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.
Read the book "Who Stole the American Dream?" by Hedrick Smith. This is a typical example of the greedy american management and investors efforts to steal the money out of the workers pockets and send them packing penniless. Under bankruptcy, the company will not have to honor any pensions guarentees and steal the money and sell off the assets to cover and pay all the investors the money they really don't deserve or need.
The last comment shows how little the people don't about their own country and how businesses have influenced law makers to push through bills that favor the business and destroy the middle class in the name of greed. The first thing that needs to happen is to change the bankruptcy laws back to pre-1978, and change the law to make stockholders vote a binding vote on corporations management. Those would go a long way to straightening out this mess the business have gotten american in.
In today's economic climate, you can trust the unions to eventually cost you your job. Unless, of course, your President decides to let taxpayers pay for a bailout.
Some of you may say well they shouldn't have taken the job.. I understand, however most American’s work more than two jobs just to make it in this economy which in turns take away from the family structure: translation: more moms and dads out of the house working long thankless hours to provide for their children. Children who are raised by their friends on the streets, many American would like to be able to see their child off to school or place them in a nice after school program, but these things cost money and American’s in today's economy just can't afford that when health care is rising the cost of living is rising and gas prices are still at a higher rate.
So what do people do when they see their bosses getting pay raises, that ask the question why?
Hostess budget is paid to labor. those 18,000 + workers who were on strike refused to take a pay cut at their expense to pay off 1 billion in debt that Hostess created. So before you idiots make stupid remarks at least know what the hell your talking about. If you hate unions so much, move to a third world country were you can work 12 to 14 hours a day for about 1.00 an hour. Don't forget to take your kids i'm sure you can put them to work too.
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