Lessons learned from Twinkies maker's demise
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Commentary:
(MoneyWatch) At the end of last week, Hostess announced plans to wind down its business operations, shut its factories and lay off some 18,500 employees. Over time, it seems likely that some of its iconic brands may be revived but, for now, a large number of people are going to have a miserable Thanksgiving. Even in boom times, this would be bad news.
The easy explanation has been to blame the unions. The same was true when America's car companies failed. But while costs, of course, do count, you have to ask the more serious question: How responsive was this business to a changing, competitive and technologically advanced marketplace? Why weren't labor issues tackled? What was the management thinking? What did the unions seriously expect to gain?
You can't explain this business failure by anything sudden -- it is their second bankruptcy -- and tastes in unhealthy snacks have not undergone any revolutionary change. But the company has been sold three times since the 1980s, at each juncture racking up debt. So this is the classic story of a company that isn't being run for its customers, isn't being run for its employees, isn't driven by a love of product, but which is regarded purely and simply as the vehicle for financial transaction. The people who ran it consistently awarded themselves pay increases, all the time creating no future for the business that paid them so well.
It's become very fashionable of late to write about business failure caused by galvanic changes in the market place, disruptive technologies, fierce competition, volatile social change, globalization and so-called black swan events. But, rather like its products, this is an old-fashioned story of bad management: Well-paid managers who just didn't care about their future or that of their 18,500 employees.
It used to be said that Twinkies were the only food that could survive a nuclear holocaust. What they couldn't survive was greedy, short-term leadership by cynics who just didn't care.
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She must be a cool-aid drinker of the liberal left.
"It's the evil rich's fault because they make all the money, but don't pay their fair share of the taxes!"
But again....this is CBS"News"-worthy!
The only lesson learned by reading this article is that the author doesn't really know how to make a case for her argument...which is flawed to begin with. It's a broad brush approach without any definition.
Why are there so many of these shallow, useless articles on this CBS network? Don't they hire deep thinkers anymore? I'm beginning to ignore the email alerts, no matter how interesting the "hook" is.
How sad...
Somewhere along the line, multiple parties lost sight of the financial goal--value. Management ceased to be stewards of value. Private equity destroyed value rather than creating it. In trying to distribute value short-sightedly, unions shut out their stakeholders to value. We could say that Government lost track of the long-term value that belongs to Society--except U.S. Government IS Society.
We can gripe about the role each perp played in the death of Hostess. But, do we realize that Hostess is an anomaly? No one faction would kill a company if the other factions were working properly. We have thousands of companies in the U.S. and in the International economy that didn't fail, or even file bankruptcy, because their management is good, the equity market is good, unions are good, and U.S. Government is as good as Society is. Let's not paint all of these factions with the same brush.
If the company is all dead, then all that is left is to go through its pockets for loose change. The perps get to keep the pocket lint. But if the company is mostly dead,maybe a "Miracle Max" will revive it with a magic pill.
I hate to hear that the future of SuzyQ is at stake. A SuzyQ and cup of coffee has been my lunch many times. (Not recently, but that's not Hostess' fault.)
Now when we look at profitable manufacturing companie like BMW, Audi, and Mercedes in Europe or in the US like Caterpillar and John Deere -- what these companies have in common are well trained, and well paid union labor forces. Hmmmmm.
"I am the COO and EVP of Hostess Brands. We sincerely appreciate you interest in helping us but we must respectfully decline. We have marketing and Research and Development teams that work on projects continually. We are currently working on many snack concepts including modifications to Suzy Q's. The reason we do not accept help from anyone outside of our organization is that it opens the company up to lawsuits. For this reason it is a policy established by the companies legal department and approved by the board of directors NOT to solicit or accept proposals from outside the company. Thanks for your interest but we cannot accept your help or suggestions." end of email.
Even after I informed the executive that I have had my Suzy Q marketing idea for well over 10 years and that I was not trying to compete with their in house people anyways, and that they could design the deal memo and I would either accept the terms or not, Hostess still declined to have anything to do with me or my idea.
So I would have to agree to a certain extent to what your article is implying about Hostess not keeping up with the times. Being resistant to someone's idea when that person is willing to let Hostess create the terms of the agreement seems old school to me.
The brand "twinkies" is an Intellectual property of "Hostess" products such as these will be auctioned or sold through the bankruptcy process to new company's which will most likely eventually regurgitate the same or similar product back to market likely with little to no delay in supply.
Corporate manipulation and greed of management is very real, but so are the conflicting pressures of unions.
Maybe a new business model should be considered
Employee Owned business
Co-ops - Cooperative Business