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 1:47PM

This is an obvious case of management union busting. Better to ruin your company and destroy your income and those of your employees than shoare in the wealth that you created all by yourself. Why can't you run the company all by yourself without any workers if you are so talented? The courts should seize the assets and give them to the creditors so the CEO and President of the company cannot profit from this. 120 years of worker's progress down the drain.

Underfunding public education works: Look at all the anti-union rhetoric from these members of the 99% who do not see this systematic erosion of the middle class. It's called ECONOMIC SLAVERY.

Nov 16, 2012 1:46PM
The trolls want workers to pay hostess for the rights to make Twinkies. They forget to mention that executives, at least the ones who are left, got 80% pay raises last year. 

Stupid trolls.

Nov 16, 2012 1:46PM

The ultimate result is that Hostess is no more and the union broke them.

Great job unions, you did such a good job that your members no longer have jobs.


Of course there was mismanagement, but what's the bottom line?


The bottom line is that Hostess is no more.


All those union jobs are no more.


Will we miss twinkies?   Probably not.  I mean, it's not healthy.


But what about Ho-Ho's and Ding-Dong's?   They were good.

Nov 16, 2012 1:45PM
Move your company to Martinsville, Virginia and you will have a driven workforce. We need jobs here our unemployment is at 16% we have the highest unemploymnt in the State of Virginia due to NAFTA.  We have lost a DuPont plant, Furniture factories, Textiles along with smaller supporting businesses.
Nov 16, 2012 1:45PM

Ironically, Union President Frank Hurt blames the crisis on "financial and operational mismanagement".  The teamsters reached an agreement, but his Bakery Workers Union has not.  I guess he meant to say that the Bakery Workers have killed their employer by the financial and operational mismanagement of the union. 

Nov 16, 2012 1:45PM
Wow.  Twinkie is a tough cookie, who knew.  I will miss you Twinkie and your buddy Cupcake.
Nov 16, 2012 1:45PM

greedy unions...when will they learn?


Nov 16, 2012 1:45PM

I'm just wondering if any of the 2459 comments mention the decade or more of insane management behavior that brought Hostess to this condition.


Blaming the "union" for management foolishness is just the kind of ill considered thinking that has Wal-Mart employees working for minimum wage, while pricing on same items at Wal-Mart stays the same as unionized Grocers who pay considerably better, and have real benefits for their employees.


There isn't enough information in the article to judge either sides position, maybe some of us should withhold our "wisdom" until there is something to judge.  I would think that, just possibly, the Union members have a clearer picture of conditions than the long list of anti-labor commenter's above.



Nov 16, 2012 1:45PM
yet another case where the unions have bled the company dry -

but how impressive it to see the union stand-fast -
I can just hear them saying -
"it's not about the 18,500 people who are loosing their jobs -
YES - that is a real shame - it's about the principle of standing strong"

when are the "union workers" going to figure out that the unions only care about themselves -
and don't give a rat's **** about the workers - if you have any doubt - here is your proof!

Nov 16, 2012 1:45PM
A case like this is why so many people love the union. They don't care if you lose your job or not. They will just look elsewhere to make up the lost money in their pocket.
Nov 16, 2012 1:44PM
why dont all you union haters ask romney to loan you the cash to save your twinkies. He will treat you right. Oh wait he loves firing people and profiting off workers. Get off your computers lick your wounds and get a job,union of course.
Nov 16, 2012 1:44PM
Since the shelf life of the major sweet Twinkie is something like 12 years, it is feasible to perhaps collect a few to share with grand children on those warm afternoons we all reminisce about. We will be able to break a pack out somewhere on down the road when they are bored and say "Yep lil Jimmy, these were part of 'the good 'ol days". "We are not only enjoying this wonderful afternoon together, but we are also consuming part of history.  So enjoy what you can, and try to imagine why people in earlier times found it more important to drive a company that produced such sweet marvels as the Twinkie, into the ground from personal greed and never gave it a second thought when it meant their own means of support went right out the door with the Twinkie."  Things that make you go...'hmm'!
Nov 16, 2012 1:44PM
For all you Anti-Union you feel it's ok for a company that has been run incorrectly, to just lower the pay of it's workers to fix their debt problems?? They should just be happy to have a job right?? Because if you have been at your job for, say, 20 years, and your employer says, "we're going to cut your pay in half", you should just say "sure! that would be fine! I'm just happy to have a job!!" Idiots! And of course, this MUST be Obama's fault.
Nov 16, 2012 1:44PM
Unions are currently hurting our country's ability to make the difficult decisions needed to move forward in an economically stable environment.  
Nov 16, 2012 1:44PM

Unions = Living wages


Non-Unions = Slave wages


Who would you rather work for? I will only work for a Union or I REFUSE to work. SIMPLE AS THAT!


God bless America!

Nov 16, 2012 1:43PM
unemployment figures 7.8% with 600,000 added PART TIME jobs in Sept. 
now its 7.9%  and will be back over 8% now the election is over.
Devil is in the details people.

example whats going on today -- Obama and the cliff,  Obama wants to let Bush taxes expire on people making $200K / $250K  so they pay their fair share.  35% vs 39.6% tax is a 13.5% additional increase he is wanting. 

What the news isn't telling you is that ObamaCare has a 20+ Billion dollar tax  3.8% + .9% = 4.7% increase on people making $200K / $250 that starts Jan of 2013 in 45 days.

Obama's tax increases on people over 200/250K  will come to 9.3%  from 35 to 44.3% which is an additional 26.5%.    

Nov 16, 2012 1:43PM

Workers screaming "shut it down" got what they wanted thinking someone else is going to come in, buy up the assets and put them back to work at their old wages and benifits.  FACT is this is not going to happen.   Those workers lost their jobs, plain and simple. 


No white nights will come riding in to take over the plant, this is not a Disney movie, this is reality and the sooner all workers realize this the better.


We need to get back to making quality products in the USA that people want, the top line will always pull the bottom line.

Nov 16, 2012 1:43PM
I think Unions are a double edge sword; they help keep people from getting paid minimum wage and that's basically the extent of their usefulness. On the other side they are greedy bastards that always seem to go overboard and this is the result. If I was an employee at Hostess I would have took the pay cut and other cuts just so I had a steady pay check. This is where the Union lost these people there jobs.
Nov 16, 2012 1:43PM
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