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.
Yeap, 4 more years
This is why you locate your production facilities in 'Texas' or the 'South' or other "Open Shop" States and let the morons in the Union States destroy their own future.
little debbie still going strong making a better cake at a better price and lot better management. GOD BLESS MCKEE FAMLIY
To all of the myopic people blaming the unions - do you realize that Twinkies filed for bankruptcy BERFORE the strike even occured? Did ya???
Unions were simply pointing out a problem that was there all along - the INVESTORS wanted to ruin the company so they could sell it's assets. The workers are want kept the company going and they had every right to stand up for themselves.
A well managed company doesn't go under in just a week.
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As a union shop steward I had always tried to tell my bargaining unit that while they alway screamed we want more that they needed to remember that at what point does you demands become to cost prohibiting. Yes everybody wants more money but it's more important to have a stable job, but they just wouldn't listen to reason. Dept. was disbanded 5 years ago since then they've all been struggling. All I can say is thanks my union brothers appreciate your greed costing me my job.
Organized labor was a necessity in the beginning, but as it got more powerful - it got greedy - the union dues as a percentage of income gained by workers in many fields have been better for the Union than the workers.
If free health care is an issue the owner providing it - my wife worked for an insurance company for 30 yrs, paid her employer to provide insurance - was cheaper than the street cost - people are losing common sense and greed has taken over the entire thought process not just for business owners, but also the middle class if we continue we will be deeply entwined into a socialistic country, glad I most likely won't be alive in 20 yrs to see what happened to once a powerful and respected Country.
I feel for the future generations unless they wake up quickly
The Jungle is a compelling story, and the reason unions were needed and formed.
That was a long time ago.
Now, we have the same sad story of greed trying to protect lazy, whining union folk.
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The hotel giant and the food service company started trading on the New York Stock Exchange Thursday.
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