Twinkies maker Hostess going out of business
Nearly 18,500 workers will lose their jobs as the company succumbs to the crippling effects of a nationwide union strike.
Hostess Brands, the bankrupt maker of Twinkies and Wonder Bread, said it has sought court permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.
Hostess said a national strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that began last week had crippled its ability to produce and deliver products at several facilities.
The liquidation of the company will mean that most of its 18,500 employees will lose their jobs, Hostess said on Friday.
The 82-year-old company said it took the decision to shut down after determining that not enough employees had returned to work by a deadline on Thursday.
The company, which filed for bankruptcy in January for the second time since 2004, said it had filed a motion with U.S. Bankruptcy Judge Robert Drain in White Plains, New York, for permission to shut down and sell assets.
The Irving, Texas, company has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Its brands include Wonder, Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita, but it is probably best known for Twinkies -- basically a cream-filled sponge cake.
"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Chief Executive Gregory Rayburn said in a statement.
"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," Rayburn added.
Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement" and that management was trying to make union workers the scapegoats for a plan by Wall Street investors to sell Hostess.
Hostess said its debtor-in-possession lenders had agreed to allow the it to continue to have access to $75 million to fund the wind-down process.
"There's no way to soften the fact that this will hurt every Hostess Brands employee. All Hostess Brands employees will eventually lose their jobs - some sooner than others," Rayburn said in a letter to employees.
The company has canceled all orders in process with its suppliers and said any product in transit would be returned to the shipper.
In its filing with the court, the company said it would have incurred a loss of between $7.5 million and $9.5 million from November 9 to November 19 in lost sales and increased costs.
"These losses and other factors, including increased vendor payment terms contraction, have resulted in a significant weakening of the debtors' cash position and, if continued, would soon result in the debtors completely running out of cash," it said.
Hostess had already reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union.
I've seen comments about Hostess pricing their products at $1.59 and Little Debbies pricing theirs at $.99. These posts somehow come to the conclusion that the price difference is because Hostess has union labor and that's the reason for so huge a difference.
Could this possibly be true?
The Twinkle is going no where. This is a way for the top executives to still get their golden parachutes, the rights for the twinkie, ding dongs and other hostes products will be absorbed by other companies.
The company has defaulted on its pension payments and health care payments for years. They have gotten concessions from its employees for years also. The bakeries will reopen after the current contracts with the unions expire. The top management will be working for the companies that take it over. they will reopen as non union with no benifits and low wages. Of course that has been the american way for a decades now.. the only ones that will be hurt are the union and the low and middle management employees that were not high enough on the totem pole to get a planned job with the new company. The cost of production will go way down. the cost of the twinkie will stay the same. the consumer will still be foolish enough to not see what's happening and pay for that same price twinkie and bash the union worker. I for one will eat healthy and not have one.
I SURE HATE TO SEE THE HOSTESS CO GOT.WE HAVE EATEN THEIR PRODUCT'S
FOR YEARS,AS LONG AS I CAN REMEMBER.ESPECIALY TWINKIES.
This make a lot of sense, 18,500 people lose their jobs, primarliy because of their union's stubborness to make reasonable negotiations! What am I missing here? Tthe Union president is blaming it on corporate mismanagement. That may well be, but how does he justify that his members will soon be out of work! Hostess is an American istitution, man, I'm going to miss my twinkies!!
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