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.
3428Comments
Nov 16, 2012 1:18PM
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Well, I guess this is one way to get people to quite buying junk food.  Bankrupt the company and displace all the workers.  Union brilliance.  I hope the Union President gives back the employees all those union dues they have been paying into for years.  There probably should be millions of dollars saved for when they do strike and support other unions striking.  They are not going to have to worry about doing anymore strikes in the future.
Nov 16, 2012 1:18PM
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How can this happen to Hostess, they are so sweet.

Nov 16, 2012 1:18PM
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The Twinkle is going no where. This is a way for the top executives to still get their golden parachutes, the rights for the twinkie, ding dongs and other hostes products will be absorbed by other companies.

The company has defaulted on its pension payments and health care payments for years. They have gotten concessions from its employees for years also. The bakeries will reopen after the current contracts with the unions expire. The top management will be working for the companies that take it over. they will reopen as non union with no benifits and low wages. Of course that has been the american way for  decades now.. the only ones that will be hurt are the union and the low and middle management employees that were not high enough on the totem pole to get a planned job with the new company. The cost of production will go way down. the cost of the twinkie will stay the same. the consumer will still be foolish enough to not see what's happening and pay for that same price twinkie and bash the union worker. I for one will eat healthy and not have one.

Nov 16, 2012 1:18PM
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wow another legend brought to the ground now i'll have to think of something other than twinkie jokes.
Nov 16, 2012 1:18PM
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Sure it's the unions fault. These people who are overpaid at $13.00 or $14.00 dollars an hour and not someone with a BA degree. The same person who receives bonuses when the union reaches production goals.  
Nov 16, 2012 1:17PM
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I was in three separate unions and each did nothing for me except take my money. In one factory where I have worked the company was getting a huge contract and was agreeing to everything that the union wanted. Our Union rep said we should go on strike anyway just to prove we could ? Never did understand that type of mentality ?
Nov 16, 2012 1:17PM
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does this mean no more orange flavored cupcakes??? lol damn
Nov 16, 2012 1:17PM
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Alot of you people are quick to blame the unions, but it was the unions that fought for our 8 hour work day, it was unions that created Labor Day, it was unions that fought for a livable wage with insurance and a livable retirement pension, so when you point your finger at the unions, remember that three fingers are pointing back at you...  Alot has to do with corporate greed!!!
Nov 16, 2012 1:17PM
Nov 16, 2012 1:17PM
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is funny bones choclate is going down too?? please please please answer :( say nooooo please my life depends on those choclate bars.
Nov 16, 2012 1:17PM
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I'm wondering when the last time Hostess re-tooled their plants? Could it be possible that they just simply ran the company into the ground using it as a cash cow and now it isn't worth saving because other businesses have modernized and taken advantage of productivity gains created by new technology that Hostess doesn't want to or cannot make?

Nov 16, 2012 1:17PM
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Rats - no more Twinkee's or Cupcakes.  Thanks union folks, as this article states, for not only putting thousands of people out of work but also bringing about the end of an era.  For the time being, you could have supported the company until the finances got better - but, no.  Shame on you!
Nov 16, 2012 1:17PM
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It seems most of the comments are about the "oh my god" unions.  Did anyone notice that the company has been in bankruptcy filings twice in the last ten years, and has been in bankruptcy since the beginning of this year?  We don't know what the situation is with the unions, but is it like no one even notices that the company had issues much larger than any issues it had with the union?
Nov 16, 2012 1:16PM
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GO ONLINE SO UNIONS WONT HAVE A SAY REHIRE W/OUT UNION OR TELL THEM WHO ARE UNION  TO FIND A UNION JOB WATCH HOW FAST THAT UNION GOES BROKE WHEN NOBODY WANT TO PAY THE DUES FOR A CLUB WHO LOST YOU UR CARRIER

GO TO ONLINE AND ONLY HIRE NON UNION

F*&%K THE UNIONS

Nov 16, 2012 1:16PM
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It clear not working people are talking here.
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Now they are definately going to need that website panicattax. I don't understand how one union approved and the other did not.
Nov 16, 2012 1:16PM
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Go non-union Hostess!! There are lots and lots of people who would be happy and grateful for a good paying job in an American institution like hostess. Thank you, greedy union, for screwing another workforce and American institution! Off overseas goes another resource...

Think America!!! Keep the jobs and our products home!!!

Nov 16, 2012 1:16PM
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this was the best bread around.  Had good bread for kids too.  So sad that we have gotten to the place where business can not make it anymore.  Thank you Hostess for all the years of great products you have given to us.
Nov 16, 2012 1:16PM
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To bad about the ones who wanted to work but as the old union saying go's" We'll show them(the campany) yes sir ree, come pay day we'll show them".Don't forget to buy union products that is if they havent gone out of business yet.
Nov 16, 2012 1:16PM
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The union members now collect unemployment for 2 years whitle they work under the table at local places that are non union, they will get  state unemployment payments for two years at $500 per week and the union will pay them a strike fund amount each week, in addition, their union medical plans remain in effect for their families.. not a bad deal for them, local governments and the feds lose tax collections, so who is the real loser in this game? Not the unions.

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