Hostess Brands, the maker of everything I used to love about lunchtime as a kid such as Cup Cakes, Twinkies, and sandwiches made of Wonder Bread, is nearing the end of its existence. Though there are a number of mixed opinions and stories to point blame for the Hostess bankruptcy, most official news reports are citing inability to come to an agreement with the Union. However in contrast, CNN Money quotes Union officials as stating that “Hostess failed because its six management teams over the last eight years were unable to make it a profitable, successful business enterprise.”
Ultimately the recipes, brands, and even possibly the Hostess name could be resold to other companies throughout the liquidation process as a way of creating funds to pay creditors. Therefore, a company in Mexico or China could suddenly own the rights to one of the Hostess products like Twinkies. So even if these products made it back on the shelves of stores, it is unlikely it would result in the re-hiring of any of the 18,500 Hostess employees.
Reflecting on the Hostess Bankruptcy:
So even though the economy isn’t fantastic, we’re still a long ways away from the woes of the Great Recession. With that, who is to blame for the Hostess bankruptcy? Popular opinion blames the following:
• The Union’s demands
• Incompetent management
• Private equity ran it into the ground
Though the real reason may be a combination of each of these elements, I think smaller businesses can learn a great deal from this dilemma. Despite its size and popularity, the opinion of the workers and the Union which represents them is still enough to bring down a company of this magnitude. From their perspective, management may have squeezed them too hard for profitability and forced them into conditions that were no longer desirable. In a smaller business, it is important to recognize that the culture the business creates and promotes is one that all levels of employees can find as inclusive. To do anything to the contrary could, just like in the Hostess bankruptcy, cripple the company from carrying on forward any further.
Though Hostess may be beyond saving, smaller companies could benefit from reaching out for help. They could try a business rescue website or seek private consultants to see what options are left to save the business. The use of fresh ideas or people who specialize in such practices as business recovery may prove useful to a business in need.
Readers – Who do you feel is to blame for the Hostess bankruptcy? Did the company go wrong, or are the Union workers to blame?
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