How Unions Almost Killed the Twinkie

Millions of Americans were devastated when they heard that Hostess Brands filed for Chapter 11 bankruptcy protection. Hostess makes Ho Hos, Ding Dongs, Yodels, Sno Balls, and the cream-filled yellow torpedoes called Twinkies. You may recall in the film Zombieland (2009) that Woody Harrelson’s character was in pursuit of his beloved Twinkies.

Tallahassee (Woody Harrelson): [discovers Hostess truck filled with Sno-Balls] Sno-Balls? Sno-Balls? Sno Balls? Where’s the  f****ing Twinkies?

Columbus (Jesse Eisenberg): I love Sno-Balls.

Tallahassee: I hate coconut. Not the taste, consistency.

Columbus: [eats a Sno Ball] Fresh.

Tallahassee: Oh, this Twinkie thing, it ain’t over yet.

It was close to over because of massive debt. Hostess employs about 19,000 full-time and part-time workers, including 10,413 hourly workers and 8,436 salaried workers. Here’s the kicker: about 83% of the employees are union members.

The company has a long list of creditors. Pension funds top the list. The Bakery & Confectionary Union & Industry International Pension Fund has the largest claim of nearly a billion dollars. Hostess has been unable to compete because of its “unsustainable cost structure.”

You’ll have to dig long and hard to decipher what “unsustainable cost structure” means. You can bet your last Twinkie that it has something to do with the fact that nearly all the employees at Hostess are union workers.

Hostess claims the company is “not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules. Those issues, combined with the economic downturn and a more difficult competitive landscape, created a worsening liquidity situation that prompted the need for a reorganization.”

An earlier buyout from an e-v-i-l corporation – part of the one percent – saved the Twinkie from extinction. It’s going to me a harder sell this time since the union is stonewalling about concessions. Who will want to buy a company where the union has made it nearly impossible to compete in a health-conscious environment and a slowing economy:

Next time you’re choosing a fattening indulgence in the checkout line, ask yourself if you’re willing to pay extra so Twinkies and Wonder Bread (made by the same company) can arrive at the store on different trucks? So the driver can be excused from helping to unload? So the company can pay workers-comp costs way out of line with the industry? So a company with just 19,000 employees can administer 40 different pension plans?1

  1. Holman W. Jenkins Jr., “The Truth About Bain and Jobs,” The Wall Street Journal (Jan. 14, 2012). []