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 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!!
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!!!!!!!!!
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.
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.
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.
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.
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