Tasty Baking Co. deserves a bailout because it’s important to Philadelphia and the company’s employees.
Imagine a world without Tastykake Butterscotch Krimpets. Get rid of the cream-filled chocolate cupcakes and those handheld apple pies; no glazed honey buns, Chocolate Kreamies or Peanut Butter Kandy Kakes, either.
Unfortunately, this horrible Tastykake-less nightmare may be a reality. Tasty Baking Co. has been walking on financial eggshells and risks defaulting if it can’t work out a deal with its creditors soon. On Jan. 5, the Philadelphia Inquirer reported Tasty’s debt at $100 million.
Luckily, I am not the only one horrified by this terrible news. Gov. Ed Rendell is determined to make sure Tasty can come up with the dough it needs to survive by orchestrating a bailout for Tasty.
He’s absolutely right to do so. Tasty is too important for Philadelphia to lose. Everyone, from government officials to potential investors to the average consumer, should ban together to keep Tasty alive.
“We are trying to find a way to keep Tastykake on its feet,” Rendell told the Inquirer in a Jan. 7 article. “It’s an important Pennsylvania company and a significant employer.”
Although Rendell’s term ends Jan. 18, he should still go ahead with the bailout plan. Gov.-elect Tom Corbett will be sworn in and have the power to undo any deal Rendell is able to work out; it’s a power he will likely use. If Corbett does so, it is up to us to persuade Corbett otherwise.
If Tasty goes under, a piece of Philadelphia’s culture will go with it. Tastykakes are staples of Philadelphian cuisine. It may not get the same respect as the soft pretzel or water ice, but that doesn’t make it any less important. If Pat’s or Geno’s was in trouble, we’d help them out, right?
There would be a physical loss if Tasty disappeared. In the Jan. 7 article the Inquirer reported Tasty employed 315 people at its factory in March, which means the company’s foreclosure would leave those same people unemployed.
A Tasty bailout would do more than just keep its delicious products on the shelves – it would keep 315 people at their jobs.
These aren’t high-paid investment bankers. These are blue-collar factory workers who would be thrown to the back of the unemployment line.
Some may get queasy at the mention of the word “bailout.” That’s because the word has been elevated to the status of vulgarity. It has become synonymous with corporate greed and excess. However, Tasty is different.
It isn’t a coast-to-coast corporation. Tasty’s products are only found locally; the products are made in one factory making it easier to monitor Tasty’s expenses to make sure no loans were being abused. The money couldn’t simply disappear into thin air like in some national bailouts.
Besides, logistics – not greed – has put Tasty in this predicament. Tastykake products have a shelf life of about two weeks, so exporting them to different parts of the country is nearly impossible without new factories. The company has looked into the possibility, but expansion hasn’t exactly been a piece of cake.
Efficiency is also a concern. Until last year, Tasty had been operating in its Nicetown factory, originally opened in 1922. The factory became outdated, but Tasty didn’t want to leave the Philadelphia area.
Eventually it relocated inside the city limits, spending a reported $78 million in the process. Tasty hoped for at least $13 million worth of returns on the investment this year, but is now expected to manage about $10 million.
Tasty was reliant on those few million dollars for its next loan payment. Without it, the baking company may require outside help. That’s where the state and Rendell’s bailout would come in.
For nearly a century, Tasty has provided us with delicious treats and has always remained loyal to the Delaware Valley sweet tooth above all else.
Tasty deserves its loyalty to be repaid and this is our opportunity to do it.
Zachary Scott can be reached at zack.scott@temple.edu.
I hate to Tasty Cakes disappear too, but we tax payers do not need to fund another bailout. If Ed Rendell is in favor of a bailout, then it HAS to be wrong.
Please a bail out for a snack cake company. Scott paleeeze. I like tasty cakes but the money could be used for something better, rather the city and state doesn’t have the money to begin with. Rendell was a terrible mayor and governor and this would just add to the legacy. How about we use the bail out money to erase the philly wage tax? Chicago, L.A. and Houston are all larger and more efficent cities, all with out a wage tax. Philadelphia residents need to wake up and say enough is enough. Hey better yet let Vince Fumo bail them out with his money that he stole from us.
As a TIG welder in the food industry,working in the food industry is a most satisfying job.
Mallow cups in Altoona Pa went bankrupt and got its self back on its feet,its still producing.
100 million is alot but with help they may be able to pull themselves back up .
Who doesnt like there products ,really.
As long as they pay it back,get it done.Sounds to me there trying.
Its NOT AIG,GS,or any other bank were we wont see the returns.Ill just look on the store shelf for that.
Jobs are better than welfare any day.
This is a foolish and poorly researched article. Not only would the lack of a bailout not cause unemployment, it wouldn’t cause you to never ever see a kandy kake again either. The company would file for Chapter 11 bankruptcy, which would allow it to restructure its debt while continuing to operate – that’s right, workers still working, kandy kakes still made. Most likely, the outcome of the current bailout will be the same. Why? Because Chapter 11 allows the flexibility of a bidder who may only pay the debt for the company, or perhaps even less. It is the already-overwhelming $110 MM of debt which is choking the company now – bankruptcy will help fix that. The Navy Yard facility is a new, gree, affordable facility without $100MM of debt, so the jobs aren’t going overseas immediately either. But if you were Bimbo bakeries or someone else – why would you pay $150MM now for what you can buy for $100MM later? “Later” just got delayed from January to June here, at the taxpayers expense. The only thing that changes that is some amazingly better operating results in the next 6 months. Foolish arguments like this let Lehman fail but saved BoA and Citi.
Let Bimbo Bakeries USA buy Tastycake. They have money and none of it is my tax dollars. They will keep the integrity of the brand much like they did with Stroehmann, Arnold, Thomas’s, and Sara Lee. I bet you didn’t know they were all owned by this super-company.
Enough with the bailouts! Lots of other companies were equally or more important to Philadelphia but were allowed to fail. Considering that a great deal of Tasty’s debt is already debt to the state government — offered at very low interest rates — and will likely face default if the firm files for reorg, more state money at this point is just throwing cash down a hole.