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.
And why wouldn't these Union workers rather take a pay cut to continue getting a paycheck???
Because they know they can still get a paycheck from the Dems, courtesy of King Hussein Obama!
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.
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.
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.
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.
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!
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!
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%.
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.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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