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 11:01AM
avatar
Hostess has been around for at least 60 years. How does management screw that up.?
Nov 16, 2012 11:01AM
avatar
Unions & their greed shut down another manufacturing facility, the 82 year od Hostess corporation. This country is going down the drain & can't afford to lose any more jobs, jobs which won't be replaced. Unions should have been abolished in the early 1900s when they last served any purpose. Of course union workers would strongly disagree being that they are largely underworked & overpaid. Try to get rid of a lazy union worker. Can't be done. Of course Bailout Nation, the good ole US helped the undeserving car makers. Why don't they print up some more Monopoly money & help Hostess.
Nov 16, 2012 11:01AM
avatar
I don't understand how Hostess could go out of business with all that bread.
Nov 16, 2012 11:01AM
avatar
At least now they'll all qualify for free cell phones
Nov 16, 2012 11:01AM
avatar
Negotiated yourselves right out of a job. Way to go. Greed at it's finest. 
Nov 16, 2012 11:01AM
avatar
So funny how everyone is suddenly anti-union.  If not for unions you would be working in unsafe conditions, for 100 hours a week with very little pay.  Unions made it possible for you all to be able to have the life and the wages you now make.  You all would get rid of unions thinking your company would continue to do the things that they offer you now, without the union or threat of it, you would be back to doing back breaking work, and making nothing in return.  Sounds like the union and the company had reached and agreement, that part was over- the fault here lies with those employees who did not return to work after they had struck a deal.  Point the blame where it goes and get off your GOP high horse and turn off Fox "News" and learn facts. 
Nov 16, 2012 11:01AM
avatar
This is exactly what obama wants - more unemployed & in need of gov't assistance.  Thanks obama & the Einstein's running the unions
avatar
What pisses me off is so many out of work. lazy people who don't want to work, and push a company to break down, which actually means mismanagement. So the union is usurping every American that needs a job and wants to work. How about i sue the union for usurping my right to work, because the company wont higher me because a union is involved?
Nov 16, 2012 11:00AM
avatar
Does this Union not see that it is doing more harm than good. Hope they are happy now that the employees are all going to be out of work..
Nov 16, 2012 11:00AM
avatar

The company would spin it so the union is blamed. This seems to be the trend these days, and of course ALL THE ANTI-UNION TROLLS COME OUT TO COMMENT!

 

Hostess went out of business because they had too much debt. To blame it on unions is just conservative manipulation.

Nov 16, 2012 11:00AM
avatar
Woody Harrelson would be highly upset. LOL.   Bring on the zombies..  
Nov 16, 2012 11:00AM
avatar
OK Obama, your plan is working. Here's another company you can buy with our tax dollars and give to your union cronies.
Nov 16, 2012 10:59AM
avatar
This is really too bad. Way to go employees now instead of standing on the picket line you can stand in the unemployment line. Good job!!!
Nov 16, 2012 10:59AM
Nov 16, 2012 10:59AM
avatar
it figures all of you anti union pukes always put the blame where it does not belong. what do you want? everyone going back to 8 bucks an hour which no one can live on? you need to wake up and put the blame on the ceo's of corportate america. they do not deserve to make millions and millions of dollars every year, that is where the greed is and all the while shipping jobs overseas while they keep adding their multi million dollar mansions, expensive cars,taking trips numerous times a year that us piss on's cannot afford. everyone complaining on this is either management or are jealous of the union wages and benefits. so quit your complaining and do something about it by complaining to your senators and congressmen to close the loopholes that make sending our american jobs overseas. bring the jobs back and then you will see more taxes being paid by everyone so the goverment can afford to put folks back to work.
Nov 16, 2012 10:59AM
avatar
Another American icon goes down, I will miss the Twinkie and all the delicious cakes and breads that Hostess produced. Very sorry even more people have to lose their jobs. It SUCKS..... Where does it end. I would like to take my 5 year old daughter to places like this one day, so she can see with her own eyes success. We tell our children, if you work hard and go to school you can be anything you want to be. How sad for us all, we have to change our teachings to our children. GOOD LUCK TO US ALL !
Nov 16, 2012 10:59AM
avatar
Well, at least Hostess Twinkies, Cupcakes, Snowballs, et al have a shelf life of approximately 500 years. So if you load up on what's left at the grocery stores, you might be good to go for a long time!
Nov 16, 2012 10:59AM
avatar

My husband has worked for the company for 17 years. They have been a great company to work for. Financial hardships and changes in the American diet have hit Hostess hard. The Teamsters union agreed to the cuts and understood that it was better to make less than nothing at all.The Bakery union did not. The Bakery, Confectionery, etc. union thought the company was bluffing, but the writing was on the wall. A company bluffing doesn't file for bankruptcy and tell employees 7 months ahead of time that they may have to liquidate assets as a scare tactic. Bakery, et.al, Union screwed EVERYBODY!!! So sad. 18,500 people out of a job. The union gambled and lost!

Nov 16, 2012 10:59AM
avatar
Don't worry, Obama has the Health care and entitlements already set up to take care of everyone. I wonder who is paying?????
Nov 16, 2012 10:59AM
avatar

What a shame that “both sides” couldn’t reach an agreement; I don’t know the extent of the wage and benefits concessions, but I suspect failure on both sides. Hostess management didn’t take the necessary actions to avoid the negotiations conflict, such as did they (Hostess management) volunteer reduction in their salaries and benefits? I suspect not. Also, management should have trim up the products to be offered, as some products are poor sellers and should have been eliminated. New equipment should have been purchased to replace inefficient, high maintenance equipment (at the cost of management bonuses).

The union should have found ways to “lean up” the workforce by combining job tasks, this would have resulted in a few layoffs, but it would allow Hostess to reorganize and stream-line daily operations to emerge from the bankruptcy as a stronger company. I see this failure on both sides, which is too bad as if “both sides” worked together to solve the problems, Hostess would have been a stronger company.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

105
105 rated 1
271
271 rated 2
420
420 rated 3
633
633 rated 4
492
492 rated 5
532
532 rated 6
725
725 rated 7
515
515 rated 8
343
343 rated 9
140
140 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
SWNSOUTHWESTERN ENERGY COMPANY10
TAT&T Inc9
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.