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.
3436Comments
Nov 16, 2012 11:24AM
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Who cares !!!!   They taste terrible anyway.  They are dry,tasteless,have very,very little cream filling in them anymore. Years ago they were moist,full of the cream filling and very good.I ahve wrote Hostess many letters complaining about there product and telling them you don't honor your commercials," the ones with racoon,shark saying, "Where the cream filling!" Well that was years ago and thye had lots of cream filling in them,then later they changed the recipe and they weren't as moist,they didn't taste the same and very,very little cream filling. It's like every thing else they downsize the quality and raise the price and the taste is terrible. So if you go broke and don't make them anymore,IT'S YOUR own Darn fault.  Don't blame the workers.  Also these works make  good money on the job,more then they deserve.  People are greedy and don't appreciate that they have a job and be happy they have one.  Instead they want more money,more benefits,etc and are just down right GREEDY !!!!  So let Hostess go broke and 18.000 lose their jobs.  You both deserve losing everything for being GREEDY.    KARMA biting you all in the A**.  I stop buying your hostess ever since I wrote you a letter complaining about the quality and raising the prices. SO GREED will make you go broke. So goodbye Hostess you won't be missed.
Nov 16, 2012 11:24AM
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Now we will all know how Woody felt in Zombieland. Thanks Union!
Nov 16, 2012 11:23AM
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Well you voted for a president that didnt want jobs. Cant have your cake and eat it too.

Nov 16, 2012 11:23AM
Nov 16, 2012 11:23AM
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I will miss those Twinkies, guess I need to make a run on the store, a great old fashion snack.
Nov 16, 2012 11:23AM
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Yes, companies are laying off all over to get under the 50 employee limit for Obamacare costs.  The unemp this week rose from 365,000 to 459,000!!!

 

They tried to say it was storm (Sandy) related, EXCEPT, the total increase in NJ, NY, PA, MA was only +5500, so where did the other 84,000 come from, huh?  

 

Companies can no longer be squeezed, something has to give!!!!

Nov 16, 2012 11:23AM
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It always amazes me that when a company like this falls none of you people on here say a word about the way the company was run or that their suppliers were also pricing them out of business or the demand for their product is drying up.  If its a union shop it must be the unions fault.   I'd venture that most of you have never belonged to a union and so are just regugitating right wing talking points that have been part of the republican agenda since they became the party of big business and they discovered that they contribute to the democratic party.    A union is just that. A group of workers that band together to be able to at least have some say in their own lives and working conditions. They are people that stand up for themselves and their fellow workers.  They are not the villans in this scenario. They are people that have decided to stand up for themselves. I'm not here to defend unions but rather to ask a fairly simple question.   How much are you willing to give back to your boss to keep your job and what will you do when they want more than you can afford to give back?    Should the entire country just jump right to it and everyone earn no more than minimum wage and no benefits which would keep us all below the poverty level and on federal assistance or better yet just abolish the minimum wage and all just be glad if at the end of the day the company throws us a few coins for our 10 - 12 hours of work? 
Nov 16, 2012 11:23AM
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"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."

Ummm maybe this is for the best, don't you think? Maybe they were trying to run the company in the old paradigm and it just wouldn't work...maybe everybody that works for them will get an even better job or career now...life is meant to be good. If you focus on bad things that's what you experience.
Anybody who is successful has to want it just as bad as they want to survive. 
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Unions used to help.Now they are all just  another reason for people threaten the very company that hired them. Hostess was a mismanaged company,they admitted that.They tried to salvage what they could and they failed.There are no winners here.The company is DEAD,The workers are UNEMPLOYED (18,000) ,and the consumer will have one less product to buy to support our economy. It's LOSE everywhere you turn. And it's just gonna get worse.Watch.All the companies will start. Then will everyone listen and start trying to work together to build our country string again? STOP THE BICKERING AND START WORKING TOGETHER BEFORE WE ALL SUFFER MORE!
Nov 16, 2012 11:23AM
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Obama 2012 campaign slogan "Forward".  Stock market down several percentage points, unions closing down companies, health care causing employment reductions in numerous companies.  How about "Backwards"?  And my friends, this is only the tip of the iceberg.  The most corrupt, inept president in the history of the U.S. 
Nov 16, 2012 11:23AM
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Next time you receive a decent wage paycheck, get paid extra for overtime, spend time with your family on the weedend,  get paid for vaction or don't get killed at your job due to an unsafe work enviroment thank the unions.  Oh wait employers willingly did all those things, right?
Nov 16, 2012 11:23AM
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Home Pride bread is the only decent bread out there!  I'm so sad...
Nov 16, 2012 11:23AM
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All of you people are Morons!! You cannot see the real issue here; So hostess has done it's job in duping you knuckleheads with a simple smokescreen. The greed,theft, mismanagement are at the core of the problem here, not the employees who go to work everyday and expect a fair wage and working conditions. NONE of you ungrateful idiots would have a 40 hour work week and other basic workers rights if it were not for people in unions who fought so hard for these rights. You blind mice are led to believe the propaganda that corporations are putting out these days because they want to union bust and get rid of Unions, so they can follow Wal-Marts example. Put all their employees on part time basis-zero benefits,feed your families withat you pin-heads! Wake up and smell the coffee and learn to read between the lines!!!!!!!
Nov 16, 2012 11:23AM
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 How can 7.6% of private sector unions jobs be the blame of our country's problems when 92.4% of you cowards are afraid to stand up to management and have decent working conditions and to retire with dignity. But keep on believing you don't deserve anything!...............idiots
Nov 16, 2012 11:23AM
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When the UNIONS were started it was for the  GOOD of the worker!!! NOW it's for the GOOD of the UNION HEADS!!! When will ALL YOU ANTI AMERICANS see this?? They are RUINING the businesses in this country!! WAKE UP AND SMELL THE COFFEE!!!!
Nov 16, 2012 11:22AM
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No more Twinkies...wow the Mayans were right after all.
Nov 16, 2012 11:22AM
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Accroding to Ask.com, the average hourly pay for Hostess Bakery employees is $16.93 +/-.  This equates to $33,860 per year.  Not exactly a rich person's income, but better than nothing at all.  However, one can certainly see both sides.  It may be that the employees WOULD be better off finding another employer.  Possibly Hostess will be bought by a foreign company, or better, by a company in a right-to-work state.
Nov 16, 2012 11:22AM
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if any of you were union memebers you would feel differently and it swas not all the unions fault bad management played a big role in this but people only see what they want

Nov 16, 2012 11:22AM
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Maybe Obama will ride in and save the day.  Afterall, the unions supported him for his re-election.  Oh, wait....he won't save them because with his re-election he got what he wanted .   Now maybe the idiot union workers who voted for Obama will realize what the rest of us have known for 4 years.  He doesn't care about you.  He has his own agenda and unions don't mean crap to him, except for a vote.  Doesn't it feel good to have been played for your vote.  What a bunch of suckers!!!!   
Nov 16, 2012 11:22AM
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Another 19,000 people on unemployment, food stamps, houses re-possessed, welfare, medicaid.  Another 19,000 Democratic votes.  God Bless America.
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