Twinkies: the neo-neon yellow, cream-filled sugar eats have a wild, totemic significance for many Americans. The maker of these sugar monsters, the Hostess company, is now, as one Reuters writer says, "oozing past bankruptcy" for the second time in three years -- but it looks like stopsville this time.
Twinkies are profoundly unhealthy, nutritionally and stylistically trivial things: so what does our current obsession -- a spate of stories and informal exchanges about them and producer firm Hostess -- say about us? In Tulsa, part of the compulsion flows from a genuine concern for the fate of the 185 T-Town bakery/confection workers who will almost certainly lose their jobs in what is still the greatest economic downturn since the Great Depression. And the crash of the Wonder Bread organization in Tulsa will bring the temporary departure of this ubiquitous product from store shelves.
Hostess' problems come as a consequence of a radical conflation of bad management, a horrendous debt load (nearly $900 million on a firm with a $2 billion revenue stream last year) spawned by two rounds of huge restructuring attempts, and real "they want us to take the whole hit" fatigue on the part of the unions associated with the operation. But another vector -- and this may be the most important and far-reaching driver -- is a profound change in American health and nutritional preferences.
Hostess managers are a lot like the current imperial crew now running America Airlines. AA managers, like the Hostess folks, failed to act decisively when monstrous changes in their competitive and technological environment became evident. And Hostess has arguably failed to learn from other nimble, more agile players in the "junk food" space, including Flowers Foods -- a more nutritionally enlightened firm that may buy/modify some or all of the rolled out parts of the TwinkieVerse.
If you get about here in town, you have almost certainly overheard several conversations that go: "Well you know, it's just the damn unions, the unions you know, they killed it." This is a pivot point at many watering holes and a pole for newspaper headlines, including a couple in the Tulsa World. Supposedly, the impossibly named Bakery, Confectionery, Tobacco Workers and Grain Millers Union brought the Hostess organization to its knees with a strike that began a few weeks ago.
An example from the New York Times on Nov. 20:
"Tuesday's announcement came four days after Hostess announced that it would wind down its operations, a move precipitated by a bakery workers' strike that began on Nov. 9 at two-thirds of the company's 33 bakeries. Ever since Hostess filed for bankruptcy last January, it has insisted that its labor costs were unsustainable and that it needed to cut its wage, health, and pension costs to continue operating. But the bakery workers' union balked, asserting that Hostess was badly managed and that the company would most likely face liquidation again."
Importantly, the Teamsters organization, another powerhouse labor confederation, and one that represented an even larger share of Hostess workers nationally, had settled earlier in the year with Twinkie management. They had agreed to a passel of dramatic wage and benefit cuts: a vomit-inducing repeat of what they did only a few years before. But to no avail: the faceoff, as of Thanksgiving week, will likely lead to 18,500 immediate layoffs and the death of an 80-year-old, multi-product junk food company.
Like almost everything else in our hyper-connected, 21st century realm, things are a bit more entangled.
Here is what another close observer said in Salon magazine on Nov. 20:
"But the story is far more complicated ... and in some ways, the exact opposite of the tale pushed by those on the right. It's the story of two bankruptcies, hundreds of millions of givebacks from Hostess unions and hundreds of millions of debt piled onto the company by venture capitalists. It's a story of management that boosted its own salaries while failing to make agreed payments into workers' pension funds.
And it's a story of changing tastes and diets ... The company simply hasn't been able to adequately compete due to a stodgy, moribund management that did not act to diversify a product base that hasn't changed with the times."
Dr. Andrew Weil, integrative medical maven, author, and nationally prominent nutrition and health care advocate, gave a compelling lecture in Tulsa the other day. Weil came as a part of the great, ongoing speakers bureau run by Tulsa Town Hall and its leader, Kathy Collins. Weil's view of the Twinkie nexus: sugar and its various molecular and metabolic avatars is every bit as destructive, every bit as devastating, as tobacco was during the 20th century. An auspicious part of the body of evidence for Weil's analysis rests on detailed studies of the "radioactive" role that uncontrolled inflammation plays in the degeneration of human metabolic functions and powerful correlation between these dysfunctions and sugar consumption.
Part of the Twinkie trauma: inflexibility and an imaginative failure in how our society operates economically and what happens to workers bashed by gargantuan transitions in our economy. This is stuff that private equity firms (several Bain-like companies are at the heart of the Twinkie play) don't seem to really handle well. Sci-tech/visionary Steven Johnson, in his sparky new book, Future Perfect, argues that we need to make better use of what he calls peer-based/network-centric-based models. These avenues are arguably radically new ways of thinking about our economic machinery that go beyond simple distinctions between public and private roles and classic "the market will work it out" nostrums.
What Johnson and others have in mind entails looking seriously at what some in Spain and elsewhere in Europe and here in the United States as well are beginning to explore. The fix: crafting dynamic combo/co-op organizations and inventive public-private partnerships to retrain and empower workers who are tossed out by disruptive corporate shutdowns and dramatic changes in the marketplace.
More in a week or so...
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