Noooooo! Not my twinkies! Say it isn’t so. How can this be? My monthly allowance for cupcakes and twinkies alone should be able to financially prop up any major corporation! But alas, Hostess Brands, Inc. has fallen over $860 million in debt and now, for the second time, finds itself in need for protection under Chapter 11 of the Bankruptcy Code.

Second time? Yes, you heard right, Hostess Brands, came out of bankruptcy only two years ago! How did this happen? Well, high labor expenses and rising ingredient costs for one. But isn’t that the case with every food manufacture? In a recent blog I talked about the rising food costs that were being passed on to the consumer due to increases in labor and costs. So then, why Hostess? Why now?

The reason for the first bankruptcy filing in 2004 was blamed on low sales and high fixed costs. (at least according to Hostess). But I think a more plausible explantion for the recent bankruptcy filing may be the on the recent failure to reach an agreement with the almighty unions regarding pensions and health care.

Good grief. Unions! I understand the basic principle of what they are and why they are here. But over and over again I see companies going bankrupt and closing their doors thanks to the Unions. Shouldn’t they be helping to create jobs rather than destroying them? Most of us don’t have the luxury of employers paying into a pension plan. Many employers, in fact have cut health care benefits entirely just to be able to meet payrolls. It is tough on employees but at least they have a job. In this economy, with it’s high unemployment rate, I am not sure forcing a company to pay more money into pensions and health care is the right thing to do.

Of course, there is an argument on both sides of this issue, but the fact remains, my beloved twinkies are now wrapped in bankruptcy paperwork.

Okay, with my political opinion out of the way, here are some Hostess facts.

–         Hostess, formerly known as Interstate Bakeries, was founded in 1930

–         It currently operates 36 bakeries and employees over 19,000 people

–         It operates in 49 States.

–         Annual sales are approximately $2 billion.

–         Total assets of $981.6 million

–         Total liabilities of $1.4 billion (as of December 10, 2011)

Recently, Hostess has attempted to sell it’s business to companies such as Smuckers and Kraft Foods, but has not had any success. Hostess will continue to operate and produce it’s product’s while in the Chapter 11.

Regardless of the reason for filing the bankruptcy, whether it is political or financial, whether or not the Union’s are to blame or just simple economics, as long as I get to continue satisfying my twinkie urges, then all is well with the world.

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