ONTD Political

Hostess Going Out of Business, CEO Blames Union Strike

10:14 am - 11/16/2012

Hostess, the makers of Twinkies, Ding Dongs and Wonder Bread, is going out of business after striking workers failed to heed a Thursday deadline to return to work, the company said.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

Hostess Brands Inc. had earlier warned employees that it would file to unwind its business and sell off assets if plant operations didn't return to normal levels by 5 p.m. Thursday. In announcing its decision, Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products.

The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year.

NBC's Savannah Guthrie read a statement on "Today" from the bakers' union that said: “Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and the union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers.”

Rayburn responded that he had been “pretty straightforward in all the town hall meetings I’ve done at our plants to say that in this situation I think there is blame that goes around for everyone.”

He denied that the decision to shut down could be a last ditch negotiation tactic to get the union back to the table.

“It’s over,” he said. “This is it.”

Rayburn, who first joined Hostess earlier this year as a restructuring expert, had earlier said that many workers crossed picket lines this week to go back to work despite warnings by union leadership that they'd be fined.

"The problem is we don't have enough crossing those lines to maintain normal production," Rayburn told Fox Business.

Hostess said that production at about a dozen of the company's 33 plants had been seriously affected by the strike. Three plants were closed earlier this week.

The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess had argued that workers must make concessions for it to exit bankruptcy and improve its financial position.

The company, founded in 1930, was fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks.

If the motion is granted, Hostess would begin closing operations as early as Tuesday.

"Most employees who lose their jobs should be eligible for government-provided unemployment benefits," Hostess said.

Copyright Associated Press / NBC 5 Dallas-Fort Worth

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chaya 16th-Nov-2012 05:19 pm (UTC)
Food tag!
girly123 16th-Nov-2012 05:21 pm (UTC)

maynardsong 16th-Nov-2012 05:23 pm (UTC)
Those are little Debbie...
castalianspring 16th-Nov-2012 05:25 pm (UTC)
No! How will Egon Spengler explain the current amount of psychokinetic energy to laymen NOW?
kaelstra 16th-Nov-2012 05:59 pm (UTC)
omg dead
girly123 16th-Nov-2012 05:25 pm (UTC)
That said:
"The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year."

You got what the fuck was coming to you, Hostess. Good riddance.
maynardsong 16th-Nov-2012 05:26 pm (UTC)
Sucks about the loss of jobs, but THIS accounts just as much for people wanting to eat less junk food as does any perceived self-righteousness. Hostess' shenanigans? Supported by the sale of every Twinkie eaten.
Good fucking riddance to Hostess TBH
jeterluva 16th-Nov-2012 05:33 pm (UTC)
I thought they already went out of business a while ago.
tabaqui 16th-Nov-2012 05:34 pm (UTC)
Huh. Could have sworn i heard about this a couple years ago or something.... Maybe i'm thinking of something else.

Sucks for the people who work there.
ultraelectric 16th-Nov-2012 05:55 pm (UTC)
I think a year or two ago they started selling their items to other companies (for those companies to produce and sale)... that might be what your thinking of.
lone_concertina 16th-Nov-2012 05:36 pm (UTC)
8% wage cut, reduced health benefits, frozen pension payments. Good fucking riddance.
skellington1 16th-Nov-2012 06:48 pm (UTC)
Eeek, yeah.
kaelstra 16th-Nov-2012 06:01 pm (UTC)
This pics are killing me
effervescent 16th-Nov-2012 05:40 pm (UTC)
I'd say good riddance, except... that's a lot of jobs. :/ I hope those people find work.
mollywobbles867 16th-Nov-2012 05:49 pm (UTC)
+1 The owners will be fine financially, but the workers are screwed. The story of America.
little_rachael 16th-Nov-2012 05:51 pm (UTC)
Well, that sucks. Wonder Bread was my favorite bread ever since my grocery store stopped carrying Pantry Pride.

But still, good riddance to them if that's how they were treating their workers. They brought it on themselves.

I wish the union members the best of luck in finding new jobs.
butterbuns 16th-Nov-2012 05:57 pm (UTC)
Agreed. It's always been my favorite for grilled cheese, so that's a bummer.
hippie_chick 16th-Nov-2012 05:53 pm (UTC)
I don't mourn the loss of overly sugary, diabetes inducing, preservative laden snack cakes. I do think the loss of all those jobs in this is the worst thing.
satellite__eyes 16th-Nov-2012 05:54 pm (UTC)
Does this mean Drake's is going too?!

Anyways, Tastykake >>>>> all
keeperofthekeys 16th-Nov-2012 05:55 pm (UTC)
Ah yes, another union destroys a company. How dare they demand fair wages and good treatment! Workers are irrelevant to a company's success, good company management has nothing to do with them, and if a company can exist AND treat its employees like shit then they should be allowed to! If people don't like those shitty jobs, they can magically find others and the company will go under naturally. Argle bargle, etc etc.
ultraelectric 16th-Nov-2012 06:02 pm (UTC)
I might get hate for this, but I'm curious how much they were already making (the Union workers) I think unions are good in a lot of ways, but sometimes I hear these people demanding more money and they are already making a boot load an hour (at least what I would consider a boot load given I grew up lower middle class).

By the way, kinda laughing they were still doing Pensions, from what I've learned in business class they aren't the greatest way to go.

Very sad situation. Though, I have heard they are more an likely going to sale their products off to other companies so the product will still be out there just under new ownership (Little Debbie is prob jumping on that right as we speak lol)
halfshellvenus 16th-Nov-2012 06:53 pm (UTC)
The unions were protesting having their wages and benefits CUT though, not that there wasn't an increase.

I'm surprised the Teamsters agreed to it, but not surprised that the other union did not.
astridmyrna 16th-Nov-2012 06:02 pm (UTC)
Wut, you mean employees aren't self-replicating robots that survive on motor oil?

That said, this once again shows that this country needs national free/lowcost healthcare with no ties to employment. I'm worried that the people who lost their job will have trouble finding new ones, since the CEO is more than happy to put the blame of his failings onto his job force.
awfulbliss 16th-Nov-2012 06:09 pm (UTC)
The Teamsters had their own financial experts look at the company's finances and warned the bakers union that massive layoffs were not simply empty threats designed to force workers into concessions. The company was in a horrible place financially and there was pretty much no way out of it besides cutting costs as they could not stay current on their loan obligations. I'm kind of dumbfounded as to the reactions of some around here as if this was Monsanto or something and I'm curious as to what other options people think they had.

Edited at 2012-11-16 06:10 pm (UTC)
layweed 16th-Nov-2012 06:15 pm (UTC)
Thank you for saying this. I have had the same thing on my mind but didn't want to say it for fear of being dogpiled as being anti-union or something. The company was in the process of undergoing bankruptcy and posted net loses of $341 million in 2011. The company also attempted to make up for the 8% pay cut with a slow increase (though not fully back to normal" over 4 years and other compensations like union reps on the board of directors and equity.

I'm not saying management doesn't deserve some blame for this, but it's between a rock and a hard place.


eta: not to mention the sugary crap that Hostress produces won't be going anywhere. They'll just sell off the rights (or recipes, idk) to some other company who will continue putting it on store shelves.

Edited at 2012-11-16 06:21 pm (UTC)
seasontoseason 16th-Nov-2012 06:10 pm (UTC)
finally, an end to bauhaus food!
mollybarton 16th-Nov-2012 06:30 pm (UTC)
Fuck Hostess, and fuck the CEO for laying the blame on unions. You treat your employees like crap while giving yourselves millions in bonuses, and don't get why they go on strike.

Jeez, this is pretty much the way Eastern Airlines went out of business 22 years ago. It's always the union's fault, isn't it?
halfshellvenus 16th-Nov-2012 06:51 pm (UTC)
went on strike late last week after rejecting in September a contract offer that cut wages and benefits.

CUT wages and benefits? With the economy finally picking up? I can understand "not improving" wages and benefits as being a bargaining position, but CUTTING them?

Forseeable outcome, Hostess. Forseeable outcome.

My sympathies to its employees.
ultraelectric 16th-Nov-2012 07:37 pm (UTC)
Just remember, just because the economy is slowly picking up doesn't mean all companies are. Hostess has been on a downward spiral for awhile.
back_track 16th-Nov-2012 06:58 pm (UTC)
no sympathy for the company, just the workers who are out of a job.

and when they say they're selling assets, I'm pretty sure that means they're selling the brand names such as twinkies and their cupcakes and everything else and thus twinkies will survive.
aviv_b 16th-Nov-2012 07:02 pm (UTC)
Oh Noz! I won't be able to make a Twinkling Turkey for Thanksgiving this year. A culinary delight will be lost to history. Oh the humanity!

No, I'm not kidding (about the recipe, though I am about actually making it):

layweed 16th-Nov-2012 07:04 pm (UTC)
that sounds even more ridiculous than a turducken. At least there you have the trifecta of poultry. Stuffing twinkies into a turkey just sounds,....ew.
rjdaae 16th-Nov-2012 08:02 pm (UTC)
My grandma heard on about this on the radio. Except the version she heard was that "Obama is shutting down Twinkies!". :/
romp 16th-Nov-2012 08:28 pm (UTC)
oh...I suppose I should have seen that coming
notgarystu 16th-Nov-2012 08:23 pm (UTC)
It's not the union's fault Hostess decided to jack up the salaries of the owners while attempting to cut wages and benefits of the workers.

Fuck you, Hostess, and good fucking riddance.
seasight 16th-Nov-2012 10:29 pm (UTC)
OMG YOUR ICON I have been wanting one forever may I steal it?
kyra_neko_rei I need a Philosaraptor icon.16th-Nov-2012 09:03 pm (UTC)
I'm curious, why don't they offer to cut hours across the board and pro-rate health benefits while leaving wages untouched instead? It would save the company the same amount of money while not devaluing the workers' labor or making them take a wage cut for nothing, and it would make them an industry leader in improving the treatment of not-quite-full-time employees, who are in many businesses kept just below full time to screw them out of benefits.

Say the company wanted/needed to make a 10% cut. Say an example worker works 40 hours a week and makes $20 an hour, plus $5 an hour in health insurance coverage and associated benefits, for a weekly total of $800 in wages and $200 in benefits.

The standard "solution" is a wage/benefits cut of 10%: a cut of $2.00 in wages and $.50 in benefits, to $18.00 an hour and $4.50 in benefits, for a weekly total of $720 in labor and $180 in benefits for the same 40-hour week.

Alternative solution is to drop 4 hours from everybody's workweek and pro-rate the health benefits (pay benefits by the hour instead of having them cut in en masse once you hit 40 hours a week). 36 hours a week at $20/hour is $720 in wages, and 36/40ths (90%) of full-time benefit value is $180 in benefits---same result as that of a wage cut, but the employees get compensation for that cut in the form of four extra hours in which they are free instead of working, which they can spend with their families or with their hobbies or projects or community engagement or whatever else fulfills them.

Since the issue is one of diminishing market share, to which layoffs were mentioned as a possible solution, the presumed* drop in total production would not be a problem.

*presumed because there are old studies from back in the 30's indicating that per-hour production rises as the workweek drops in hours, such that with a small drop in hours, total production may remain at previous levels or even go up, but I will concede presumed because I cannot remember where I put the relevant bookmark or whether the study covered workweeks below 40 hours.
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