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 12:02PM
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So the union really helped out in this case. Anyone looking to hire 18,500 bakers???? Idiots.
Nov 16, 2012 12:02PM
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Unions strike again.  You would think they would learn.  All a union does is prevent talented people from being compensated for the value they have potential to offer and give lazy people a check they haven't earned.  
Nov 16, 2012 12:02PM
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18,000 more on the welfare rolls lined up for unemployment, food stamps and FREE OBAMA phones!!!

Bend over America....

Nov 16, 2012 12:02PM
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Obviously the term COMPROMISE does appear in ANY union lexicon. 
Nov 16, 2012 12:02PM
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Twinkies; They can survive a nuclear war but they couldn't survive Obama and his unions.
Nov 16, 2012 12:02PM
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I wonder how much thier CEO and board members make.......I would rather use a brain cell and get the full picture before I start jumping on the union-I-hate-obama band wagon like half of the mental 16 year old commentors on the internet do.  Remeber the "To Big To Fail" crap that happened in the past couple of years?  This is what needs to happen when a big company can't get it together.....
Nov 16, 2012 12:02PM
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This sucks!   Hostess products are the best!   They obviously didn't think about how this would affect the consumer.  
Nov 16, 2012 12:02PM
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Yes I am a baker, yes I belong to a union however it is the united food workers assoc. I don't totally blame it on the bakers it is the wind bags that run the union. They are just as bad as politicians full of 

B S and hot air, only tell you what you want to hear twisted around so you think it is the best thing going.  Well I sure hope the Managers or should I say the Mis-Managers enjoy their holidays with their families. However, I feel sorry the other 18,500 families will be wondering if they can even give their families a holiday at all. 

 

Nov 16, 2012 12:02PM
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Wow what dedication, what fortitude, what honor these strikers and their union must feel. Hey we really told hostess huh! Well I've been unemployed for 6 months and there's no honor in it, they went on strike because they didn't want to help the company that was paying their bills and now they are unemployed. I hope the union made good choices with the union dues because they just picked up almost 1900 employees. Bet they go bankrupt too, I would not be happy with this situation if I was an employee. Hostess call me I'm dying to work and I will walk right through that line.
Nov 16, 2012 12:02PM
Nov 16, 2012 12:01PM
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Welcome to the new United Socialist States of America! America's new motto: "I'm from the government and I'm here to help"
Nov 16, 2012 12:01PM
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Typical, management runs the company into bankruptcy and then expects the employees to bail them out at their expense. Sounds like Wall Street. People keep bashing unions. If it weren't for Unions we'd have no vacation time, no sick time, no health insurance, no overtime- apparently that's what everyone wants. So, why don't you all go into your employers office today and tell them you need a pay cut and do not want any benefits at all from now on?
Nov 16, 2012 12:01PM
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Unions raise wages of unionized workers by roughly 20% and raise compensation, including both wages and benefits, by about 28%.Unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree.

Strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries.

The impact of unions on total nonunion wages is almost as large as the impact on total union wages.

 

Nov 16, 2012 12:01PM
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Thank You Obama for killing the Twinkie
Nov 16, 2012 12:01PM
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Sell off everything you own including you stocks and move out of the country we are doomed
Nov 16, 2012 12:01PM
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This my friend is what they mean that elections have consequences, The unions helped get 
 elected and now their are more lay offs and I am sure their are more on the way, When you vote for Liberals this is what you get, It is hard to feel sorry for someone when they were told this would happen and they would not listen.
Nov 16, 2012 12:01PM
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hostessbrands brought this on themselves,their motto has been you give we take,well now they have taken it all.As an employee of 20 years I gave every time they ask even until it hurt; And what good did it do.It only made upper mangment richer.They recently told me I would only recieve $875.a month instead of the $2200.a month retirement. My retirement was not a gift I earned it.But the theives in upper mangment stole it.Gave themselves raises after asking us to give up money.Those people will not lose their homes,cars,or retirement they will receive large checks for conpensaiton.As for me I forgive these theives. For all envolved put your trust in GOD and not men like these in charge of WONDERBREAD    HOSTESSBRANDS       MAY GOD BLESS
Nov 16, 2012 12:01PM
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And you voted in Obama!!!! LOL... Its only the beginning! Over taxing...
Nov 16, 2012 12:00PM
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No China killed the Twinkie,, soon all of your jobs will be outsourced to China or India, or somewhere that people are willing to do your Jobs For LESS,,  Why you ask,, because there home is a Cardboard box,, near some dump at the edge of town,, and there Health insurance is very simple,,Try and stay Healthy or DIE!!!   Face it people if it were not for Unions,,You would be eating each other or the family Dog this Thanksgiving, instead of a Nice Dinner in a Warm Home with Family and Friends, being comfortable knowing your car is Paid for and Your Taxes are Paid,,and you are on your way to Owning your Own Home!!!
Nov 16, 2012 12:00PM
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From a retired management person - Taking pay and benefit cuts rarely ever  stops plant closings. If a management group cannot keep afloat paying living wages, possibly a competitor ought to be servicing their market.

Workers are never paid wages and benefits that an employer did not agree to pay them. Failure of Hostess is most likely reflective of poor management or products no longer highly demanded by the market.  Too many of our corporate failures come from disproportionate costs high in the organization versus competitors and not disproportionate costs at the labor level.

Unions help protect the middle class.

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