Tuesday, October 6 , 2015, 2:08 pm | Fair 73º

Jim Hightower: Death of Twinkies a Case of Corporate Murder

By Jim Hightower |

Born in 1930 in Schiller Park, Ill., the deceased was 82 years old at the time of passing, which ironically was the day before Thanksgiving.

Having long enjoyed the sweet life, the end was a bit bitter, for the dearly departed’s estate had been mercilessly plundered in recent years by unscrupulous money managers. This left 18,500 surviving family members in dire straits. Indeed, the family contends that the octogenarian’s death was not due to natural causes, but to foul play — a case of corporate murder.

This is the drama behind the sudden death of Twinkies. Fondly remembered as “the cream puff of the proletariat” (and less fondly as a sugar-and-fat bomb that delivered a toothache in one bite and a heart attack in the next), this industrial concoction of 37 ingredients became, for better or worse, an icon of American food processing.

The father of the Twinkie was James Dewar, a baker at the old Continental Baking Co. who saw the goo-filled tube cake as a way to keep the factory’s confection machinery busy after strawberry shortcake season ended. Yes, the Twinkie was actually conceived as “food” for idle machines. How fitting is that?

But us humans happily swallowed this extruded marvel of comestible engineering. As a teenager, I probably downed my weight in Twinkies each year — and my long years on this Earth might well be due to the heavy dose of preservatives, artificial flavors and other chemicals baked into every one of those cellophane-wrapped two-packs that I consumed.

The Twinkie was the best-seller of Hostess Brands, a conglomerate purveyor of some 30 nutritionally challenged (but moneymaking) brand-name food products, ranging from Wonder Bread to Ho-Hos. In the past year, Hostess racked up $2.5 billion in sales — yet it suffered a staggering $1.1 billion in losses. Thus, on Nov. 21, Ripplewood Holdings, the private equity outfit that had taken over the conglomerate in 2009, pulled the plug, solemnly announcing that Hostess simply couldn’t survive.

Why? Because it was burdened with overly generous labor contracts, the firm’s executives declared, adding that greedy union officials refused to save the company by taking cuts.

Wait a minute. They claim that the bereaved loved ones of the Hostess family killed the Twinkie? Holy Agatha Christie, that can’t be right.

Remember the horrible murders in 1978 of San Francisco Mayor George Moscone and Supervisor Harvey Milk? At the killer’s trial, his lawyer argued for leniency on the grounds that his client subsisted on a steady diet of junk food, which had addled his brain. This claim entered the annals of American jurisprudence as the “Twinkie Defense.”

Even less defensible is the campaign by Ripplewood financial manipulators to lay the death of Hostess at the feet of loyal, longtime employees who, after all, need the jobs. In fact, far from greedy, Hostess workers and their unions have been both modest and faithful. Their wages are decent but not at all excessive — only middle class. And the charge that unions would not make sacrifices to help the company is a flat-out lie, for they had previously given back $100 million in annual wages and benefits to help it survive.

The true perfidy in this drama is not in the union, but inside Ripplewood’s towering castle of high finance in New York City. After buying Hostess in a bankruptcy sale, these equity hucksters proceeded to feather their own nests, rather than modernize Hostess’s equipment and upgrade its products, as the unions had urged. For starters, these profiteers piled an unbearable debt load of $860 million on Hostess, thus diverting its revenues into nonproductive interest payments made to rich, absentee speculators. Also, they siphoned millions of dollars out of Hostess directly into their corporate pockets by charging “consulting and management fees” that did nothing to improve the snack-makers financial health.

But it was not until this year that their rank managerial incompetence and raw ethical depravity fully surfaced. While the Ripplewood honchos in charge of Hostess were demanding a new round of deep cuts in worker’s pay, health care and pensions, they quietly jacked up their own pay. By a lot! The CEO’s paycheck, for example, rocketed from $750,000 a year to $2.5 million.

Like a character in a bad Agatha Christie whodunit, Ripplewood — the one so insistently pointing the finger of blame at others — turns out to be the one who killed the Twinkie. Along with the livelihoods of 18,500 workers.

Jim Hightower is a national radio commentator, writer, public speaker and author of Swim Against The Current: Even A Dead Fish Can Go With The Flow. Click here for more information, or click here to contact him.

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» on 11.28.12 @ 09:24 PM

Too bad you don’t see the similarity between your unions, government and those very Wall Street fat cats.

BTW – those same executives that received 80% increases were forced to reduce their salary to one dollar in January 2012, for one year. They will never see those bonuses.

The final nail in the coffin was the bakers strike this month. How in the world did these union members think a strike would solve any of their grievances knowing full well management was looking for any excuse to liquidate?

I have absolutely no love at all for capital management companies, basically looters, pirates and pillagers of this country’s greatest asset, manufacturing, but the problems at Hostess were far more reaching than greedy Wall Street parasites. The bakers union was so damned rigid and strangled with the most ridiculous rules it made it almost impossible to modernize, since that would have resulted in the loss of jobs. No instead they forced the company to do it the “same old way” to preserve jobs at their own peril.

This has been done many times at many companies and does nothing but create an adversarial environment between management and labor. The end result is always the same, move offshore, replace with robots or close. Too many workers are brainwashed by unions into believing they don’t have to train up, improve their skills and work with management.

Automation is replacing dummies and unskilled. The loser will be union workers. Those who worked in merit based companies had the competition driving them to be better, they will run the robots. Until unions figure out that the basic rights workers needed to protect them from unscrupulous management, were codified in federal labor law and that they are nothing more than legalized extortion rackets now, then I see no hope for them and good riddance.

When the rest of you figure out there is little difference between a bank and the IRS then little will change on Wall Street either.

» on 11.28.12 @ 10:32 PM

Who is John Galt?

» on 11.29.12 @ 11:04 AM

John Galt was one of many rape fantasies concocted by the author of novels aimed at adolescent boys.

» on 11.29.12 @ 11:16 AM

Thank you. I appreciate knowing that. I always wondered. Have a great day.

» on 11.29.12 @ 07:11 PM

Daniel, either Rambler is putting you on big time or he has no idea of what he is talking about re. John Galt. If he thinks that Ayn Rand is an author that adolescent boys would even attempt (Atlas Shrugged at 1168 pages and no pictures), he must know an entirely different group of teens than I ever have.

And BTW, weren’t the cuts that the bakers’ union refused imposed by the Bankrupcy Court? And didn’t the other unions, like the Teamsters’ Union, accept them?

» on 11.29.12 @ 08:21 PM

I’m still trying to deal with rape fantasies of boys….does that mean he was a member of the ACLU or NAMBLA?  I’m so confused.

» on 11.29.12 @ 08:30 PM

Ramjet crawled out from under his rock and left his meds behind again.

Art the cuts were indeed directed by the court, however, the trustee was largely directed by Ripplewood. That may have led to the hostility from the bakers. But calling a strike played right into Ripplewood’s desire to liquidate. If the union wanted to damage the Wall Street parasites they would have taken the cuts and forced Ripplewood to manage the damned company through chapter 11.

This is a perfect example of two parasitic organizations, both conspiring to suck a company dry to line their pockets. It could not happen at a worse time or to a worse sector of the economy, one that actually builds real intrinsic wealth, manufacturing. It affirms what I have been bitching about for 4 years now, the selfish, short sighted, parasitic, narcissistic culture we have become.

Jim laments the unionized workers who are their own worst enemy, but is right in condemning these pirates and looters masquerading as capitalists on Wall Street. The union leaders and Wall Street pirates and all their flunkies in Washington should be lined up and shot as traitors to the republic.

Those of you who see this as a right/left issue are horribly deluded as Jim is. The is a producer/parasite issue and until this shallow, gambling addicted, welfare sucking culture of ours wakes up to that reality we will continue to see this happening again and again until there is nothing left.

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