Twinkies maker Hostess files for bankruptcy

Brian P said:
Privately-held company. Food industry is generally not a high-margin business. Bankruptcy wipes out the common shareholders anyway. Not saying the shareholders never got any dividends, but I doubt if it was enough to have made a difference with the sort of pension obligation that they have.

Company pensions funded through the company itself or paid by the company and administered by the union (which seems to be the case here), as opposed to being operated independently by an insurance or investment company, don't seem like a good idea. Too vulnerable to things going wrong, either with the company or with the union.

Just wait, because there is another shakeout on the horizon for ex auto workers. The "detroit 3" have divested themselves of their pension obligations and handed it off to the UAW, but the UAW has a fraction as many dues-paying members as it did in years past, has practically no chance of organizing any of the import brands, owns shares in the very same companies that it represents but the value of these shares nowhere near offsets the pension obligation (and this places them in a rather interesting position, too), but is trying to operate as it did in years past. I would say that there is a significant possibility of the UAW going bankrupt because of this ... a situation that I have a hard time imagining that they could ever recover from. Bye-bye, pensions, for ex auto workers in USA.

Too-rich pension promises come back to bite later on. It's best when planning one's retirement that any company pension plan will be worth nothing.
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Being primarily US based impulse category food manufacturers, their food margins will be reasonable. You don't have the customer consolidation in the US that you do here, which results in Canadian food margins being terrible.

I'd heard somewhere they had gone on an acquisition rampage over the years buying up small regional bakeries. The pension absorption from those acquisitions alone would be challenging. But, being a privately held company, you'll probably never hear the REAL story as they have no need to reveal it.

The UAW stock ownership piece is something I've been trying to explain to people for a long time. Next time your management group asks for concessions, keep in mind the shareholders pull the strings on profitability requirements. :) It may be your own union screwing you.
 
invictus43 said:
Actually, junk food places usually do well in recessions/depressions. I suspect this failure is due more to poor management and union excess. They'll just use this as a renegotiation tactic to make their pay structure come more into line with what should be expected these days.
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Didn't they just reorganize under bankrupcy 2 years ago?
 
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there are some startling stats on how many companies that reorganize fail again within 3-5yrs.

The "dont worry, we have a good pension" mindset died a few years ago. I feel for they guys that are currently getting screwed, but any younger workers that have options in planning for retirement should control there own destiny. Good luck organizing those foreign manufacturers, lets hope they hired enough smart workers to not get sucked into the solidarity brothers! speechs.
 
Can someone explain to me how the pension money disappears? This isn't money that the company gives you as a gift you when you retire. It's money that gets put aside in a found from every paycheck.
 
they're produced under license by saputo in canada. wonder if that means we will continue enjoying day-glo yellow globs of sugar, fat and chemicals long after americans lose out. perhaps it will become a tourist draw, lol. . .
 
daught said:
Can someone explain to me how the pension money disappears? This isn't money that the company gives you as a gift you when you retire. It's money that gets put aside in a found from every paycheck.
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Simple, don't put the pension money into a separate account, leave it in with the general operating pool but keep track of it as an accounting matter. When the company starts going down, start "borrowing" money from the pension pool to fund operating costs and give the pension fund an IOU.

Do that for 10 years...
 
OpenGambit said:
Simple, don't put the pension money into a separate account, leave it in with the general operating pool but keep track of it as an accounting matter. When the company starts going down, start "borrowing" money from the pension pool to fund operating costs and give the pension fund an IOU.

Do that for 10 years...
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Also it gets invested in hot stocks like Briex, Nortel, Laidlaw, Enron.....Oh and mortgages on Florida homes. There is so much money floating around in pension funds that everyone looks at them like a newbie looks at someone elses race bike. "Let me ride it and show you how good I am."
 
OpenGambit said:
Simple, don't put the pension money into a separate account, leave it in with the general operating pool but keep track of it as an accounting matter. When the company starts going down, start "borrowing" money from the pension pool to fund operating costs and give the pension fund an IOU.

Do that for 10 years...
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translation: massive screw up by upper management, and massive screw job for the thousands of workers who diligently worked for decades thinking they would have something to retire with and might be able to feel safe in their old age.

got it.
 
afong56 said:
translation: massive screw up by upper management, and massive screw job for the thousands of workers who diligently worked for decades thinking they would have something to retire with and might be able to feel safe in their old age.

got it.
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Not neccessarily. Everyone likes to blame upper management, but often it's outside pension management companies managing this funding. Keep in mind, running a pension is like trying to thread a needle from 100 feet away. You're really just guessing you're going to have the right amount of money put aside at the end based on historical rates of returns. When you have three major economic meltdowns in one workforce's generation (90's construction meltdown, .com bust and sub-prime) it's really hard to manage against. Couple that with a record number of retirees living longer and trying to draw from that pension with a smaller workforce underneath them trying to support it....you're in a bad spot fast.

Heck....even the OSSTF pension was in trouble until your tax dollars got re-directed to bail it out back in the 90's.
 
Myztyk said:
Not neccessarily. Everyone likes to blame upper management, but often it's outside pension management companies managing this funding. Keep in mind, running a pension is like trying to thread a needle from 100 feet away. You're really just guessing you're going to have the right amount of money put aside at the end based on historical rates of returns. When you have three major economic meltdowns in one workforce's generation (90's construction meltdown, .com bust and sub-prime) it's really hard to manage against. Couple that with a record number of retirees living longer and trying to draw from that pension with a smaller workforce underneath them trying to support it....you're in a bad spot fast.

Heck....even the OSSTF pension was in trouble until your tax dollars got re-directed to bail it out back in the 90's.
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read the post i actually quoted. it doesn't describe the scenario you are talking about. where did you get that from?

what is the osstf pension? don't know what that is. i have heard of the otpp, tho. and have not heard of any 'bailout' of that pension. links for proof?
 
OpenGambit said:
Simple, don't put the pension money into a separate account, leave it in with the general operating pool but keep track of it as an accounting matter. When the company starts going down, start "borrowing" money from the pension pool to fund operating costs and give the pension fund an IOU.

Do that for 10 years...
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afong56 said:
translation: massive screw up by upper management, and massive screw job for the thousands of workers who diligently worked for decades thinking they would have something to retire with and might be able to feel safe in their old age.

got it.
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Both included here. You said upper management screwed up. I said not neccessarily as often these pensions are often run by outside firms. More money going out than coming in = pension goes under. The anticipated growth rates to fund the requirements have not materialized due to unanticipated economic downswings. Do I need to explain it again?

afong56 said:
read the post i actually quoted. it doesn't describe the scenario you are talking about. where did you get that from?

what is the osstf pension? don't know what that is. i have heard of the otpp, tho. and have not heard of any 'bailout' of that pension. links for proof?
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That would be the Ontario Secondary School Teacher's Federation. Surprised you've heard of OTPP and not heard of one of the union that funds it. At work. Will find links later. Was initiated pre-internet though...so may be hard to find.
 
Myztyk said:
Both included here. You said upper management screwed up. I said not neccessarily as often these pensions are often run by outside firms. More money going out than coming in = pension goes under. The anticipated growth rates to fund the requirements have not materialized due to unanticipated economic downswings. Do I need to explain it again?

That would be the Ontario Secondary School Teacher's Federation. Surprised you've heard of OTPP and not heard of one of the union that funds it. At work. Will find links later. Was initiated pre-internet though...so may be hard to find.
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if an 'outside firm' keeps funds in the 'general operating pool' of the company, how does the outside firm keep an eye on it? furthermore, how does it start borrowing from those funds in the general operating pool? read the original post. your post postulates a separate scenario entirely. i am responding to the actual scenario from the original post, not yours.

also, your clarification has made my point. the osstf doesn't have a pension. the otpp is funded by members of both osstf and etfo, and the osstf are in fact the lesser partner.
 
afong56 said:
translation: massive screw up by upper management, and massive screw job for the thousands of workers who diligently worked for decades thinking they would have something to retire with and might be able to feel safe in their old age.

got it.
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Thats pretty much correct, I was just explaining how it can happen. Its also the only plausible explaination considering that the pension is the biggest creditor at almost a billion, while the next highest is around 50 mill ?( i forget its been a while since I read it)
 
nobbie48 said:
Also it gets invested in hot stocks like Briex, Nortel, Laidlaw, Enron.....Oh and mortgages on Florida homes. There is so much money floating around in pension funds that everyone looks at them like a newbie looks at someone elses race bike. "Let me ride it and show you how good I am."
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While that may be true for some pensions, that could not have happened in this case because then the pension fund would not haved ended up as such a huge creditor of the company.
 
Myztyk said:
Not neccessarily. Everyone likes to blame upper management, but often it's outside pension management companies managing this funding. Keep in mind, running a pension is like trying to thread a needle from 100 feet away. You're really just guessing you're going to have the right amount of money put aside at the end based on historical rates of returns. When you have three major economic meltdowns in one workforce's generation (90's construction meltdown, .com bust and sub-prime) it's really hard to manage against. Couple that with a record number of retirees living longer and trying to draw from that pension with a smaller workforce underneath them trying to support it....you're in a bad spot fast.

Heck....even the OSSTF pension was in trouble until your tax dollars got re-directed to bail it out back in the 90's.
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In this case, it is almost certainly managment. This is a private company firstly, and an outside pension fund firm would definately not have allowed such a huge investment in the company itself, it would be affront to all investment principles to have such complete lack of diversification.
 
That's huge bull. All pension money should go in an outside fund. I wouldn't want my company to touch it. Sure fund management companies can screw up, but in this market nothing is secure.

Dumb move from the union to allow the fund to stay within the company.
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