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.
WOW how the world is a changing.
First off Unions Built the USA. Remember that... Take a good look at where things went wrong, Lets say the last 4 years have been a trying time, 8 years of one of the dumbest people in office and 1 puppet master pulling all the strings.
Wow gas 80 Cents a gal for Gas, before The puppet master and the dummy to over $4.00 a gal in most states.
The company I used to work for laid off 80 thousand people before he even gave his speech.
Its going to take Law suites and Jail time for wall street to get the msg we are DONE.,
This company is worth more dead then alive. Hey maybe Romney will buy it for pennies on the dollar.
Get a grip and take your head out of the sand and help. Ask for tougher jail sentences for money scamming wall street execs. THEY get paid if they win or lose.
soo sooo sad to see this happen. so many people loosing thier jobs with a weak economy. not the kinda news anybody needs. :(
Years ago unions were good with the idea of protecting workers with a safe working enviroment,but have taken a wrong turn. I worked at an airport and filed a grevience over safety issue, the union rep came in and told me to stop crying and if I didnt like it quit. When it came to contract time we the employees never got to vote. We got a 20 cent raise 1st year 12 cents 2nd and 6 1/2 cent the 3rd year.We were told stewart voted. we never heard what we got until after it was to late. Dues went up 8 dollars amonth. And you wonder why 1/3 of employees quit within 2 weeks? Unions reps live off membership. Bet they are blamming Hostess for it, they were told they need concessions to stay afloat, now they sank like the Titanic ,gone
Solidarity my Union brothers! See you all down at the Unemployment office. We need to stay strong and not let those clerks there push us around!
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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