Sweetest Comeback: How Did the Twinkie Revival Happen?

Editor’s note: The death of Hostess sent Twinkie-loving Americans reeling. But all was not lost: The iconic snack cakes have returned under new ownership.

This revival story serves as a powerful lesson in economics—one that many unions and the progressive Left won’t understand, appreciate or admit. What caused the collapse in the first place? And how did the amazing recovery happen?

For our October issue, we dug into what really happened to Hostess and how entrepreneurship saved and American classic.

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Below is an excerpt from the September 2013 cover story, “Sweetest Comeback Ever.” Get the full story ONLY in the newest issue of TheBlaze Magazine.

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So who has cream filling on their face from sucking the life out of the Twinkie?

Since a new manufacturer returned the pastry tube of caloric deliciousness to store shelves in July, business analysts, political writers and even junk-food bloggers have opined on why the 80-year-old producer of Wonder Bread and Zingers finally shuttered last November after two rounds in bankruptcy.

The feared demise of the iconic cakes didn’t prompt a “Donettes-and-beer” summit. President Obama didn’t observe that he might have resembled Fat Albert if he had been part of the SnoBalls Gang in his youth.

But more than 2,500 “signatures” were affixed to a petition on the White House website asking Obama to “immediately Nationalize the Twinkie industry.” Apparently it failed to get the requisite 25,000 signatures within 30 days that would have prompted an “official response.”

The Twinkie turned political. Greedy venture capitalists were blasted by liberals for looting the struggling company, while labor unions were excoriated for wage and pension demands and restrictive work rules that critics said cut the operating legs from under the mother-bakery, Hostess Brands.

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Others suggested the old Hostess failed to react to market trends. High-fructose creations with poor nutrition facts were falling out of favor with American consumers, and the company had done little to expand its reach into foreign markets.

While there are shards of truth in those theories, a federal bankruptcy judge overseeing the Hostess break-up and the accompanying claims of the Teamster’s union, which represented the largest share of Hostess’ 18,000 workers, arrived at one conclusion that may shock you. Both sides agreed with the judge that the former Hostess was pushed over the edge by the strike of 5,000 unionized bakers who permanently shut down mixers and ovens.

Hostess products disappeared from shelves after Hostess Brands Inc. announced it filed a motion with the U.S. Bankruptcy Court to close its business last November. (Image source: BigStockPhoto)

“Many people, myself included, have serious questions as to the logic behind this strike,” said federal Judge Robert Drain, who presided over the 2012 bankruptcy.

Hostess’ Teamsters union, the company’s largest labor group, agreed and had settled on concessions after it reviewed Hostess’ books.

“Our financial advisers had looked at their books, they had total access,” said Ken Hall, the union’s secretary-treasurer. “We pushed them in negotiations to where we thought it was the absolute limit, that we would get the most for our members and [still] have a pathway back to prosperity for the company. The bakers’ union disagreed with that.”

Just hours before Hostess’ Nov. 15, 2012, liquidation deadline, the Teamsters union took the Bakery, Confectionary, Tobacco and Grain Millers International union (BCTGM) to task for its 11th-hour strike.

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“On Friday, Nov. 9, the BCTGM began to strike at some Hostess production facilities without notice to the Teamsters despite assurances they would not proceed with job actions without contacting the Teamsters,” a Teamsters’ statement said, “… that strike is now on the verge of forcing the company to liquidate—it is difficult for Teamster members to believe that is what the BCTGM Hostess members ultimately wanted to accomplish when they went out on strike. We may never know unless the BCTGM members, based on the facts they know today, get to determine their fate in a secret ballot vote.”

Of course, the Teamsters’ demand for a “secret ballot vote” was an interesting argumentvin light of the union’s support for federal “card check” legislation that would eliminate “secret ballots” for union recognition.

There may be no truly clean hands in the 2012 death of Hostess. Some suggest Hostess’ owners engineered the bankruptcy to get out from under a $2 billion pension liability.

Others allege the bakers’ union was willing to sacrifice the teetering snack-cake company, believing that making concessions there could cascade and ultimately undo contracts for its other 80,000 U.S. and Canadian members.

Unwrapping the Hostess story spotlights today’s increasingly spongy condition of U.S. labor unions. The other story at the creamy center is that when there is demand for a product, the market will produce supply.

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We have much more on the truth behind how Twinkie died, made a comeback, and is now profitable. Find how who took over and how they found a way to keep the Hostess snack cakes in the black--without labor unions and without giving in to progressive economic ideas.

Read the full piece only in the pages of the October issue of TheBlaze magazine--which you can get for FREE.

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