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Friday, April 24, 2015

Twinkies prove the system works

A few years ago the company that made Twinkies hit the skids and was in bankruptcy court fighting for some breathing room from creditors under Chapter 11. In 2012, it had an operating loss of $1.06 billion on $2.47 billion in sales, with $2.5 billion in liabilities. Pension expenses topped $930 million. The bakers union went on strike. Management was lousy -- hey operating losses were 40% of revenue. Newspapers and TV stations went wild with stories about the death of Twinkies.

Readers may remember me yawning. I said the Twinkie name was too valuable and someone would buy the name, make them again without union help, and rake in some big bucks. A story by Steven Bertoni of Forbes this week said that is exactly what happened.

Billionaire C. Dean Metropoulos and Apollo Global senior partner Andy Jhawar bought the brand in 2012 and opened a bakery in Kansas.

From Forbes:
The new factory is bright and clean. Tight rows of Twinkies m arch along the $20 million Auto Bake system with the precision of Soviet soldiers in a May Day parade. Yellow robotic arms, which look like they should be welding Teslas rather than boxing Twinkies, stack snacks with hypnotic rhythm. This 500-person plant produces more than 1 million Twinkies a day, 400 million a year. That’s 80% of Hostess’ total  output–output that under the old regime required 14 plants and 9,000 employees. And it’s about to get more efficient: Metropoulos and Jhawar just installed a second Auto–Bake system, this one for Cup Cakes, and the governor is here to cut the ribbon.
They saved Twinkies. Metropoulos previously saved Bumble Bee Tuna, Chef Boyardee and Pabst Blue Ribbon. He told the reporter: “No one ever thanked me for saving Vlasic pickles.”

Imagine what would have happened if President Obama had not bailed out GM. The company could have been saved. Pontiac might still be around, Saturn too. Instead of blowing billions on some bureaucratic fetish car like the Volt, Metropoulos could be building Cadillac convertibles.

Instead of paring back the staff and bringing in innovation, the government appointed a politically correct CEO -- The First Woman CEO Of A Car Company -- who is a joke.

The government protected the very things that brought down GM: Unions, lack of innovation, inefficiency, and not knowing the market. GM is just another Amtrak.

Have a Twinkie. Those we will make because the politicians have no interest in them. Now if you don't mind, my red Mustang GT convertible awaits me.

6 comments:

  1. Roger Penske tried to buy Saturn, workers, factory and all, and the gov't refused to sell it ... gotta save jobs buy closing companies and factories ... I guess it made sense to some bureaucrat somewhere

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    1. gotta save some Union jobs. An independent Saturn would have been competition to government motors.

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    2. oh, you mean Tn being a right to work state and the bankruptcy buyout would have broken the UAW added to a successful Saturn showing how poorly GM runs things was the reason they refused to "save" it? Inconceivable!

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  2. Now think of all the jobs a gummint mandated $15 an hour minimum wage will cost as fast food outlets will get more and more robotic.It doesn't take much skill to flip burgers. A robot could do it. A robot will do it.

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  3. Don't know the tuna, but I patronized a little pizza place in the midwest that used Bumble Bee shrimp in their salads.

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  4. "Twinkies prove the system works" and that Don Surber was right when, in 2008-2009 he argued on his earlier blog against a government bailout of GM. That's (another) +1 for you, Don.

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