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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NOT MY OATMEAL CREME PIES
"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.
Good fucking riddance to Hostess TBH
Sucks for the people who work there.
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.
Anyways, Tastykake >>>>> all
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)
I'm surprised the Teamsters agreed to it, but not surprised that the other union did not.
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.
Edited at 2012-11-16 06:10 pm (UTC)
I'm not saying management doesn't deserve some blame for this, but it's between a rock and a hard place.
http://dealbook.nytimes.com/2012/11/1
http://money.cnn.com/2012/11/16/news/co
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)
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?
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.
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.
No, I'm not kidding (about the recipe, though I am about actually making it):
http://www.huffingtonpost.com/2011/11/0
Fuck you, Hostess, and good fucking riddance.
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.