The Hostess Twinkies demise is a business case study that also has political implications. I would love to see if any of the major Business Schools like MIT, Harvard, Univ. of Chicago have taken this defining case on. David Weidner of WSJ and Marketwatch tells the story on who killed the Twinkie:
Modern finance is ruthless. Desperate companies sell themselves to Wall Street mercenaries who keep the names alive while extracting what little value is left. If, against the odds, the companies survive, they are leaner and meaner. If they don’t, the truth shows up quickly. Everyone’s piece of the pie has long ago disappeared.
Now, the starving are looking at each other nervously. It isn’t pretty.
Lets be frank . David is telling us a summary of the Bain Capital/Private Equity/Rapacious Hedge Fund story. This is not the first or last time where those ever rarer commodities in the US Economy, Jobs and Prosperity, have been lost to a rapine Wall Street.
Don’t Believe Dave Weidner?
How about that bastion of capitalism, Forbes Magazine. Adam Hartung at Forbes describes the Hostess Twinkie Defense is a Management Failure.
Hostess Brands file for liquidation this week. Management blamed its workforce for the failure. That is scapegoating.
In 1978 Dan White killed San Francisco‘s mayor George Moscone and city supervisor Harvey Milk. The press labeled his defense the “Twinkie Defense” because he claimed eating sugary junk food – like Twinkies – caused diminished capacity. Amazingly the jury bought it, and convicted him of manslaughter instead of murder saying he really wasn’t responsible for his own actions. An outraged city rioted.
Nobody is rioting, but management’s claim that unions caused Hostess failure is just as outrageous.
Adam supports David Weidner’s argument – a succession of expert management teams failed time and gain to revive Hostess but rather saddled it with huge debt in a cruel echo of what the GOP did for the US Deficit.
The problem is some Angel Cake agent will come in and scoop up Hostess for a song for just the brand names, not the plants and workers. And market forces will be proclaimed as the victors while jobs, pensions and benefits will be flushed down the toilet and into the already staggered and faltering Safety Net. Markets and the invisible hand will have triumphed – with nobody bothering to account for the real financial winners and losers. Is this all US Business can muster – Vulture Capitalism Triumphant while real innovations and astute risk taking migrates across the Pacific to Korean, Chinese and Indian shores? No wonder US Business Corporations are more unpopular than Congress and the Financial Sector. Corporations are sitting on $5trillion in cash and profits – and saying to their stakeholders – “Give us more”.