In their past they ran into some problems, and couldn’t make the transition to a more efficient business model with the management team/investors/owners they had. Thus in comes the VC $$; and depending on what VC becomes involved and the VCs ultimate goals… The choice is always the same… Make it work or Liquidate; the VC normally doesn’t care either way, although they may “influence” a company one way or another.
Actually didn’t know WalMart wasn’t unionized but did read this today.
Wal-Mart Workers’ Black Friday Strike By Elizabeth Dwoskin on November 16, 2012
America’s biggest retailer may be in for an unexpectedly painful holiday season. Protesting low wages, spiking health care premiums, and alleged retaliation from management, Wal-Mart Stores (WMT) workers have started to walk off the job this week. First, on Wednesday, about a dozen workers in Wal-Mart’s distribution warehouses in Southern California walked out, followed the next day by 30 more from six stores in the Seattle area.
The workers, who are part of a union-backed employee coalition called Making Change at Wal-Mart, say this is the beginning of a wave of protests and strikes leading up to next week’s Black Friday. A thousand store protests are planned in Chicago, Dallas, Miami, Oklahoma, Louisiana, Milwaukee, Los Angeles, Minnesota, and Washington, D.C., the group says.
In a conference call with reporters on Thursday, workers who were either planning to strike or already striking explained their situation. “We have to borrow money from each other just to make it to work,” said Colby Harris, who earns $8.90 an hour after having worked at a Wal-Mart in Lancaster, Tex., for three years. “I’m on my lunch break right now, and I have two dollars in my pocket. I’m deciding whether to use it to buy lunch or to hold on to it for next week.” He said the deduction from his bimonthly pay check for health-care costs is scheduled to triple in January. In 2013, Wal-Mart plans to scale back its contributions to workers’ health-care premiums, which are expected to rise between 8 percent and 36 percent. Many employees will forgo coverage, Reuters reports.
Sara Gilbert, a manager who was striking in Seattle, called in on her cell phone: “I work full-time for one of the richest companies in the world, and my kids get state health insurance and are on food stamps,” she said.
Along with Target (TGT) and Sears (SHLD), Wal-Mart has plans to open retail stores at 8 p.m. on Thanksgiving night. Employees said they weren’t given a choice as to whether they would work on Thanksgiving and were told to do so with little warning. “They don’t care about family,” said Charlene Fletcher, a Wal-Mart associate in Duarte, Calif. She said she is expected to report for work at 3 p.m. on Thanksgiving Day. The workers said that when they complain about scheduling and other problems, management cuts their hours or fires people.
With 1.4 million U.S. workers, the Bentonville (Ark.)-based company is the U.S.’s largest private employer. For years, Wal-Mart has been targeted by unions and workers complaining about low wages, scant benefits, and retaliation against those who speak out.
Until now, the company has crushed attempts by employees to organize. So it’s unusual that Making Change at Wal-Mart has been able to organize a number of strikes—the first in the company’s history, they say. The first strike occurred in Los Angeles in October. That strike spread to 28 stores in 12 states, organizers say.
In an e-mail, Wal-Mart spokesman Kory Lundberg called the strike “just another exaggerated publicity campaign aimed at generating headlines to mislead” the retailer’s customers and employees. “The fact is, these ongoing tactics being orchestrated by the UFCW are unlawful and we will act to protect our associates and customers from this ongoing illegal conduct,” he wrote, referring to the United Food and Commercial Workers International Union.
The workers intend for next week’s protests to be much bigger. They say their goal is not to shame the company, but to improve conditions. “Wal-Mart needs to know,” said Harris, “that if we didn’t want to work with them, we would have quit.”
Yet the strikes—timed to coincide with the holiday shopping rush—are clearly intended to put pressure on the company during the busiest time of the year, when Wal-Mart most needs its employees. Holiday cheer is a tough sell if your workers are picketing in the parking lot.
So
“Hostess and Bakers Union agree to mediation, preventing shut down.”
Must have raised a bunch of capital with the sell off of every remaining twinkie
LOL, or they all went “Shit, mortgage is due and Christmas is around the corner…uh oh”
Nope Bankruptcy Judge ordered it. Said something was “fishy” with the Union rejection of the offer (because it didn’t have a reason for the rejection or counter-offer)
lol
sux for all those people paying big bucks for a box of Twinkies
Publicity stunt 101
Well played Hostess.
This doesn’t make me mad, it’s a very reasonable action.
If a PE or VC firm wants to carry out dirty work to lean out a company or take it into bankruptcy you need your senior management to ‘play ball’ knowing full well that they may be guiding the company into a liquidation or sale. As a result, there are no guarantees on their long term employment.
Moreover, you are asking them to carry out negative actions (lay-offs, pay cuts etc.).
And it’s a very tricky period that needs a lot of collab with your finance and legal counsel.
The result is that in order to keep your top people engaged you have to buy their short-term loyalty by over-paying for their services.
The CEO negotiates a large compensation package knowing full well that he will be the scapegoat or the focus of the angst during the process. You only do that for a golden parachute.
There are CEO’s whose ‘schtick’ is that PE can hire them for a short period to come along and hack and slash budgets, staff, etc. etc. then they either fire them or allow them to leave and take all the blame leaving the image of the PE firm largely unscathed so that they can stay in the back ground and continue to use mercenary CEO’s for this dirty work. One of the best i can remember is Home Depot a few years back brought in a mercenary CEO to lay off thousands, cut budgets, hack and slash then he was pushed out and took home a couple hundred million for a few years worth of not a heck of a lot… and it obviously worked because we’ve all forgotten that it happened and there is no ill-will toward the retail giant as a result… any blame falls on that guy if you care to look him up.
“here’s your agenda, go be the bad guy.”
I gotta tell you, I’ll probably have the opportunity to do something like this in my career in 15-20 years and it’s a very reasonable proposition.
Bing - The CEO/Executives that were mentioned in that article are long gone (march of this year); and have/had nothing to do with this go-around.
still puts a new perspective on big business, never thought of it that way
on topic:
there was a time where a company was run by the “fill in the blank” family for 60 years and there was a certain amount of attachment owners felt to the company, its too bad that now a days there is no loyalty with the managers or employees
Just another IMO negative consequence of globalization and public corporations
i don’t see this as a counterpoint really. I’m sure that some of the executive is still around and they will take guidance from the board or the VC anyways so even if it’s 75% new people doing the lifting but the same philosophies steering the boat it still falls into what i’ve suggested. In fact, they’ve probably either pushed out select people from previous management or those people burned out, took their packages etc. it’s just a later stage of the scenario i suggested. inevitably when you are an exec in this position you are using head hunters to out-place you so that you can get out of the rabbit hole and into somewhere where you are trying to build a company, not dissolve it.
100% executive turnover is unlikely over this short a period at Hostess (between bankruptcies). There has to be some continuity in key finance and management rolls considering all the stuff that is going down.
in a round a bout way i’m defending the union here, or at least suggesting what they are up against and fighting for.
btw, i was involved in an environment like this but it was a succession plan, not a liquidation. The company is an a state of flux and it gets complicated and really interesting.
Nardelli = HD = one of the most misunderstood business case studies of all time. Bing you are right and the fact that many assume these guys didn’t have his actions and being the “scapegoat” planned out are nuts. If only they predicted the impact women had in this market and delivered a nicer customer atmosphere sooner…Lowes would have stayed regional at best. Either way HD was horribly inefficient before him and Lowes was coming up either way. Without Nardelli HD would have quite possibly failed yet his legacy with the company is that of the “Motorola Meanie” haha
yeah i guess what it comes down to is that since 99% of people will never be involved in decision making at that level it’s very easy to engineer whatever perspective you want people to have: unions are bad, it’s the CEO’s fault, Lowes would have grown anyways, Twinkies will increase in value even though they will continue to be made by Hostess through bankruptcy and by the company who buys them, get mad at the 1%, stay tuned for this commercial break, blah blah blah
opinion piece describing how Twinkies will be bought by another major consumer brand house…
I’ll just throw this in here…
I said this was coming…aaaaand now its here
Me too. 
I make components for food service automation and automation for other industries.