Trump and Twinkies

As most of us remember, Hostess, the company that makes Twinkies, went out of business a few years ago. The story of their comeback is a very interesting one:

http://www.nytimes.com/2016/12/10/business/dealbo…

Most of the old Hostess's workers lost their jobs, while Dean Metropoulos and Apollo Global Management scavenged through the remains, picking up Twinkies and a few other brands along with the related factories. I actually worked with Hostess in a past life (it sometimes feels like a different life, anyway), and it was definitely remarkable how they were able to turn the company around by increasing shelf lives. The old company needed a nationwide distribution network, as they had to race to get Twinkies into consumers' hands before the expiration date, a crushing cost. The new approach allowed them to have fewer factories, distribution centers, and employees, significantly cutting those costs. However, the gains the company experienced were definitely concentrated at the top, with the owners doing dividend recaps to juice their returns, while the remaining workers were lucky to have jobs.

So, WSO, what do you think of all this? I personally don't blame Apollo, Metropoulos, or private equity for any of this. I believe that this is useful as a cautionary tale that illustrates how we have to do a better job taking care of those people who have been left behind to ensure that they share in the gains that their work contributed to. I also believe that this is a good reflection on the forces that led to the popularity of Trump, and reminds those of us who didn't support him of why he was so popular to so many Americans.

 

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