Tandy-man special: Pizzi's bet icing on the Kake

He nearly destroyed the Butterscotch Krimpets to save them.

But when the final hand in a high-stakes business poker game went down yesterday, Tasty Baking Co. CEO Charles Pizzi's big gamble didn't just save the most iconic Philadelphia brand name on your supermarket shelf. He also got it done with a cream-filled center of Philly attytood.

Since the former chamber of commerce chief embarked on his uphill mission to save the slumping Tastykake brand nearly nine years ago, Pizzi's unusual strategy relied not on his knowledge of the baking industry - he didn't really have any, at first - but on his political clout and his determination to keep jobs here.

Pizzi's big bet at the center of it all - taking on deep debt for a state-of-the-art plant at the Navy Yard, in South Philly, that opened into the howling winds of the Great Recession - drove the 97-year-old company to the eve of destruction.

Things looked so bleak that Tasty Baking's head of investor relations even sold off some of her stock at the rock-bottom price of $2 a share - but that was before yesterday's news that Georgia-based Flowers Foods is buying the company at twice that stock price and pledging to save both the Tastykake brand and the jobs at the Navy Yard.

"Tastykakes, for us, it's almost a generic term - it's part of the Philadelphia lexicon," said former governor and mayor Ed Rendell. He hailed Pizzi's role in keeping jobs while getting a good deal for shareholders, adding: "It would have been horrible to see it just consumed by another company."

In a hedge-fund-driven economy in which jobs typically get shipped off to China or India at the drop of a Stetson hat, there was something refreshingly different for Philadelphians about the way yesterday's sale of Tasty Baking went down.

After all, the drip-drip torture of manufacturing's decline and mergermania have already caused Philadelphia brand name after brand name to disappear, from Packards and the Pennsylvania Railroad straight through to Strawbridge & Clothier and John Wanamaker. It always seemed as if what was best for corporate shareholders was never what was best for Philadelphia, its jobless rate or its battered psyche.

But there was something about Tastykake and its familiar treats, from Chocolate Juniors to Kandy Kakes, that truly touched the heart of the city, not to mention its arteries. In the end, it wasn't the man in the shopping-aisle but Pizzi - a Philadelphia native with degrees from La Salle and Penn - who saw through the risky strategy that ultimately allowed company operations to stay here.

The company's problem for years had been its outdated, six-story "vertical" factory on Hunting Park Avenue, in Nicetown, which was not only expensive to run but also made it hard to introduce products to meet changing consumer tastes.

It was Pizzi who devised a plan to keep manufacturing in Philadelphia, even with the city's higher labor costs. It involved using the political and personal connections he'd forged in 13 years as head of the Greater Philadelphia Chamber of Commerce to obtain loans and other aid to relocate the main assembly line to a new, envionmentally friendly plant at the Navy Yard.

"No one would have kept that old plant," said Robert Costello of Costello Asset Management, a Montgomery County analyst who has long followed Tasty Baking. He agreed that the irony of the new plant was that it created the conditions that forced the sale of the Philadelphia company, yet it also made Tasty Baking more attractive to buyers.

But the $100 million in debt to move and build the plant - including an initial $31 million in government loans - quickly proved an albatross in 2010, when the recession battered local supermarkets and prices for food commodities soared. It didn't help when officials found that the high-tech, high-speed manufacturing line tended to amplify mistakes, and the expected huge productivity savings didn't happen right away.

Pizzi called in his political chits with Rendell and other leaders one final time, garnering $6.5 million in new loans while the company searched for a savior.

The acquisition by the financially sound and growing Flowers Foods, bakers of breads and products like Mrs. Freshley's sweet rolls, had been talked about previously because it made sense for both firms. Flowers now gains a distribution toehold in the lucrative Northeast, while Tastykakes will be available in the heart of Dixie for the first time.

Pizzi, who declined all requests for interviews yesterday, said in a statement that he was excited by the opening of new markets but stressed that it was just as important that "this merger ensures that Tastykakes will continue to be made by Philadelphians in Philadelphia."

Deal watchers say it's doubtful that any jobs here would have been saved if Pizzi hadn't pushed to replace the aging behemoth in Nicetown with the new factory. About 740 people now work for Tasty Baking, most in Philadelphia and some at a small plant in Chester County. What's more, the deal ensures that state and city taxpayers will be off the hook for the roughly $40 million lent to Tasty Baking.

Still, it's a split decision for a city used to corporate defeat - since Tasty Baking, like so many before it, will cease as a Philadelphia-headquartered, locally managed company. And some experts say that its likely that at least one area job will disappear soon: Pizzi's.

"Not likely," said analyst Costello, when asked about the chances of the Tasty Baking CEO staying on. "Usually you get a golden parachute."