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.
UNIONS ARE ONLY GOOD FOR LINING THEIR OWN POCKETS. SO NOW WHAT ARE ALL THOSE PEOPLE GOING TO DO? AMERICANS NEED TO GET THERE HEADS OUT OF THERE BUTTS AND TAKE MORE CONTROL OF THEMSELVES. NO ONE MADE THOSE WORKERS JOIN THE UNION. AND NOW YEARS OF PAYING THERE DUES HAS LOST THEM A INCOME. SURE SOMEONE WILL BLAME THE PRESIDENT .WE DO SEEM TO NEED SOMEONE TO BLAME..MY HEART GOES OUT TO ALL THOSE THAT WILL BE UNEMPLOYED.
Years ago, when my spouse was in a union (running heavy equipment for an earthworks construction company), he was the only one who hadn't dropped out of that union. His boss was just waiting for him to slip up somehow so he could fire him. When my spouse called the office to inquire about one item on his paycheck, only needing clarification, not complaining, he was fired. The union did nothing to help him with grievance. After all those years of paying union dues, all he got was a kick in the pants and a "don't let the door hit you in the rear on the way out" from the union.
Unions are a blight on the land. The time for unions has come and gone. My dad ( a poor farmer on a small farm) used to say the unions would someday strangle the US economy. Well, well, well... looks like he was rather prophetic....
Now we will have to pay for another 18,000 unemployed simply because of thier short sighted greed.
I think if you strike and close a company - then you should not be entitled any unemployment assistance.
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