Hostess: A Lesson In Blaming Unions For Your Failures

Twinkie the Kid couldn’t lasso up a sustainable business plan

Hostess Brands, the makers of Twinkies, Ho-Hos, Wonder Bread, and Drake’s Cakes, announced this morning that it will be shutting down its operations. The company explained that will close 33 bakeries and 565 distribution centers, laying off most of its 18,500 employees.

The impetus for the death of these jobs? According to the company (and the media covering the story based on corporate press releases) it’s organized labor of course! Hostess Brands blames its demise on a strike by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, which represents workers at nearly two-thirds of Hostess’s factories. With those workers on strike, Hostess Brands told the world it simply could not survive and will be forced to close its doors.

The corporate bias against labor is buried in the rhetorical DNA of the company’s announcement. Note the New York Times article announcing the closure:

Hostess Brands, the bankrupt maker of cream-filled pastries like Twinkies and Ho Hos, said on Friday that it planned to wind down its operations and sell off its portfolio of well-known brands. The decision comes a week after one of the company’s biggest unions went on strike to protest a labor contract.

The paragraph flows from announcing the liquidation to the union strike and the decision to close one week later. This draws a chain of causation between the strike and the closure that sits in the mind of the audience. The important term glazed over by the structure of the paragraph?

“Bankrupt.”

Yes, Hostess Brands was bankrupt before this strike happened. Indeed, it’s been bankrupt twice in the last 8 years, having only emerged from its last bankruptcy 3 years ago. Think about that a second. That means Hostess managed to go bankrupt, restructure, and run itself back into bankruptcy in 3 years. Perhaps this should get more play than “labor strike” when we discuss the demise of the company.

The name was a question, as in “Wonder what’s in this bread that it doesn’t go bad?”

What prompted the company to run itself into the ground again? While the company has publicly placed all its business woes since 2009 on the difficult task of cutting labor costs, the reality is that the company remained behind the times. When America began to seek healthy alternatives to Wonder’s delicious but frightening 1950s deadly chemical feel, Hostess trudged onward losing market share to others. When childhood obesity became a national epidemic, Hostess kept churning out fat-filled cakes that sat uneaten on shelves. As the business faltered, Hostess turned blame on the workers.

But a losing business model with cheap labor can generate higher margins for only so long, and while this strike will provide the basis for closing the doors of the company, it will trigger the event that the company itself has planned for some time — liquidation. Hostess will now sell its famous brand names to other companies who can profit off them with smaller-scale production or by tweaking the product itself to better compete. For those at the top of Hostess, this — and not cutting labor costs while chasing diminishing markets — was the brass ring all along, with the owners of the company likely to become rich on these sales. By the way, who owns Hostess? If you guessed, “Private Equity firms seeking to slowly kill the company while milking its resources” you’d be right!

The Private Equity firms running Hostess may have a slightly different business model than Mitt Romney’s Bain Capital, but remember the standard model of private equity and thoroughly read about Hostess and marvel at the pattern:

In blaming workers for management woes, Hostess has an unlikely ally in the Teamsters Union. Unfortunately, the Teamsters are blasting the Bakery Union for going on strike and putting the Teamsters employees of Hostess out of a job. It’s an understandable response, given the Teamsters members are going to lose their jobs over a decision made by others, but it also reflects the long-term strategy of businesses to pit unions against each other to shield themselves by rhetorically framing the dispute not just as “union kills company” but as “rogue union kills company.” By keeping in the good graces of one union, Hostess is leading journalists by the nose to writing stories that show Hostess flanked by friendly workers outraged by the other union run amok.

But the Bakery Union knows the score. Their strike did not kill their jobs…their strike ended the farce that was going to kill their jobs:

“The plan has little or no chance of succeeding in saving the business,” said Frank Hurt, president of the Bakery Workers union, in a statement last month.

“This is a company that is controlled by Wall Street private equity and hedge fund firms, whose sole objective is to maximize their own returns, not rebuild a company for the long haul,” he said.

This story, unlike Twinkies, is very fresh, but as the news runs over the next few days and weeks, expect to see “Union Strike” appear in coverage at least 10 to 1 more often than “Private Equity.” And that’s a lesson in controlling communication.

30 comments for “Hostess: A Lesson In Blaming Unions For Your Failures

  1. November 16, 2012 at 11:12 am

    thank you, thank you, thank you!! finally someone calls it like it is . . . even in Midwestern newspapers, who you’d think would be more informed about union pensions being nothing more than deferred wages, the private equity spin is all you hear

  2. Mike Hargis
    November 16, 2012 at 1:35 pm

    I was into the process of preparing a very long Facebook post regarding this matter (in response to pro-Hostess hyperbole), and during my research I came across this article. I then deleted my post-in-progress, and simply posted your article. Thanks for saving me the trouble, and for calling it like it is

    • November 16, 2012 at 1:39 pm

      That is high praise! Thank you. Like you, I read the story this morning and was inspired to go on a rant and I’m glad you thought I was able to articulate that sickening feeling that the culture of “blame unions first” brings out.

  3. November 16, 2012 at 4:13 pm

    Of course you’re right. Hostess has decided to forever close their company just to make unions look bad. And in no way did their inability to compete with ever higher labor costs have anything to do with closing. Those greedy morons. Imagine a group of people always demanding more and more money regardless of how it effects the market and all the parties involved.

    • November 16, 2012 at 7:44 pm

      This snarky response seems to miss the economic realities of bankruptcy laws and the tax structure for private equity. If you watched the embedded video you’d understand why the private equity world (and those of us lawyers who represented them) actually know that it DOES make sense for a company to forever close its doors. Our legal system is set up much like Mel Brooks’s Producers, a flop of a company is more valuable than a hit when coming out of bankruptcy.

    • November 16, 2012 at 8:24 pm

      Missed this part here, did you?

      “For those at the top of Hostess, this — and not cutting labor costs while chasing diminishing markets — was the brass ring all along, with the owners of the company likely to become rich on these sales.”

      This article, coupled with many others elsewhere, make it clear that…
      …the real causes of the Hostess collapse were the billion-dollar debt load they’d been saddled with by their private-equity ownership, coupled with the loss of both sales and market share undergone for over a decade, by management’s complete failure to adjust to new market realities (double-digit growth in “health,” “organic,” and “whole” foods; plummeting demand for both hi-chemical and hi-calorie food-product)
      …liquidation was probably the goal of the private-equity firms at least since last winter when they filed for their second bankruptcy in 8 years.

      I’m sure the cherries you picked from the article taste just fine to you, though.

      BTW, the verb is “affects the market,” not “effects.”

      • November 16, 2012 at 8:30 pm

        Apologies to everyone; hope it was clear that my comment was a response to friend aesop’sview, two above, not to Mr Patrice, directly above.

    • i2haightU69
      November 17, 2012 at 8:17 am

      Indeed, Aesop! Imagine a group of people demanding more and more money regardless of how it affects the workers involved! Its just too bad that group, in this instance, is made up of shareholders and private equity firms.

  4. November 16, 2012 at 4:59 pm

    This is why unions are viewed as an elite club.

  5. Gardengal58
    November 16, 2012 at 6:26 pm

    Looks like there’s blame on both sides. Corporate greed and unions both seem to share in the demise.

  6. byron thomas
    November 16, 2012 at 8:25 pm

    Why do you not trust the media on their reporting/research of this, but vigorously defend the same media when aligned with YOUR opinions.??? Do we have a left wing media conspiracy or not? Usually you don’t think so….

    • November 17, 2012 at 12:48 am

      The media is, like most entities, not consciously biased, but biases can arise from methods. Here, business reporting relies largely on company press releases as sources, giving disproportionate influence to corporate PR departments. And I actually give the media grief all the time for its honest, but misguided, reliance on taking statements from the primary actors and presenting them uncritically.

  7. Scott Mordes
    November 16, 2012 at 8:47 pm

    You can’t blame unions for this. Company did not make changes when amercains started eating healthier. You must adapt to what consumers are doing.

  8. Peter Davio
    November 16, 2012 at 9:56 pm

    Thank you, Joe. Like Mike Hargis above, I was typing out a rather lengthy FB rant on this subject. I have now appended yours, as it is quite clearly stated.

  9. November 17, 2012 at 4:40 am

    This is from Wikipedia:

    With the leadership of Craig Jung, the company emerged from bankruptcy as a private company on February 3, 2009.[15] The plan included a 50 percent equity stake by Ripplewood Holdings and lines/loans by General Electric Capital and GE Capital Markets, Silver Point Finance and Monarch Master Funding. Interstate’s union workers made contract concessions in exchange for equity.[16]
    http://en.wikipedia.org/wiki/Hostess_Brands

    Once GE Capital gets involved in a company’s financing, it’s all over. They did the same thing to Montgomery Wards, Payless Cashways, and I can’t recall how many other retail stores. GE sucks the life blood out of a company, wrings every nickel out that they can, then fires everyone and closes the company.

  10. November 17, 2012 at 9:15 am

    and nobody here has mentiontioned the fact that the baker’s union hadn’t returned calls from the company for the past month. This strike has cost 18,000 jobs just before CHristmas. If they would have just accepted it and went back to work they could have all made it through the holidays and when the Company finally died or got sold ALL the employees would have gotten unemployment. Now the Bakers Union member are out of a job with no unemploymemt benefits.

    • November 17, 2012 at 9:31 am

      Most states would allow workers to collect unemployment if they lose their jobs while on strike. I’m not sure, but if that applies to all these workers, but I’m certain that was part of the calculation in making this decision. The Union did admit that they understood their action could cause Hostess to liquidate early.

  11. November 17, 2012 at 5:11 pm

    Thanks for touching on the obesity topic here, because, ultimately, had these people truly wanted to keep the company afloat, they would have developed sugar-free versions, gluten-free versions, etc. Such a treasured brand, its a shame there is no passion and vision behind it any longer. Milk it and crash it. Move on. Capitalism at its worst.

  12. James
    November 17, 2012 at 5:23 pm

    Management performance and external variables are not to be discounted; however, organized labor absolutely played a role in this outcome. Unions represent fixed costs and they’re constantly pushing for more. Throw in other fixed costs like tax, regulation, healthcare, etc. and something has to give. The liberal agenda just keeps piling it on as if every business has a money faucet. If you think this is one sided you have absolutely no clue as what you are talking about.

  13. Ignorant Dolt
    November 17, 2012 at 5:50 pm

    What I’d like to know did the CEO, Board and top level Executives take the same compensation concessions as the Union workers did during the previous bankruptcy actions and current financial difficulties? It’s kind of hard to take a bunch of white collar types seriously if they too don’t bite the bullet in order to save the ship.

    I’ve read where the top level executives received compensation increases on a grand scale during the companies troubles (currently unverified). If they did get richer off of the plight of Hostess and let the place crash, it’s a thuggish example of Vulture Capitalism in it’s purist form.

  14. Misterbunns
    November 17, 2012 at 7:16 pm

    This comapny has been screwed up for many years… just like a “good old boys club.” The problem is that the first company that was supposed to bring IBC out of BK milked the cash cow as long as it could. Then the crooks at the top decided to skim more before the axe came down. Why aren’t the crooks that breought the comapny in jail?

  15. Paulie
    November 17, 2012 at 9:22 pm

    Got that, but Patrice’s comment does show how corrupt lawyers and equity firms are.

  16. November 19, 2012 at 7:49 am

    Great follow-up for those who say the strike killed good jobs… http://www.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery

    Money line: “Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.
    It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.”

  17. November 19, 2012 at 2:35 pm

    What’s hilarious about this blog piece is that while the author claims to be “a student of rhetoric who constantly watches politicians spread mischaracterizations and rank falsehoods and political “debate” where the candidates hurl sound bites at each other and are rarely if ever confronted or prodded by engaged moderation” he is doing much of what he apparently despises.

    He embeds a video by significantly partisan Robert Reich and moveon.org claiming it shows the standard model of PE. The video is wildly inaccurate and debunking it’s partisan claims is outside the scope of a blog response but some of the simplest mischaracterizations and lies are that taxpayers pay for unemployment insurance and pension insurance. Outside of one current aspect of unemployment insurance that is only temporary, federal extended unemployment benefits, unemployment insurance is entirely funded by the businesses that lay off the workers claiming unemployment. And pension insurance is provided by the PBGC. While they are a federal agency, they are funded by insurance premiums paid by the businesses whose pension plans they insure. The list goes on and one but a much more objective and evenhanded discussion of the major aspects of PE and the actual studies that have looked at the industry can be found here: http://dealbook.nytimes.com/2012/01/24/amid-attacks-on-private-equity-efforts-to-study-its-value/

    The reality is there are a number of reasons Hostess is being liquidated. Unions and unionized labor are just one of them. Yet this author gives zero fault to them. The author even goes as far as to make the unfounded claim that liquidation was the goal of Hostess’ owners the entire time while offering no evidence other than apparently his own hunch and a wholly inaccurate and biased video from moveon.org about the industry in general that doesn’t even make that claim itself! To top it all off the author goes on to say the company was going to have to liquidate anyway based upon a quote from one of the unions involved in the mess while ignoring a competing quote just above it in his provided link that claims the opposite! – “Management insists that a strike would lead to liquidation and that the reorganization plan is the only way to keep the company alive.
    “Demand for Hostess products has been very resilient, giving us a solid base to work from,” said CEO Gregory Rayburn in a statement Thursday. “With a competitive cost structure and fresh capital at our disposal, we can begin to make the kinds of investments in our business that is essential to our future success.”

    • November 19, 2012 at 3:16 pm

      A spirited response — just a couple of thoughts.

      It’s unclear to me why the piece is contrary to my stated disdain for sound bites. Indeed, a piece that digs beyond the superficial coverage of articles parroting the press release from the company is the exact opposite of accepting sound bites.

      Rather I think you are mistaking my disdain for the standard mock “debate” of Sunday talk shows for a proclamation of non-partisanship on my part. I actually think the concept of “objective” journalism is to blame for superficial political discourse, because accepting sound bites from both sides as though they are equally valid is what erodes quality debate.

      The Reich video does not reflect the business model of every private equity company in the world, nor does it claim to. It does accurately reflect a particular strategy employed by some private equity firms in some situations, specifically Bain Capital in a number of controversial deals highlighted during the campaign, which was the basis of the video’s production. Some private equity firms are engaged in perfectly honorable strategies — in fact, the Auto Bailout was basically a different private equity strategy (managed by a private equity guru, actually) using public money.

      Were the private equity firms behind Hostess engaged in this practice of raiding the company with an eye toward liquidating it or were they trying to restructure the company into a sustainable business?

      Well, in this case it’s the former. The backers who took over Hostess loaded it up with debt to the tune of almost $1B just as described in Professor Reich’s video. http://dealbook.nytimes.com/2012/11/16/hostess-brands-says-it-will-liquidate/ As the linked article explains this more or less ended any hope of enticing additional investors.

      As for unemployment and pension funding, you are correct to a point. The unemployment insurance system is funded by a much more complex system of taxes that are capped and regressive, failing to cover the entire cost of the system. http://www.cbpp.org/cms/index.cfm?fa=view&id=1466 In other words, the rest of us end up covering portions of the bill indirectly through the taxes paid by our employers (because, as conservatives often correctly argue, those taxes basically represent money that could have been salary). As for pensions, the same “indirect” taxation is true.

      I do give zero fault to the unions because the unions haven’t done anything based on a careful review of the facts of this case. In fact, the union involved here took a major cut to pay before in an effort to help the business survive. This deal would have been an even more severe cut made necessary solely to bailout the company for its practice of tripling executive compensation (http://thinkprogress.org/economy/2012/11/16/1203151/why-unions-dont-shoulder-the-blame-for-hostesss-downfall/) while loading the company with debt.

      Hostess could have scaled back and laid off workers to be a leaner company, but that was not the plan. Even though the business model was failing, the private equity backers of Hostess wanted to maintain output and revenues (and by “borrowing” the worker-funded pension) while cutting inputs by getting wage cuts to artificially create a better balance sheet and rack up debt that could be used to pay themselves.

      Perhaps they “accidentally” paid themselves millions while pushing the company back into bankruptcy…I just assume millionaire financiers are smarter than that.

      • November 20, 2012 at 11:08 am

        I was mostly focusing on your apparent dislike of “mischaracterizations and rank falsehoods”. But you’ve made it pretty clear you actually like them if they agree with your political stance. Thanks for pointing out that you are indeed quite partisan, though it was already obvious.

        I would agree that mock debate is lame, but I would think partisan journalism is much more to blame for superficial political discourse (think MSNBC, Fox News) than an attempt to be objective. And accepting someone’s inaccurate sound bite (like the Reich video) is just bad journalism, or in this case bad blogging, whether you are partisan or objective. It is sad that they all do it and don’t call out the partisan that comes on their show and spews known lies like we saw over and over again during the presidential campaign.

        Regarding the moveon.org/Reich video, you are the one that claimed it shows the “standard model of private equity”!!! In fact you said the PE owners of Hostess might be different than Bain, “but remember the standard model of private equity” while then providing a colon and a link to the Reich video. This is pretty clear. And yes the video mentions Bain in the beginning, but goes on to say it’s describing Private Equity, not just Bain’s or some other “villain’s” Private Equity model. You have clearly contradicted yourself here. Regardless the video is filled with, your favorite, mischaracterizations and falsehoods, plus red herrings and is largely worthless. Using the video’s logic, anybody can boost profits overnight by taking on debt simply b/c the interest is tax deductible. This is laughable. Debt can ultimately make you more profitable if you invest the money correctly, but debt and it’s tax deductible interest by itself does not make a company rich! All the deduction does is lower the actual cost of repaying the debt relative to where it would be with no deduction. And besides, debt financing interest is deductible for every corporation, not just PE corps. Like I said before, the video goes on and on with total BS. The viewer is left to believe that PE is some drain on society while, at a minimum, it has been proven that PE is no more a villain than any other corporate ownership structure.

        I love your link that you are apparently using to try and prove that Hostess’ owners were simply trying to raid the company. You really, really don’t do your research. Yes the owners bought the company out of bankruptcy and added debt, but it was already laden with debt. It’s not like they loaded it up with all that 860mm so they could quickly raid it and liquidate it. Besides, debt financing doesn’t necessarily equal corporate raiding. Just look at the size of the corporate bond and bank loan market! Man there are a ton of raiders out there! BTW, one of your own links lays some of the blame on the unions: “The labor costs, too, proved insurmountable, a situation that has been complicated by years of deal-making.” Like I said, there are myriad reasons for the liquidation. Poor management, spiking commodity prices, an underfunded pension plan that was only getting worse, unions, etc.etc Your link about executive compensation provides a link that discusses the role that out-sized pensions played and a link that quotes the Teamsters as saying that their concessions in 2009 helped the company and now it’s time for others, including the other employees/unions, to step up.. Also, what is funny in all of this is that he owner of the PE firm that owns Hostess is a certified big-time Democrat and actually sought out unionized companies to buy.

        The tax/funding systems for unemployment insurance and the PBGC are not all that complex, but the point is that the companies they cover largely and almost exclusively fund them. You can argue that it’s really the employees that pay the costs, but the point the video made that it’s the taxpayers (as in all of tax paying society) that pick up the entire bill is totally wrong. Just another reason why the video is terrible.

        • November 20, 2012 at 12:16 pm

          I agree that partisan journalism has faults, but I contend it was the natural conclusion of “forced objective journalism.” When you watch Wolf Blitzer call every debate a draw and pretend every claim either side makes as “interesting” it becomes bland and uninteresting, and partisan channels fill that vacuum. What journalists should be doing instead is being consistently harsh, and if that tends to help one side more than the other there should be no whining about “bias.”

          “Using the video’s logic, anybody can boost profits overnight by taking on debt simply b/c the interest is tax deductible.”

          Not really. The strategy (basically the old LBO strategy from the 80s) can only work in situations where the business can have its costs successfully slashed without hurting short-term production. That’s necessary to bolster profits on paper. The skill in a buyout is in identifying companies that can be squeezed like this. And that really is a skill because most companies don’t have enough slack.

          Not sure how “proven” it is that private equity is good for the economy. The crux of our disagreement here though is likely the broad definition of “private equity.” Take, for example, Bain Capital’s involvement with Staples. This was a private equity deal that did not involve gutting the company or loading it with debt, but investing in a company trying to change its structure for the long-term. Lots of private equity deals operate like this. It doesn’t make the huge bucks that LBOs did in the 80s, but it counts in the positive ledger of the private equity brand. I actually think private equity managers are ridiculously smart and when they set their sights on building companies their track record is generally good. However, the government (and I’ll blame them) has set up a tax structure that incentivizes financiers to kill companies that fit certain conditions. If carried interest is taxed as regular income, would deals like this really happen? We need to know the eventual price Hostess could have demanded for its brands, but it would have at least been a less profitable move for the equity company.

          Now the argument FOR private equity is that Hostess was going to kill itself anyway because they had no clue how to adjust to the market and at least private equity firms could salvage some value out of the company. It’s a fair argument, though I contend that the death of some reasonably healthy companies through this process suggest we’ve incentivized too far.

          “I love your link that you are apparently using to try and prove that Hostess’ owners were simply trying to raid the company. You really, really don’t do your research. Yes the owners bought the company out of bankruptcy and added debt, but it was already laden with debt. It’s not like they loaded it up with all that 860mm so they could quickly raid it and liquidate it.”

          OK…and your proof of that is? This is just speculation on your part that they had some independent plan beyond running up the debt and paying themselves out. I’ve provided evidence that they’ve already tripled their executive packages and that experts felt that the debt load prevented efforts to attract more investment to keep the company going. What is true, and a concession I will absolutely make, is that the private equity firms involved have not paid out their investors with a dividend. I would contend “yet” should be included, and that this is the reason they are miffed by the shutdown because it accelerated their schedule too much, but I can’t prove that, so I will concede it.

          • November 20, 2012 at 5:00 pm

            You missed my point about the debt. I was pointing out how wrong your video is for claiming that a PE firm pulls a magic trick by taking on debt and deducting the interest to somehow instantly increase profits. It says: “and since interest payments on this debt are deductible from company income, presto!, the company shows even bigger profits”. Obviously I don’t think this, I’m pointing out another reason why this video is worthless (just being from moveon.org is enough to prove that though). This line of reasoning reminds me of when at a company lunch some idiot would claim that even though the boss is buying the lunch out of his own pocket, it doesn’t cost him anything b/c “it’s a write-off”. Assume his combined marginal tax bracket is 40%, every dollar on the lunch still cost him 60c.

            You’re really not following along well. I’m not claiming that PE is good, I’m just saying that at worst and in aggregate it’s no more evil than the rest of corporate america. Again, plenty of evidence here: http://dealbook.nytimes.com/2012/01/24/amid-attacks-on-private-equity-efforts-to-study-its-value/

            You, on the other hand, have claimed “while this strike will provide the basis for closing the doors of the company, it will trigger the event that the company itself has planned for some time — liquidation” and “For those at the top of Hostess, this — and not cutting labor costs while chasing diminishing markets — was the brass ring all along, with the owners of the company likely to become rich on these sales.”. You couldn’t be more dead wrong!!! Ripplewood is expected to LOSE IT’S ENTIRE INVESTMENT in Hostess! http://finance.fortune.cnn.com/2012/11/19/hostess-bain-vultures/

            On your last two paragraphs above you are again getting really confused. I don’t profess to know exactly what Ripplewoods intentions were, I pointed out that you have no evidence that they were trying to raid it and you don’t. Paying a few executives too much money and adding some debt is by no means evidence that they are trying to raid it. It actually sounds like most companies, PE owned or not. Again, you’re off on the debt. You claimed they loaded it with close to 1B, you’re missing the fact that when Ripplewood took over there was already close to 600mm in debt. You really have no proof for your claims and all this BS you’re spewing is your hunch about the company based upon what you claim to be the standard PE model – which is dead wrong. You even go as far as to concede that they haven’t done some of the key elements of what corporate raiders do, but that you know they were going to. Are you on the board? You have gone from inaccurate to just silly.

            But what you have done is managed to trick people that read this inaccurate blog. As one reader wrote: “Milk it and crash it. Move on. Capitalism at its worst.” If losing 130mm is milking something, no thanks!

            You’re literally as bad as the media you’re mad at for claiming this is all the union’s fault

  18. November 20, 2012 at 4:56 pm

    You missed my point about the debt. I’m was point out how wrong your video is for claiming that a PE firm pulls a magic trick by taking on debt and deducting the interest to somehow instantly increase profits. It says: “and since interest payments on this debt are deductible from company income, presto!, the company shows even bigger profits”. Obviously I don’t think this, I’m pointing out another reason why this video is worthless (just being from moveon.org is enough to prove that though). This line of reasoning is reminds me of when at a company lunch some idiot would claim that even though the boss is buying the lunch out of his own pocket, it doesn’t cost him anything b/c “it’s a write-off”. Assume his combined marginal tax bracket is 40%, every dollar on the lunch still cost him 60c.

    You’re really not following along well. I’m not claiming that PE is good, I’m just saying that at worst and in aggregate it’s no more evil than the rest of corporate america. Again, plenty of evidence here: http://dealbook.nytimes.com/2012/01/24/amid-attacks-on-private-equity-efforts-to-study-its-value/

    You, on the other hand, have claimed “while this strike will provide the basis for closing the doors of the company, it will trigger the event that the company itself has planned for some time — liquidation” and “For those at the top of Hostess, this — and not cutting labor costs while chasing diminishing markets — was the brass ring all along, with the owners of the company likely to become rich on these sales.”. You couldn’t be more dead wrong!!! Ripplewood is expected to LOSE IT’S ENTIRE INVESTMENT in Hostess! http://finance.fortune.cnn.com/2012/11/19/hostess-bain-vultures/

    On your last two paragraphs above you are again getting really confused. I don’t profess to know exactly what Ripplewoods intentions were, I pointed out that you have no evidence that they were trying to raid it and you don’t. Paying a few executive too much money and adding some debt is by no means evidence that they are trying to raid it. It actually sounds like most companies, PE owned or not. Again, you’re off on the debt. You claimed they loaded it with close to 1B, you’re missing the fact that when Ripplewood took over there was already close to 600mm in debt. You really have no proof for your claims and all this BS you’re spewing is your hunch about the company based upon what you claim to be the standard PE model – which is dead wrong. You even go as far as to concede that they haven’t done some of the key elements of what corporate raiders do, but that you know they were going to. Are you on the board? You have gone from inaccurate to just silly.

    But what you have done is managed to trick people that read this inaccurate blog. As one reader wrote: “Milk it and crash it. Move on. Capitalism at its worst.” If losing 130mm is milking something, no thanks!

    You’re literally as bad as the media you’re mad at for claiming this is all the union’s fault.

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