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.
3428Comments
Nov 16, 2012 12:02PM
avatar

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
avatar
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
avatar
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
avatar
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
avatar

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
avatar
Thank You Obama for killing the Twinkie
Nov 16, 2012 12:01PM
avatar
Sell off everything you own including you stocks and move out of the country we are doomed
Nov 16, 2012 12:01PM
avatar
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
avatar
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
avatar
And you voted in Obama!!!! LOL... Its only the beginning! Over taxing...
Nov 16, 2012 12:00PM
avatar
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
avatar
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.

Nov 16, 2012 12:00PM
avatar
Im just glad to see a bunch of idiot democrate union workers out of work, Still glad you voted democratic? I call it justice. Well get your hand out and get the govt money you voted FOR.
Nov 16, 2012 12:00PM
avatar

WOW how the world is a changing.

 

First off Unions Built the USA. Remember that... Take a good look at where things went wrong, Lets say the last 4 years have been a trying time, 8 years of one of the dumbest people in office and 1 puppet master pulling all the strings.

 

Wow gas 80 Cents a gal for Gas, before The puppet master and the dummy to over $4.00 a gal in most states.

 

The company I used to work for laid off 80 thousand people before he even gave his speech.

Its going to take Law suites and Jail time for wall street to get the msg we are DONE.,

 

This company is worth more dead then alive.  Hey maybe Romney will buy it for pennies on the dollar.

 

Get a grip and take your head out of the sand and help. Ask for tougher jail sentences for money scamming wall street execs. THEY get paid if they win or lose.

Nov 16, 2012 12:00PM
avatar

soo sooo sad to see this happen. so many people loosing thier jobs with a weak economy. not the kinda news anybody needs. :(

 

Nov 16, 2012 12:00PM
avatar
Another fine example of union stupidity.  They would rather close a shop than allow the company to stay open.  Talk about greed!
Nov 16, 2012 12:00PM
avatar
Let's not forget what the sweat shops were like before the unions came along. Or, are we destined to return to those days as a reminder.
Nov 16, 2012 11:59AM
avatar
Lets strike to get more money !!! oops! now theres no job to return to  wtf are we gonna do now???? UNION morons!!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

120
120 rated 1
265
265 rated 2
460
460 rated 3
719
719 rated 4
629
629 rated 5
629
629 rated 6
622
622 rated 7
437
437 rated 8
319
319 rated 9
116
116 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.