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.
SEIU WILL BE DOING THIS TO HUNDREDS OF SERVICE CONTRACTS/ TENS OF THOUSANDS OF JOBS...........IS THIS THE REAL REASON PEOPLE PAYING $15/BEER $12/HOTDOG.........
SEIU HAS TO BE TAKEN DOWN.BY JIMMY, HE'S COMING BACK AND HE'S PEED THAT HIS UNION'S HAVE GONE LOCO!
At least the stock market is up today. I made $2,972.59 so far today. I just love Fracking Texas. And now North Dakota. Dam $5008.19 got to love America. I can make or loose 20,000 dollars in a minute. You should all have a stock account. Really sad so many as holes think labor should not get a good deal.
Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.
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There was a time when the Knights of Labor and Samuel Gompers could be construed as a necessity. By the time that the unions got to the point of having leaders like Jimmy Hoffa and Dave Beck, they had finally committed occupational suicide. With the death of Hostess, we see another nail being driven into the coffin of organized labor.
Now we have 18,000 odd people out of work along with another who knows how many thousands that were suppliers to Hostess. No one knows how many people working for companies that supply Hostess will also lose their jobs due to the great largesse of the labor union. Also remember tht the union administrative types will not be going hungry as a result of the death of Hostess. This is just pathetic.
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