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In a dawn press release that they obviously took days preparing, Hostess Brands execs murdered the once great giant of the baking biz, Hostess Brands. Hostess Brands was born in a "merger" of over a hundred bakeries in the roaring 20s. Nourished by weak antitrust enforcement and prohibition, Hostess grew rapidly, revolutionizing and all but taking over the bakery biz. Christened at birth as "Continental Baking Company", they rapidly played down their hundred bakery's heritage craft breads and substituted Wonder Bread, a white bread well suited to mass production with flour delivered by pneumatic tubes and baked in tunnel ovens with conveyor belts running down the middle. In 1930 Jimmy Dewar used shortcake baking pans that were sitting idle during the off season to make Twinkies, the first of many products Jimmy invented.

Along the way the Bakers union established a foothold in Hostess brands plants and delivery drivers joined the Teamsters. Under the union's umbrella Hostess became an american success story, paying living wages with benefits while the company made a profit clear through the depression and upgraded bakeries, delivery trucks, depots and thrift stores when the nation returned to prosperity. By the 1960s Hostess had a network of efficient bakeries all over the country, a fleet of modern long life diesel powered delivery trucks, and nearly a thousand depots and thrift stores. In the late 1960s Hostess was bought by the evil empire ITT. But ITT had other fish to fry, and functioned as a benevolent dictatorship that even built new state of the art high speed bakeries in suburban Chicago and southern California.

But in the 1980s the first generation of "masters of the universe" demanded higher returns on investment, and Hostess was sold to Ralston Purina. Ralston was drunk with power, at the same time adding Eveready Batteries to their all too diverse portfolio that included Chex cereals and snack as well as pet foods and livestock feeds. Ralston dragged Hostess HQ from Rye, NY to their St.Louis compound in da 'hood and went on a binge of closing bakeries. After bleeding Hostess  of a couple dozen bakeries with no improvement in Hostess' financial health, Ralston engineered a merger with a joke of a bakery chain known as Interstate Brands. The abusive marriage to Interstate went bad from the start, with more bakery closings. That disaster was eclipsed by an even bigger one when Interstate tried to force a chemically "enhanced" bread down customers  throats that had a shelf life measured in weeks. Bakers sampling the bread said it tasted like something unprintable and customers soon joined the chorus of complaints. But Interstate didn't care, and as they tried to jam there chemically "enhanced" bread down customer's throat's, customers spent their money elsewhere in the bread aisle. Within months Wonder Bread slipped from the number one sales position it had held for decades to third place. Interstate quietly dropped the chemical enhancement, closed more bakeries, and filed for bankruptcy in 2004.

Renamed Hostess, the company belatedly came out of bankruptcy nearly five years later. The choice of the Hostess name was foretelling- it was considered the company's most valued brand and the easiest to sell off. The stockholders having been wiped out, ownership shifted to a group of vulture capitalists that demanded insanely fast return on investment that a capital intesnive food business could never sustainably provide. Despite labor giving substantial concessions, predictably Hostess quit making contractually mandated contributions and was back in bankruptcy court last fall. With management clueless (imagine the Wall Street "masters of the universe" trying to make bread), the unions took the lead and countered management's liquidation plan with strategies to restore Hostess to sustainable profitability. Grudgingly, Hostess management agreed to a concession contract which the Teamster drivers barely approved and the bakers roundly rejected. The baker's went out on strike a week ago and management refused to negotiate, and judging by the well developed liquidation website that popped up at dawn today, the "masters of the universe" had intended to profitably carve up Hostess all along.  

Cause of death was chronic corporate greed that slowly bled Hostess to death. Hostess is survived by 18,000 current workers, at least 100,000 laid off workers and retirees, thousands of retailers and suppliers, and millions of happy eaters. Management has announced that they plan to dispose of Hostess remains by sale to the highest (or insider) bidders, but Hostess workers may have other plans...  

7:13 AM PT: Thanks for the promotion to the rec list! We've now got three diaries on the Hostess shutdown on the rec list, please read them all. I'm clearing my schedule (changing a flat tire on my pickup) for the day and will be updating here and commenting on the other diaries as well.

7:21 AM PT: Hostess is really leaving retailers in the lurch- They've stopped production, so many grocers that relied on Hostess for their best selling private label breads will have empty shelves. They've also told grocers that they won't be picking up stale product or displays, sticking grocers with the cost of disposal. And those millions of dollars in displays will be needed by any baker who wants to resume production of Hostess' brands.

10:57 AM PT: All the Hostess closing diaries rolled off the rec list, but Laura Clawson's most excellent diary got front paged. I'll check back here, but all be doing most of my commenting over there.

Originally posted to RuralRoute on Fri Nov 16, 2012 at 06:13 AM PST.

Also republished by In Support of Labor and Unions.

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