw one!
ahayes Wrote: Nov 19, 2012 11:45 AM
>Having to pay union workers roughly $100 per hour

I call bullfeces. PROVE that a union worker at hostess in an unskilled and non-hazardous position earned that amount.

Hostess didn't fail because if unions, it was its own fecal mismanagement. The company was doing poorly since the 2000s and while the union workers agreed to take pay cuts to keep the company afloat the CEOs each gave themselves raises, one CEO raised his own pay three times while the company was failing. Even if the labour costs are high a smart company would have invested in better automation to make up for it, the management was too busy figuring out how to fatten their own wallets to figure out how to keep the company's wallet from becoming anorexic.
wschimpf Wrote: Nov 19, 2012 12:58 PM
$100.an hour in pay and beneflits?? The average benefit package is 1/3 of the total package. That would put their hourly rate at $66.34.
Wow, $530.72 a day. That explains it. Idiot.
rwright Wrote: Nov 20, 2012 2:46 AM
How does 14 to 16 dollars per hour suddenly become 100 dollars, even with massive benefits??
BK22 Wrote: Nov 20, 2012 9:40 PM
First it is $20 per hour and you fail to recognize that benefit costs are continuse...they pay for those retired and not working. It also pays for those employees covered by the union who hide their incompetence.

The demise of Hostess and Twinkies is not a national emergency, but it is certainly sad when a major business goes under and thousands of people lose their jobs.

If federal and state policymakers want to play a useful role here, they should study why Hostess couldn’t make a go of it. Were there tax or regulatory factors that stood in the way of the company earning a decent rate of return?

Unions were an important factor that pushed up the firm’s costs and reduced its operational efficiency. The policy reform here is obvious for people who appreciate market economics: repeal America’s coercive union laws. If policymakers don’t...