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 respect the concept of a union. Just never see it in proper action. Seems to me the only winners are ever the union. They collect the dues and make a better lives for themselves. Thugs.
Can i ask a stupid question.? Does China have unions and the same regulations that american's do.??How can we compete with a country that pays their workers 10 cents and we pay ours 5 dollars for the same exact product. the white house is going to find out that it's only going to go down hill at a fast rate of speed.. That's an hourly pay scale.. i don't know if its an exact figure?? But i think you get the idea..
I can't agree that unions serve NO purpose, even today. However, they do grossly overstep and abuse the power they have over a company. This is a prime example of union heavy-handedness doing far more harm than good; in fact, doing NO good at all.
It does't even benefit the union itself to lose the dues of over 18,000 members! Will the union do anything, ANYTHING at all to help these members continue to support their families, or will they simply pawn them off on the gevernment and run off and try to organize some other company's workers?
So The UNION MENTALITY at Work Again :-) You Stupid Idots!
Now Hostess Should Publish a List with Their Names, So Everyone Can See Them. And Who Knows Maybe Other Companys Just Won't Hire Them.
So The American Unions Strike Again! Stike Themselves Out of Work and a Company I Grewup with Is Gone :-(
Once again, a union is the last straw in breaking a companies back. How does this end benefit anyone except the union bosses who will continue to collect their fat check and benefits. Union membership should realize their leadership has only their self interest in mind, not the memberships.
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