The Free Market Killed Hostess, And That’s A Good Thing

OutsideTheBeltway.com ^ | 11/16/12 | DOUG MATACONIS

[GSWarrior]

This morning’s news that Hostess Brands, Inc. was shutting its doors after 82 years of operation (originally under the name International Bakeries Corporation) has elicited a lot of commentary from various sources. Culturally, I’m seeing a lot of people lament the fact that some of their favorite brands of snack food or bread — from Twinkies to Ho-Hos to Wonder Bread to Beefsteak Rye Bread — will no longer be available. Politically, there’s been a definite theme on the right blaming the Baker’s Union for the company’s collapse since they would not agree to a modification of their contract notwithstanding the fact that they had been warned that this would happen, and that even the Teamsters Union warned them that they were risking the fate of the company and everyone’s jobs by being so stubborn. Both of these reactions strike me as being wildly over blown, based largely on common misunderstandings of what actually happens in Bankruptcy Court and the business world, and both miss the point that the death of Hostess Brands is a fairly good example of the free market in action.

[wideawake]

This analysis is completely off-base.

The market for the company's projects was shrinking, it is true.

When this happens, the normal reaction for a business is to reduce costs and find out ways to improve its sales by investing in other business lines.

However, the unions prevented the company from having the flexibility to cut costs and finance growth.

[skeeter]

According to the contract Hostess had with the union prior to filing for bankruptcy, shipments containing both bread and bakery items couldn't be shipped consolidated freight, they had to be made in two separate trucks.

I'd bet the contract was full of little added costs like this.

[RavenATB]

Boy, just reading the comments on that article is like a “who’s who in Moron-Land”...

[piasa]

Not to mention back when I was in St. Louis the Hostess bakery there was being attacked by the EPA and the econuts because -- get this- the odor of baking yeast bread. It smelled like heaven but as I recall there were regulations in play that were going to force the bakery to renovate to insure that no odiferous pleasantries were emitted that could delight the senses.

[dila813]

I think the issue is, the locations where the bakeries were enabled them to deliver fresher products to these markets ... don’t know if this was critical in their business model.

I buy chips made in North Carolina all the time in Washington.

So..

There can be a rational argument that the free market killed this company (we will never be able to prove or disprove this) but there is an absolute proven fact that the union kept them from having the flexibility for the Hostess company to have an opportunity to reinvent themselves to save these jobs.

[Diana in Wisconsin]

I’m with you! I grew up in Milwaukee and driving past the breweries and smelling that heavenly yeasty goodness was the only good part about living there! (We escaped in 1970...)

[SWAMPSNIPER]

Hostess was providing jobs for many people just simply not able to master any job requiring much skill.

You can't pay workers more than they can produce with their efforts.

It will serve the union right if someone moves the brands to Mexico.

[ravenwolf]

What would any one expect a union loving socialist to say.

[SampleMan]

Free market? I’m 47 and I’ve never seen a free market. Did it slip in during the night and kill Hostess?

[TheDon]

Hostess went Galt...

[Mr. K]

"Both of these reactions strike me as being wildly over blown, based largely on common misunderstandings of what actually happens in Bankruptcy Court and the business world, and both miss the point that the death of Hostess Brands is a fairly good example of the free market in action."

So... good for Hostess? Bad for GM?

[SkyDancer]

There was an article where the president of the union blamed Romney and Bain Capitol for causing the bankruptcy.

[Jmouse007]

The articles conclusions are false: The UNION and its goons killed Hostess, Twinkies and their cup cakes. The union THUGS who support Obozo thought they could roll Hostess and instead, Hostess told Obozo and his thug unionestas to "hit the road". They deserve everything that is coming to them. Once sold the new owners should move the entire operation to a "right to work state" and FIRE every union member that worked for Hostess and hire replacements for all of them.

The union workers had a chance to not only save their jobs, but save the Hostess company as well! Instead the union workers and the greedy union thugs chose to kill their own jobs and the company to boot! How in heavens name they could chose to do this to themselves and to their families in this totally failed and failing economy is beyond all reason and comprehension.

After their unemployment benefits all run out, the banks foreclose on their homes and these union workers lose everything, I hope they and their families enjoy living on the street, in their cars and in homeless shelters because they have no one to blame for the mess they are in but THEMSELVES. As for the union leadership THUG bosses who motivated them to take this delusional course of self destruction... they will still "land on their feet" and will as Hans Gruber so aptly put it; "We will be sitting on a beach, earning 20%."

Lord willing, other union workers will finally wake up, learn the "Hostess lesson" and realize that their union overlord, thug bosses do not care about them or the companies that employ them and pay their salary, but only care about themselves, their wealth and their power.

[GeronL]

we haven’t had a free market in at least a century

[GSWarrior]

So true.

[bboop]

Yes, I hope to see them reopen in a Right to Work State. Let’s call that FREEDOM to work state. Oh no! Hostess took their pensions? Mine, too. Get a real life, you union toadies.

[KarlInOhio]

Hostess went Galt...

Hostess went 20th Century Motors... but there is no magical perpetual motion Twinkie hidden in the ruins.

[muawiyah]

They were on their SECOND trip through bankruptcy court ~ obviously a management, technology and marketing problem.

[Red_Devil 232]

Having live on the island of Oahu - driving past the Dole Pineapple plant was like a blast of thousands fresh baked Pineapple up side down cakes coming out of the oven. My what a wonderful aroma~