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 11:18AM
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The same people on the line that cheered and went nuts to put their National Leader back in the White House, are now following each other to the "Bread Line". 
Nov 16, 2012 11:18AM
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Greedy union leaders use words rather than guns.  Want more money for more workers who do less and less.  Management needs union's permission to fire bad workers.  Strike for increased wages and strike when company says no.  Continue to strike until company goes bankrupt.  This union cut off it's nose to spite it's face.  Nuff said.
Nov 16, 2012 11:18AM
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You should thank your newly re-elected president. But I am sure that no one on this site voted for him. When you see old companies like Hostess throw in the towel it's a good sign of what is in store for the future. Obama's changes killed the twinkie and probably the way the USA used to be. Put up the borders, all of the welfare and assistance recipients' will be leaving the country.
Nov 16, 2012 11:18AM
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We had them striking here in utah before a store was even open, how stupid is that..
Nov 16, 2012 11:18AM
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Dam  that Dude from Zombieland is gonna get really pissed off now !!!!
Nov 16, 2012 11:18AM
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I am part of a union and now they are worthless. They get paid and they will not pay us to strike at full wages.  Really bakers??  Isnt a $30 or more  an hour job a pretty good one? What you can't live on $29.  Well wait until you live on the government becasue that doesn't give anywhere near what you are losing.
Nov 16, 2012 11:18AM
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The unions did help the working man,but how much can a company afford to pay someone to run a mixer or put lug nuts on a car. There comes a point when unions and union workers expect too much. Without a profitable company there is no company to work for. How hard is that to understand?
Nov 16, 2012 11:17AM
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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
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No more Twinkies! It's the beginning of Zombieland for sure!  Thanks unions, thats teaching em.
Nov 16, 2012 11:17AM
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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
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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
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I live in Michigan I'd work for $15hr.  I would'nt complain.
Nov 16, 2012 11:17AM
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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
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Gotta stock up on Twinkies! Time to go 'Zombieland' mode.
Nov 16, 2012 11:16AM
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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
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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
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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
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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. 
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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.
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