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.
Nov 16, 2012 11:17AM

Not to worry.  The goverment will be there to help these people.

It's a simple formula.  Help people and raise taxes "revenue" again.

Nov 16, 2012 11:17AM
No more Twinkies! It's the beginning of Zombieland for sure!  Thanks unions, thats teaching em.
Nov 16, 2012 11:17AM
Well the Union is at fault on some of this but not all.  Since I have a direct connection to the fall of Hostess I can tell you the workers have given up a lot along the way too.  Not only have the workers who have 30+ years with the company were counting on their pensions but now if you are not 65 years of age you can not collect the pension they have worked for 100% if they have to draw early they can lose up to 60% of their pension due to early withdraw.  The workers who have put in 30+ years are in their mid to late 50's & no one is hiring this age group not at a wage that can be lived on.  So before anyone judges these workers they need to walk in their shoes first.  Over the years they have given up pay raises, medical benefits cut to less coverage & higher premiums & the company quit contributing to their pensions as well, so the company was getting from the workers.  Not all Unions are good but if it wasn't for the unions most of us would be working for a lot less than we are now.  The ones who ask for (not all) their workers to give & give they themselves are not trying to live on what they are asking others to live on.  I know be thankful you have a job, but when does that stop & employers start appreciating they have employees so they can have a product to sell.  Mismanagement isn't always the union/workers fault.
Nov 16, 2012 11:17AM
I bet the executives and managers are getting huge severance packages.  Typical corporate move, screw the little guy and then blame him for not wanting to be a slave.
Nov 16, 2012 11:17AM
I live in Michigan I'd work for $15hr.  I would'nt complain.
Nov 16, 2012 11:17AM
You have posted all over the place how much the union workers are making and how much the company is asking in cuts, but no were do you see what the company heads are making and how much they are going to give up.  One other point, all the suppliers will be out as well, how much are they willing to give up to keep their business. Who ever it is the union or the company if the facts of who get what is left out, the common person cannot make a fare decision. You do not break the backs of the working person when the department heads are at fault. 
Nov 16, 2012 11:16AM
Gotta stock up on Twinkies! Time to go 'Zombieland' mode.
Nov 16, 2012 11:16AM

And the Vulture Capital Co. that owns Hostess Brands...Is not responsible for any of this ??

Guessing you people (or many) also voted for Romney and Bain Capital also..?


I could only imagine them running the Country...As they broke it up and sold off the most valuable parts first; Maybe our Resources then our Weapons systems...


Yeah it's always the Union's fault...

Kinda looks like the do-nothings in Fulton, NY...Weren't really pulling their weight, and only "depended" on the hard working union members to support them and the "vibrant city."

What did the non-union members contribute ????

Nov 16, 2012 11:16AM
It would be a lot different response from the Union if Management would also be taking a hit and not just the workers. Last time the workers took a hit, and then management gave themselves all big bonuses to congratulate themselves.
Nov 16, 2012 11:16AM

Do you people even know what a union is...... or what they have fought for to give you people that you take for granted in your every day life. I dont blame the unions for this i blame the company for being greedy. If they were asking them to take a pay cut from $12 to $9 and they decided to bend over and take the deal you would be calling them freeloaders anyways because they fell into the poverty level and would have to get government assistance anyways.


You may not realize this but union officials are voted in by its members if you didnt like what your poor unions representation was doing you should of spoke up and ran that individual out. Dont just write off all unions because some of yours didnt do the right thing. Unions still have a purpose and always will but when they are no longer here everyone will see just why they needed them for so long. If you dont think child labor or company stores or legal slavery will come back your wrong. If you think that the 40 hour work week or the 8 hour work day is there because companies want it that way your wrong. Hell why not check each of your states history and you will see that there has been a politician purposing to raise the work week to 160 hours before over time kicks in. Just recently Bush wanted to increase the overtime law nationally.


Sweden and Germany has had unions and public health care for many generations and they are two of the more profitable countries in the world maybe its time that people stopped thinking so singular and started working together before everyone in the US is owned by the 1%. Are Unions perfect NO.... by they are made up by the people and if there is something you dont like change it dont just say it needs to go. The idea is still one thats very much needed in today's day and age. ONE voice in a crowd cannot accomplish anything but Many voices together can work amazing things

Nov 16, 2012 11:16AM
Unions are only good for taking Union dues. Unions should be obsolete. They do nothing for the employees and aren't there to save jobs - only to collect money for doing nothing. 
One more point....Isn't it great that the American Taxpayer (those are people 'working' and 'paying taxes...fewer by the day) is about to inherit 18,500 more "entitled" POSs to support.  "Union" is the wrong term to describe you phuques...."TRAITOR" would be a more accurate description.
Nov 16, 2012 11:16AM
It's such a wonderful thought with Thanksgiving, Christmas, and I'm sure a very happy New Year for 18500 newly unemployed have to look forward to.    May the lord find favor on you and your families
Nov 16, 2012 11:16AM
Hmmm, let's hope HOSTESS will give another baking industry the ingredients to making a GOOD twinkie!!
Nov 16, 2012 11:16AM

For Whom the bell tolls..Time Marches on (J.Hetfield)


This is an example of "Spolied" folks who figure, well at least I will get half my pay from unemplyment, hell I can live in that AND get a job under the table....and the tax payers are the ones funding their Spoiled asses...FIRE the ALL and replace them with people who actually WANT to work and cannot find enough work to feed their familys

Nov 16, 2012 11:16AM
Yep... always the unions fault.. Forgot about the mismanagement, forget about the fact that the workers have already made significant concessions (wage, benefit cuts) a few years ago.  Forgot about all the money the top guys are making and keep making, just keep taking it and do not forget to say "please can I have another".  Everyone knows that workers should not every say anything and work for $3 an hour as long as the senior management is making money.  Yep -  All the fault of the union...
Nov 16, 2012 11:15AM
This is what has to happen when employees try to take what they want from employers....go out of business and let these people go find another job.....reopen with different people.
Nov 16, 2012 11:15AM
freaking unions destroying America one business at a time.
Nov 16, 2012 11:15AM
Yes the unions trashed another company, but what about the idiot workers that would not cross the picket line especially in today's economy.
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