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.
Pres, Hunt of the union says Hostess and Wall Street are to blame for wanting to sell off the company. Hostess is a PRIAVTE company. It dosn't take orders from Wall Street. It is unfortunate that people have this entitelment mentiity. It starts with the goverment and with liberal thinking in the world of academia. ( schools ) sorry about the spelling!
Wow, it's the unions' fault Hostess went bankrupt, not the upper management that was probably making well over a $1M a year, lol... Yeah, those pesky workers wanting benefits and $10 an hour took down a company, not a guy like Driscoll, who Hostess wanted to pay $1.5M a year to "restructure" Hostess.
The article said nothing of the higher management. Do you think they took pay cuts? How many are gonna walk away with millions of money cause of the nice contract they signed? Why couldn't the top management take the cuts instead of the workers which they did...read the last sentence of article.
It is alot easier and faster to blame unions...but the company sounds like was having a hard time awhile ago.
The people who still are complaining that Obama won the election have to realize that democracy worked. Obama won both electoral and popular vote so get with democracy or get the **** out of the country and go to Cuba or another dictatorship.
Linda Bass...I agree with your thinking, SOMEWHAT...??
But then an immigrant or even maybe an illegal, would take or do YOUR job for less.....AND THEN,
You would be on here bitching about that...DO YOU see where all this is going,YET....??
It was not the union membership but rather the Union Management --they are the force behind persuading union members to vote down contracts and who put into office socialistic politicians that are only looking out for themselves not the general population.
Nancy, Harry and Obama want more people on entitlement programs this guarantees' there bounds with lobbyist and a positive cash flow.
Remember poor people do not hire people --- we need people with vision, creativity and money to create jobs.
For all you takers -- it is as good as its going to get for you --live with it.
Hospitals are suppose to be non-profit...heh,heh..
Union workers normally make a product, bought by Consumers.
And 95% of those Companies do quite well...
Plus union members or anyone with "decent wages" spends a lot of money..
Most of the comments have trashed the union but we forget that many of the rights we have as workers are due to their efforts. We are all to young to remember factory towns and the slave like working conditions many of our grandparents were subjected too. However, their usefulness has waned and they cause more destruction to the economy than assistance. We need to thank them for their contribution to the improvement of our working lives and offer them an honorable retirement.
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