Columns

Digesting the Twinkies' Lessons

By: George Will | Posted: November 24, 2012 3:55 AM
George Will
"All Gods were immortal."

-- Stanislaw Lec

WASHINGTON -- And also brands, the gods of the marketplace. Earthquakes may strike, dynasties may fall and locusts may devour the crops, but Oldsmobile and Pan Am are forever. Never mind.

But about the death of Twinkies: Write obituaries in the subjunctive mood. Like Lazarus, but for a reason more mundane than miraculous, this confection may be resurrected. In any case, the crisis of Hostess Brands Inc., the maker of Twinkies, involves two potent lessons. First, market forces will have their way. Second, never underestimate baby boomer nostalgia, which is acute narcissism. The Twinkies melodrama has the boomers thinking -- as usual, about themselves: If an 82-year-old brand can die, so can we. Is that even legal?

The late Daniel Boorstin, historian and Librarian of Congress, said Americans belong to "consumption communities." Are you a Ford or Chevy person? Sears Roebuck or Montgomery Ward? Camels or Chesterfields? Wooed by advertising, people plight their troths to brands in marriages that often are more durable than boomers' actual marriages.

Hostess, which had 18,500 employees making and distributing more than 30 brands made in 36 plants, had been in and out of bankruptcy several times since 2004. Its terminal crisis began on Nov. 9 when thousands of members of the bakers union went out on strike to protest wage, health care and pension cuts imposed by a court. The bakers objected to a 17 percent increase in their contribution for their health care benefits.

Amazingly, Washington did not offer Hostess a bailout. This discriminatory policy may be a constitutional violation -- denial of equal protection of the laws. Since the onset of the financial crisis, the government has decided that some SIFIs are TBTF -- some systemically important financial institutions are too big to fail. Why, any fair-minded person will ask, was Hostess not TBTF?

Granted, it was not big in the technical, crabbed, hairsplitting, narrow-minded way that "big" is normally understood, as a boring matter of mere size. It was, however, big in what matters most -- in boomers' minds. They fondly remember opening their Roy Rogers or Hopalong Cassidy or Davy Crockett lunchboxes at school and finding Twinkies nestled next to peanut butter and jelly sandwiches made of Wonder Bread (another endangered Hostess species). Stendhal said that the only way ice cream could be better is if it were a sin. Boomers, a generation of food scolds, became adults who considered Twinkies and other sugary things sinful. They should be shedding scalding tears of remorse.

Anyway, why GM and not Hostess? The Troubled Asset Relief Program, aka TARP, was passed to rescue financial institutions. But Washington reasoned: "What's legality among cronies?" So soon TARP was succoring GM, which was not a financial institution. It was not even a car company. It was a health care provider unsuccessfully trying to sell cars fast enough to generate enough revenue to pay health benefits for its employees and approximately twice as many retirees.

Hostess had in its far-flung operations 372 collective bargaining agreements with various unions that had sought and received -- shed no tears for complicit management -- some interesting benefits. The Teamsters liked the rule that bread and pastries might be going to the same place but must go in different trucks.

The bakers rejected management's final offer by a voice vote. The Teamsters, who favored a compromise, wanted there to be a secret ballot. This is insouciant insolence by the Teamsters, who are situational ethicists. In Washington, operating from impressive headquarters located on prime real estate at the foot of Capitol Hill, the union's leadership has lobbied Congress for the Employee Free Choice Act. That is the Orwellian title of legislation that would effectively abolish employees' right to secret ballots in unionization elections, replacing them with "card check," whereby individuals confronted by union organizers sign a card indicating support for the union.

The market said that Hostess as configured made no sense. If, however, Twinkies and perhaps other Hostess brands retain value, the market will say so, and someone will produce them. Probably in a right-to-work state, which is how "entrepreneurial federalism" (another Boorstin phrase) should work: Business moves to states that make it welcome.

Whatever else a hospital ought to do, supposedly said Florence Nightingale, it ought not to spread disease. And whatever else unions should do, they should not put employers out of business.

George Will's email address is georgewill@washpost.com.

(c) 2012, Washington Post Writers Group

Comments (4)

TruthBeToldHere
7:25PM NOV 24TH 2012
Mr. Will has is obviously unfamiliar with what went on at this company. True the Teamsters were being obstinate but now that seems like the smart thing to have done. This particular case is about grossly incompetent management trying to point their finger at the unions. Hostess had 6 CEOs in the last ten years, their inventory, advertising, even their truck fleet was in disarray, they had not modernized or come out with a new product in those ten years despite the fact they had ample capital to do it, they did not even have an adequate company computer system. None of these issues had anything to do with unions. Not a bad strategic plan, no strategic plan, they just did not know what they were doing. The bakers union has been giving back pay and perks for those ten years and finally had enough and decided the only strategic plan was to get yet more give-backs from the union to keep it alive longer. The record shows that Hostess' unions were willing to talk with management at virtually every stage to keep the firm alive. Please Mr. Will, don't turn into another Fox liar.
ty lee
5:34AM NOV 24TH 2012
Yes Mr. Will. Its all about the Unions and their petty will to have health care that was supposed to be guaranteed through contract.

Nothing at all to do with the vulture capitalist that took over a profitable Hostess and purposely ran it into the ground.

Nothing at all about how those same workers you mention happened to take reductions in pay and contracted benefit reductions during those first bankruptcy attempts when the vultures wanted to cash out early.

I guess these Americans felt that instead of turning into Chinese slave workers, they would rather do the American thing and work somewhere else, seeing as under the Bain model there was no future there anyway.

Good job Mr. Will. I'm sure you will sleep well during this Thanksgiving weekend knowing your Christmas stockings this fine holiday season will be stuffed with the cash that your buzzard overlord have picked off the carcasses of your fellow Americans.
KS
12:28PM NOV 24TH 2012
George pointed out two problems, the labor unions being one of them, the other is that the "brand" did not keep up with the times. We are a health, fit, more nuts and brand society fixed on calories. Despite the emotional attachment to this brand, the business model and products made were no longer attractive in the market. The market voted. The labor issue is more about asking for a room upgrade when the hotel is on fire.
Frank
3:44PM NOV 24TH 2012
Yes, of course you must be right . . . . no company CEO got his reimbursement tripled over the past few years . . . . no other company executives had theirs almost doubled, while money went to pay associated hedge funds rather than product enhancement . . . . nor has the company undergone multiple bankruptcies, while employees gave up salaries and benefits . . . . and it's not like in the latest efforts, the employees discovered that Hostess was asking the bankruptcy Judge to grant CEO Brian Driscoll $1.5 million in salary plus $2 million in cash incentives and long-term incentive compensation and an agreement that would have also guaranteed Driscoll $1.95 million if Hostess liquidated. . . . . .yeah, this is all about the unions . . . . greedy venture capitalists and mismanagement have had nothing to do with the troubles of this company since the 1980's . . . .

Pathetic one-sided journalistic half-truth spins. . . .

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