The Ed Show | November 29, 2012
>>> welcome back to "the ed show." thanks for watching tonight. now, it's not the powerball jackpot, but these folks it's probably pretty close. hostess brands won big in bankruptcy court today. bottom line, the twinkie will survive. the executives will get their bonuses, but the workers, they're out of luck. federal bankruptcy judge has approved hostess' plan to go out of business and fire more than 18,000 employees. at the same time, hostess won an approval to pay $1.8 million in bonuses to its 19 executives. by the way, those bonuses don't include the ceo's regular salary which is currently $125,000 a month. hostess has touched off a wave of nostalgia when it announced it was going out of business last month. people started worrying about the future of the twinkie. many blamed the workers.
>> you know, something like a union can take them down, and we're losing, you know, an icon company. so, you know, it's a pretty big deal .
>> all my life i've been eating hostess cakes. i don't know what i'm going to do without them being here. this is going to be a sad moment for me.
>> it's going to be a tragedy, you know, my kids can't grow up to hostess cake.
>> they're comfort to me. i've grew up with them since i was a kid. i've been eating them and i'm really, i'm going to miss them.
>> well, first of all, rest assured, folks, the twinkie is going to be just fine. hostess has been losing money for decades. nobody seemed to like the twinkie until hostess declared bankruptcy. now the brand's a hot commodity . hostess is courting, count them, 110 potential buyers. 70 of these 110 potential buyers are so serious they've signed nondisclosure agreements to go over the books. hostess says it's got ten calls from interested buyers just yesterday. one of the company's financial advisers says, "not only are these buyers serious, but they are expecting to spend substantial sums." he says there are so many interested buyers it's "like drinking from a fire house ." trust me, the twinkie brand is going to be just fine. the executives will get paid despite their mismanagement. but the workers who built the brand are really getting hurt. more than 18,000 workers across the country are losing their jobs right now. right before the holidays. some have been given 20 or 30 years to the company. that kind of service to them and loyalty. they've been without health care coverage since december 1st . hostess also stopped paying pensions to them last year. hostess executives drive an iconic brand into bankruptcy twice. they're getting paid big bucks . the workers made concessions. and they basically prayed for better management that never showed up. tonight, they are out of a job. i'm joined by congressman jim mcdermott of washington, member of the house ways & means committee. great to have you back on the program.
>> great to be back, ed.
>> your state is going to lose some jobs because of this hostess liquidation, but what message does it send? you have these ceos up on capitol hill that are telling lawmakers how the economy ought to run, what we ought to be doing with all these tax cuts and this is the culture that just goes right down on the workers. what do you make of it?
>> well, ed, this is a perfect example of what mismanagement in a company is all about. and how venture capitalists never intended to run this business to work. the bakers would not give concessions because they said you have not made improvements for 60 years, and if you'd make improvements, this place would run much better, you'd make much more profit and you could keep the place open. but the management was more interested in selling it than what they went into bankruptcy twice and came out worse the first time than they were when they went in. and now they come out and they get the judge to give them $1,800,000 a year bonus to keep the lights on so they have some place for people to send in the 110 people who want to buy the business. the brand is good. the product is good. it's the management that is just really worthless.
>> so they didn't invest in infrastructure in the company or new technology that would have made them more profitable. and yet the unions are taking the hit publicly saying, well, it's their fault they put them out of business. what do you make of that?
>> well, it's typical. always blame the workers. the fact is if you don't invest in your business, if you don't continue to make reinvestment, like the president is talking about for the country --
>> -- we have to continue to reinvest in the country. well, if a business doesn't continue to reinvest in new equipment and modernize, they will ultimately go bankrupt. and this is a perfect example. you've got costco where they invest back in, they invest in their workers, they invest in the way they market, everything else, and it works. but you have hostess where they don't, and it goes down. it's really sad.
>> it is. it's really wrong. it's mismanagement across -- i think there's a moral component to this, too. surprising to me that the bankruptcy judge will go along and give these 19 executives who are probably going to get inherited by the next company to come along that they would get $1.8 million in bonuses. now, the -- what about the tax incentives ? will that have helped save companies like hostess? and, of course, we have to point out the gop killed invest in america act.
>> there are a lot of things we could do with the tax structure that could make this situation much harder for businesses to two into bankruptcy. they go in there and they strip off the benefits. they strip off the pensions. united airlines has done that to their employees. there's all kinds of companies who use bankruptcy as a way of taking away benefits from workers. that's not fair. when i fly home on the united airlines from washington, d.c., there are all these flight attendants working at age 60 years old for one reason. they still have their health care benefits.
>> their husbands don't. that's a terrible situation in this country.
>> it's happening in a lot of industries. it's the corporate culture that is strangling workers in this country and this is a classic example. still a hot brand, but not hot for the employee. congressman jim mcdermott , great to have you with us tonight. thanks.
>>> coming up, good news for the economy, in spite of the do-nothing congress. we will break down the numbers next. it's rather astonishing. [ male