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.
The demise of this company is the fault of the union workers?! Give me a break. Everytime the incompetence of the managers results in financial trouble, they turn around and look for concessions from labor. I haven't seen any reporting on management compensation, i.e. hefty bonuses, golden parachutes, etc. Yeah, go ahead and blame the owrkers, the guys who have no control over the financial side of the business; they just bake the bread and snacks. That makes perfect sense in an upside down world. I can't believe you people keep buying into the management story.
I'm going to put some twinkies in my glove box. When I get pulled over for speeding I'll reach in the glove box to get my registration out and oops, where did that Twinkie come from? Would you like this to have this Twinkie officer?
I'll never get another speeding ticket.
There will be Twinkies in Americans' bellies in coming years...and that's a pity, given the rising rates of diabetes.
Hostess isn't going out of business. They are playing to angry, old, white guys who watch Fox while listening to Rush, the guys who believe that unions are bad and rich people are good. Meanwhile, CEOs get an ever bigger slice of the pie while workers in this anti-union environment get an ever smaller cut. The rich get richer. The poor grow poorer. The only thing that's changed is angry, old, white guys who aren't rich serve as their Uncle Toms.
The failure of Hostess was due to mismanagement & disorganization, coupled with the unions. With their current structure, there was no way they were going to be able to sustain operations without a complete reorg.
You can be sure none of them had to take a pay cut or lose any benefits, but the workers were supposed to take cuts and shoulder all the blame for the SCREW UPS and mismanagement by the IDIOTS at the top who don't have a clue on how to run a company
18,000 more on the welfare rolls lined up for unemployment, food stamps and FREE OBAMA phones!!!
Bend over America....
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.
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