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.
Not to worry. The goverment will be there to help these people.
It's a simple formula. Help people and raise taxes "revenue" again.
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 ????
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
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The solid report comes a month after the retailer closed all of its Canadian operations.
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