[Vision2020] Who Killed the Twinkie?

[Art Deco]

Who Killed the Twinkie?
Posted by James
Surowiecki<http://www.newyorker.com/magazine/bios/james_surowiecki/search?contributorName=James%20Surowiecki>

[image: hostess.jpg]

Hostess Brands is not dead just yet, but the prospects for the company’s
survival are now dim at best. Hostess—which still makes iconic food
products (or sort of food products) like Twinkies and Ding Dongs—went into
Chapter 11 back in January for the second time in eight years, in an
attempt to get out from under a pile of debt and labor obligations. The
company hoped, it seems, to be able to use bankruptcy protection as a way
of imposing cuts in wages and benefits on its unionized employees. But last
week, after Hostess put in place a contract that the bakers’ union said
would end up cutting wages and benefits between twenty-seven and thirty-two
per cent (including an immediate eight per cent wage cut), that union went
on strike. Hostess claims the strike has irreparably damaged production and
made it impossible for it to continue operating. As a result, on Friday the
company asked a bankruptcy judge to allow it to liquidate the company. If
no deal is struck over the weekend, and if the judge approves Hostess’s
request, as of Monday afternoon, it will be on its way out of business—its
brands and factories will be sold for whatever the company can get for
them. A few thousand workers will be kept on initially to wind things down,
but most of the nearly nineteen thousand employees will lose their jobs.

Management, of course, blames the company’s demise on the greedy,
unreasonable unions. But, while the strike may well have sent Hostess over
the edge, the hard truth is that it probably should have gone out of
business a long time ago. The company has been steadily losing money, and
market share, for years. And its core problem has not been excessively high
compensation costs or pension contributions. Its core problem has been that
the market for its products changed, but it did not. Twinkies and Ding
Dongs obviously aren’t anyone’s idea of the perfect twenty-first-century
snack food. More important, the theoretical flagship of Hostess’s product
line, Wonder Bread, has gone from being a key part of the archetypical
American diet to a tired also-ran.

Hostess’s management certainly bears some of the blame for its failure to
successfully adapt, though the company made numerous (and failed) attempts
to introduce healthier products. But the simple truth is that this kind of
failure is endemic to the system—there are always going to be companies
that are unable to change in response to the marketplace. And those
companies are supposed to go out of business. Not to be too clichéd about
it, but this is what creative destruction is all about.

The problem, of course, is that that destruction is going to upend the
lives of thousands of workers. And to the extent, then, that Hostess’s
demise shows us something important about the plight of organized labor
today, it’s not that greedy workers have precipitated their own demise.
It’s rather that one of organized labor’s biggest challenges over the past
four decades has been that union strength was concentrated in industries
and among companies that, though once dominant players in the postwar
American economy, have often ended up in a slow slide to obsolescence,
employing fewer and fewer workers and having less and less money to pay
them with. In theory, unions could have made up for this by organizing
those companies and industries that have become ascendant since the
nineteen-seventies, but for a variety of reasons (including a tougher
corporate approach to union-busting, a less friendly legal climate, the
difficulty of organizing many small enterprises as opposed to a few big
factories, and a tendency to protect existing members rather than put real
money into organizing) they haven’t. And the paradox is that as unions have
gotten smaller and less influential, they’ve also gotten less popular.
That’s why it’s so easy for Hostess’s management to spin the anti-union
narrative.

The real issue here is that people’s image of unions, and their sense that
doing something like going on strike is legitimate, seems to depend quite a
bit, in the U.S., on how common unions are in the workforce. When organized
labor represented more than a third of American workers, it was easy for
unions to send the message that in agitating for their own interests, union
members were also helping improve conditions for workers in general. But as
unions have shrunk, and have become increasingly concentrated in the public
sector, it’s become easier for people to dismiss them as just another
special interest, looking to hold onto perks that no one else gets. Perhaps
the most striking response to the Hostess news, in that sense, was the
tweet from conservative John
Nolte<https://twitter.com/NolteNC/statuses/269436500658249729>,
who wrote “Hostess strikers had pension. PENSIONS! What is this 1962?” It
was once taken for granted that an industrial worker who worked for a big
company for many years would get a solid middle-class lifestyle, and would
be taken care of in retirement. Today, that concept seems to many like a
relic. Just as Wonder Bread does.

*Photograph by Daniel Acker/Bloomberg/Getty*.


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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