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.
Don't think for a minute some venture capitalists is going to take a loss. We take the risks we deserve the reward? Sure. How many of you idiot union haters are going to take pay cut after pay cut from your bosses? All i hear is crickets.
You folk aint seen nothin yet. Thanks to all of the followers of the Democratic flock we will see much worse than a cake factory fail. Thanks Obama.
If you were ever a sef employed, working everyday or at least available at all times, day after day, you soon realize its far better to be in control of your own destiny. You must count on yourself to get out in the work place and make a buck or two for yourseft and your family. If some entity wants to give you benefits and perks, one day they will want to collect on there generousity. Then you may end up on government programs.
Decades ago the Unions played a large role in boosting employment. Just like Twinkies being wiped out after 80 years, maybe the Unions have also surpassed their popularity.
yes our kids and grandkids can definaltey do without those sugar laden "treats", diabetes, heart attacks waiting to happen, maybe a healthier company will come about
As a former hostess employee (22 years retired) they do not mention the other cuts we had to take because of mismanagement. About 2400.00 per employee per year.
You are all so lost....and living under a rock, you really have no clue as to what is really happening in the world today. Blame the union, its all their fault. You poor ignorant fools. the Unions do not run the companies, they do not tell the companies how to run their businesses. Unions negotiate contracts that cover working conditions, wages and benefits for their members. You take everything for granted. Did you know that less than 15% of all industry in the US has union representation?
In 1970 the average CEO made 50 times more than the average teacher, today the average CEO makes over 500 times that of the average teacher. And you idiots still want to blame the worker for making too much money. What the hell are you going to do when they target your job? Its a race to the bottom people.
And they want to know why companies are moving to other countries.
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