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 10:38AM
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man.  and tallahassee thought it was tough to find a twinkie *before*...
Nov 16, 2012 10:38AM
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Of course all these jobs that will be eliminated will not be reflected in any of the the jobs reports

Nov 16, 2012 10:38AM
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I'm a union daughter. Most of my family, including myself, are or have been in a union for most of our employed lives.  I still firmly believe some unions are needed and are a great benefit to their workers and those they serve (for instance, teachers and educators).  However there are SO MANY nowadays that are riduculously greedy and unnecessary, it makes me cringe!  Seriously, you would rather put 18,500 people out of work by closing down this business than working to some type of agreement?  How does that benefit anyone?  So many crooks and idiots runnin' amuck these days....

Nov 16, 2012 10:38AM
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Day-um, union worker.  Ever heard the old saying "don't $hit in your own mess kit"?  Mensa you are not.

 

Guess those union jobs are plentiful, since you so casually squander them.

 

Maybe you can now just get on the entitlement train.

Nov 16, 2012 10:38AM
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sure says a lot for the Unions and the sheep that they fleece weekly with dues. Obama ought to be especially proud of this one. Heck if the unions and our beloved President put every business out of work then everyone left with a job will be working for the government. See the master plan here????
Nov 16, 2012 10:38AM
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Folks online are just amazing.  They have absolutely no idea of the details behind this but just start bashing unions.  Do not be ignorant... Please find out what you are talking about before typing.  If you notice (or can read) hostess has been flurting with Bankruptcy for years.  The workers have taken numerous cuts to pay and benefits and now they want to cut pay and benefits again.  At what point do you say that is enough?  Of course all you union bashing folks will just let them pay you $1 an hour and just happily keep working... Good for you.

Nov 16, 2012 10:38AM
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Businesses go out of business when people no longer want the product. There are plenty of companies that pay VERY well because they sell a lot of product..This is market driven result, but the company is  trying to blame the workers. If Sales had been  on the rise, because people WANTED the product, this would not have happened. Nothing more than that
Nov 16, 2012 10:38AM
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This is probably just the tip of the iceberg for the U.S. I just pray that others might learn from the mistakes of others before it is too late.
Nov 16, 2012 10:38AM
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I read somewhere that the CEO and some other execs voted themselves a huge pay increase just before the union went on strike.  I am normally as anti-union as anyone, but that is really not fair.  This company used to have it's headquarters in Kansas City (where I live) and they have a history of mismanagement or it may have been that the job they had trying to pull a bunch of local bakeries together to form one cohesive unit may have been overwhelming.  There is definitely some blame to go around on both sides.  Someone will buy the brands and technology.  Probably just a blip in the supply.
Nov 16, 2012 10:38AM
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Thats great ! Strike your way straight to the unemployment line. Another 18,500 people to take care of.

 

Nov 16, 2012 10:38AM
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When the zomibes come I won't be able to get a gd twinkie? Might as well end it now.
Nov 16, 2012 10:38AM
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You can keep your jobs if we come up with wage compromise. OH, you want no compromise and no job ! Well then, where will you get another job making TWINKIES ?  And you will be causing many job layoffs in the chemical industry that made our non -food ingredients !  Guess they didn't read that book  "HOW TO GET RID OF YOUR JOB FOR DUMMIES " !
Nov 16, 2012 10:38AM
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And just what in hell does this have to do with president Obama? It is pathetic how pubes want EVERYTHING  to be his fault. You people are ridiculously stupid! Well guess what, stupid people, he won, he's the president and you just can't handle the truth. Now please, continue on with that futile, irrelevant attempt at secession because it only make you look more pathetic, if that is even possible!
Nov 16, 2012 10:37AM
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This is very sad. I feel for the ppl who will loose their job/ carrier. You reap what you sew! Be careful of what you ask for, because you just might get it, and the end result may not be what you thought it would be. They are in my prayers!!
Nov 16, 2012 10:37AM
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Totally agree, union's at one time were there to help the employee to make sure good working conditions and good pay. Now they have turned into nothing but criminals. As long as they (the union) gets paid they are happy, they seem to forget the people that they represent want to earn an income and without forcing the company’s doors closed. But with today’s unions taking such high cuts of pay for themselves this is costing the jobs that they are supposed to help save. I am all for equal pay and good benefits and the good treatment of the workers, however it seems that the common problem in today is GREED. We all know of economical and financial problems in the country there is no question about that; however as a united group we can turn this around as long as we understand we all have to make some sacrifices as things will get better. Trust me I have made several sacrifices myself too but it seems that unions can certainly understand this; they just need to apply it. I personally would rather have a pay cut then lose my job completely or shutdown an entire company and cause a greater spiral effect for this country.

Nov 16, 2012 10:37AM
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Good! who needs the stupid crap anyway. Eat healthy food.
Nov 16, 2012 10:37AM
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They can all be Chicago school teachers.
Nov 16, 2012 10:37AM
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You go Union!!!!. Union mentality all or nothing you got nothing. This should have happened before the election so the unemployment rate would have gone higher. I feel bad for the route drivers that bought their routes and became a small business now they have to go bankrupt as well.
Nov 16, 2012 10:36AM
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I wonder what kind of salary and bonuses Mr, Rayburn pocketed the last few years? Maybe that worthless prick should have cut his own pay for the good of the company. Scum bag...

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