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.

By MSNMoney partner Nov 16, 2012 9:37AM
File photo of a twin pack of Hostess Twinkies and CupCakes, PAUL J. RICHARDS, AFP, Getty ImagesBy Tanya Agrawal, Reuters

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.
3428Comments
Nov 16, 2012 12:54PM
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Close and reopen in Mexico. Just make shipments over the border. Also relocate to China and give emploment to some deserving people that appriciate a job in these times. Im sure China and Europe will enjoy twinkies and wonder bread. From my experiance if you gave the local and state government as well as employees the choice on how much they could take from a company with an open door, they would stripe it clean of every penney and still want more. Then abuse you with insults when you finally shut down the operation.
Nov 16, 2012 12:54PM
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The analogy I think best fits is a simple one that some will disregard and many feel offended by but here goes.  On 11/6/12 the American economy was like  a 747 cruising at 40,000 feet.  The majority of those voting on this day said they wanted  to take from those that have in this country and make it their own.  They were bribed by a despot who was fully aware of their dependancy and their anger at those who have managed versus the now new majority whose anger consumes them. Those that "have" reached up and turned the engines off in that 747.  We will now slowly roll over and this market as well as the entire economy will face a certain demise.  The POTUS  along with the majority of the liberal socialist leaders of the world, like Chavez, Putin, Merkel, as well as Obama to name a few will now enact the New World Order on the populations of the World.  What this means is that we will now certainly be looking for American workers wages to decline to the $3.00 to $3.50 per hour range. These liberal leaders understand their power will come from the dependent masses and all either are or soon will become  billionaires as they then will most definitely have total control when picking the winners and losers in the world.  Like what I say or not it is the reality of this New World Order and those that can afford it least as always will be  the ones who voted for it and will suffer the most.  Stupid never takes a holiday and gravity always wins.  Everything is on course and under control.  So as the old gross saying is once again valid.  Just sit back and enjoy it because it is already a given.  Perhaps one more Twinky and then so long to the America many of us felt so sure and positive about for these many years. JMHO
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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.

Nov 16, 2012 12:54PM
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Once again GREEDY Union Workers!!  This Country would be better off if all Unions were dissolved.
Nov 16, 2012 12:54PM
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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!!

Nov 16, 2012 12:54PM
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Once again Union workers cut off their nose to spite their face.  Since they wouldn't give a little, now they give it all up....UNEMPLOYED!  When will people learn that unions are not their friend and NOT looking out for their best interest.
Nov 16, 2012 12:54PM
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This, of course, is an example of why I've always been a rabid antiunionist.  But, hey!  Based on the Election results, the country chose the shift to Deadbeatville, anyway.  Why not start by allowing Hostess to tank, since we have a First Lady who's size-biased?
Well, I suppose I need to start my rounds of the local gas 'n gulps, for the last of the 2-packs of orange cupcakes...but, one suggestion I'd make for any business supplied by Hostess: Replace the display, with a soda machine.  You're going to get kids by the hundreds, Soon.
Nov 16, 2012 12:54PM
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Well, here we are: One week into his re-election and the economy, stock market and jobs are all tanking while missles fly in the Mideast.

 

 

And where is Buhrock...our fearless leader? Probably playing hoops in his taxpayer subsidized B-Ball court in the white house rose garden. Heck he just got voted a salary of $800,00 for another 4 years. Life is good!!!!!!!!! 

 

 

Nov 16, 2012 12:53PM
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Sadly to say, but thiis is what we all have to look forward to sooner or later. You just wait and see.... this is only the beginning.
Nov 16, 2012 12:53PM
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Why are you so afraid of unions?  It is not wrong to ask management to conduct their business in such a way that affords it employees a living wage.  Do you really want to return to pre 1930's labor practices?  Go into Wikipedia and read about the Homestead Strike.  Read about the long hours, horrible working conditions, and low wages that drove these people to violence.  Without organized representation we are going to turn into a country where companies from overseas outsources to the United States because they will find cheap, unfair labor practices.  Do you really want that?  Stop demonizing the unions!!!
Nov 16, 2012 12:53PM
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Everyone was worried about Big Bird and Obama kills the Twinkie

Nov 16, 2012 12:53PM
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Before people down ALL unions, my dad is part of the Postal Worker's Union and THIS is why..

 

1) There were 2 types of employees: PTFs and Regulars. After so many years as a PTF, they were supposed to promoted to Regular. The Post Office refused to honor that and even tried to trick my dad into taking a temporary position that would gaurantee that he would NEVER be promoted to Regular. When a Regular employee left, the PTFs with enough hours worked were supposed to be able to apply for the Regular position. But the Post Office would abolish the Regular position when the Regular employee left and establish a new PTF position so the PTF employees could not be promoted.

 

2) A few years back, the Post Office FORCED it's employees to work 7 days a week, this went on for a month before the Union stepped in and said they could NOT work their employees 7 days a week.

Nov 16, 2012 12:53PM
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Ho no no more TWINKIES what are the movies going to be like now. I'll have to watch more Die Hard part one rerun's just to remember what a twinkies looked like. 

Nov 16, 2012 12:52PM
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Plz send me twinkies before ya  go out of biz !!!!!!!!
Nov 16, 2012 12:52PM
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Well as I read many business are going under with this Obama care

and if not the cost will past to us all. Every thing goes up to pay the bill.

NOW THAT IS A UNION       '"OBAMA UNION'

THE USA HAS NOT SEEN WHAT WILL HAPPEN IN THE NEXT FEW YEARS.

ALL THIS SCANDLE WAS SETTING ON THE STOVE WATING FOR ELECTION TO BE OVER.

THIS IS THE FOURTH COMPANY SO FAR GOING UNDER IN THE USA.  SO JUST WAVE BY

TO WHAT MY FAMILY IN THE PAST FOUGHT FOR. THE USA

 I KNOW IT WILL NO LONGER EXIST.

Nov 16, 2012 12:52PM
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You always blame the Union. If you all believe in pay cuts then take one where you work, give up your Health Care and your Pension/Retirement Fund. You say the Union, do you know that the Union is just a group of workers with a common cause? I think not.
Nov 16, 2012 12:52PM
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No, The employees did not do it.! It was the management, I have been gone  from there 8 years.

Management was over payed and under worked. Yes, I was only a loader and mechanic.

Butternut Bread side of the story 18 yrs of service. non union worker.

Nov 16, 2012 12:52PM
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Once again we have the unions to thank for putting more of us out of work.  Even California is being driven to the edge of "bankruptcy" by union demands and payouts.
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