By Bob Sanchez, JMI Policy Director
Posted January 12, 2012
Chalk up another casualty for recalcitrant labor unions. Hostess Brands, producers of Wonder Bread, Ding Dongs, and the iconic Twinkie snack cake, has filed for bankruptcy protection — again. As recently as 2009, the “restructured” firm emerged from previous bankruptcy proceedings that had dragged on for five years. Evidently, however, the company was not restructured enough. Although many factors – including market trends away from sweets and toward healthier foods – may have contributed to the company’s mounting problems in recent years, its unions’ resistance to change is demonstrably one of those factors.The Twinkies brand even survived the public-relations fallout in 1978 when the lawyers defending San Francisco Supervisor Dan White claimed that eating too many of the sugary snack cakes had brought about a “diminished capacity” that led him to shoot and kill fellow Supervisor Harvey Milk.The California jury swallowed this so-called “Twinkie Defense.” The court convicted White of manslaughter rather than murder, thereby turning Milk into a gay martyr whom Hollywood later profiled in an Oscar-winning film titled Milk.Arguably the publicity over the Twinkie Defense also caused millions of nervous moms – fearing that a “sugar rush” might cause their toddlers suddenly to become homicidal – began omitting Twinkies from snack time in favor of celery stalks and carrot sticks.Unfortunately, even though the company managed to survive the Twinkie Defense era, it could not survive a toxic legacy that accompanied its growth. Through the years, the 81-year-old company, which began in the nation’s Heartland, managed to spread nationwide by acquiring smaller companies and expanding its vast distribution network. In the process of acquiring those other companies, Hostess also acquired a slew of union contracts – 372 in all, according to the Wall Street Journal.Many of these contracts include archaic work rules and unsustainable pension obligations that do not burden the company’s principal competitors – including Thomasville, Georgia-based Flowers Foods. A case in point: As the Wall Street Journal reported, “In some instances, work rules mandate that separate trucks must deliver bread and cake products.” So why can’t Twinkies and Wonder Bread share a ride? Ask the ever-truculent Teamsters, one of the two major labor unions representing Hostess Brands employees.Granted, in the short run, making distribution more efficient by consolidating deliveries might cost a few unionized drivers their jobs. On the other hand, allowing the company to prosper so as to live another day could preserve more jobs in the long run. So by unreasonably insisting on clinging to inefficient practices such as separate deliveries of snack cakes and bread in order to protect drivers’ jobs, the union has placed all of the drivers’ jobs at risk. In the process, it is also eroding whatever value the company’s shareholders still had.Will 2012 really see the Twilight of the Twinkie? It’s too soon to tell. The unions – even the Teamsters — now indicate that they may be willing to talk, so the company could conceivably avoid some of the costs that currently keep it from being able to compete successfully in a field where profit margins are slim in the best of times. This, in turn, might free up some of the revenue now wasted on union featherbedding for other purposes, including research leading to the development and promotion of new products.Who knows? If Hostess Brands successfully transits this latest bankruptcy process and survives to bake on, perhaps a hungry public will eventually see a gourmet version of Wonder Bread and a brand new product beside the Ding Dongs on the snack aisle: Sugar-Free Low-Fat Twinkies 2.0.
2012
