Twinkies are the latest casualty… of unsustainable pension and benefit obligations! It’d be nice to get rid of Wonder Bread, and I never much cared for Twinkies. But Ding Dongs? Say it isn’t so. I agree with Dan Foster:
(T)he venerable Ding Dong. Neither the ubiquity of the Twinkie, nor the esoterism of the Sno Ball. Just sturdy, reliable, no-nonsense goodness. The Dwight Eisenhower of snack cakes.
This story is a near-perfect microcosm of where the nation is: whether it’s public or private unions, teachers or Twinkies, the promises made can’t be kept. Either elected officials (in the former case) or management (in the latter) found it easier to promise the workers across the table fatter pensions and benefits and leave the costs to someone else down the road. We’ve arrived down the road, and we’re effed.
Confiscate the entire wealth of the nation (former case) or the company (latter), and there’s still not enough money to honor the promises. “The rich” aren’t numerous enough to foot the bill. This will be a fight between the young working middle class and the retired and slightly-better-off middle class. From Holman Jenkins in The Truth about Bain and Jobs:
Look no further than Ripplewood Holdings’ decision to put the maker of Twinkies into bankruptcy this week. It’s the kind of decision that, were Ripplewood’s principals ever to run for office, would get them savaged in an ad.
But guess what? Ripplewood also bought the company, Hostess Brands, out of bankruptcy three years ago, when it was called Interstate Bakeries. Ripplewood is just the latest manager to wrestle unsuccessfully with the company’s fundamental problem, a unionized workforce in an industry where competitors aren’t unionized.
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 the industry’s? So a company with just 19,000 employees can administer 40 different pension plans?
To be fair, customers have been switching to healthier snack options, so lower sales in the industry is putting increased pressure on all the competitors. Hostess Brands is just more bloated and less flexible, and so is getting beat up by a girl. (Little Debbie. Mmmmm – Snack Rolls….)
I would think it makes more sense for someone – maybe a competitor like Little Debbie – to simply buy the Hostess assets out of bankruptcy. Take the brand names and recipes and make them in your own factories and deliver them on your own trucks. That’s how it should work: the efficient producers hire more people, we all pay less for the product and see our 401(k)s grow; the inefficient producers adapt or go extinct. That’s capitalism’s creative destruction at work. Jenkins again:
Between 1977 and 2005, years roughly overlapping Mr. Romney’s business career, some 15% of all jobs were destroyed every year, even as total jobs grew by an average of 2% a year. Job creation and destruction are both relentless, the authors showed in paper after paper. The small difference between the two is what we call prosperity.
I loved the author’s correct use of the tree from The Garden of Eden:
To fault Mr. Romney for being involved with businesses that both grew and shrank, that created jobs and destroyed them, may be to fault him for having eaten from the tree of knowledge in a way that, say, President Obama has not. But how will his story fare in November against Mr. Obama’s simpler story, in which ravenous capitalists destroy jobs and government creates them with things like the Detroit/UAW bailout, solar subsidies and health-care mandates?
Heh heh. The article closes with what might be the best argument for Romney presidency. I’m going to have to make up my mind pretty soon, FL primary coming up.
What does this have to do with the presidency? Perhaps not much, but one thing he didn’t learn at Bain Capital was to twiddle his thumbs because taking action might make somebody mad at him. That’s not the worst qualification to bring to the Oval Office right now.