Skip to comments.Hostess Brands to Wind Down Company After BCTGM Union Strike Cripples Operations
Posted on 11/16/2012 4:35:56 AM PST by Vince Ferrer
RVING, TEXAS, NOV. 16, 2012 /PRNewswire/ -- Hostess Brands Inc. today announced that it is winding down operations and has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including its iconic brands and facilities. Bakery operations have been suspended at all plants. Delivery of products will continue and Hostess Brands retail stores will remain open for several days in order to sell already-baked products.
The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the Company's largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the Company's ability to produce and deliver products at multiple facilities.
On Nov. 12, Hostess Brands permanently closed three plants as a result of the work stoppage. On Nov. 14, the Company announced it would be forced to liquidate if sufficient employees did not return to work to restore normal operations by 5 p.m., EST p.m., Nov. 15. The Company determined on the night of Nov. 15 that an insufficient number of employees had returned to work to enable the restoration of normal operations.
The BCTGM in September rejected a last, best and final offer from Hostess Brands designed to lower costs so that the Company could attract new financing and emerge from Chapter 11. Hostess Brands then received Court authority on Oct. 3 to unilaterally impose changes to the BCTGM's collective bargaining agreements.
Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands' 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands' debt.
"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said Gregory F. Rayburn, chief executive officer. "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."
In addition to dozens of baking and distribution facilities around the country, Hostess Brands will sell its popular brands, including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Ho's®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Nature's Pride ®, Merita®, Home Pride®, Butternut®, and Beefsteak®, among others.
The wind down means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.
The Company said its debtor-in-possession lenders have agreed to allow the Company to continue to have access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind down process, subject to U.S. Bankruptcy Court approval.
The Company's motion asks the Court for authority to continue to pay employees whose services are required during the wind-down period.
For employees whose jobs will be eliminated, additional information can be found at www.hostessbrands.info. The website also contains information for customers and vendors. Most employees who lose their jobs should be eligible for government-provided unemployment benefits.
The end of an era. Sadly, we will have to look for a replacement in our lives.
Another case of unions hanging themselves.
Another slice of America gone. Pretty soon, what’s left won’t be worth saving.
I’m stocking up now...imagine the street/barter value of Hostess Twinkies, Snowballs and cupcakes when TSHTF.
Reap the whirlwind, union workers.
I hope none of these union goons ever finds another job!
they were able to strike and shut the place down because being out of work paid more than working.
No more Twinkees or Snowballs...Michelle is very happy.
I had a brother-in-law who lost his job this way years ago. They stayed on strike for a year and a half until finally the company closed up and moved down south. 850 guys lost really great paying jobs cause they were a bunch of thugs and smart-a&&es!
Unions get greedy and...POOF... 18,000 jobs are gone.
Well, union thugs.. guess you showed them, huh?
be intersting to hear the union side of the story. how did they end up reasoning that the union was better off closing the company than taking the offer?
note is said how the union was better off. not the workers. my experience with unions they could care less about the people, its about the union.
The union was not willing to give up 8% salary for 3 years (with built in raises thereafter) and accept a 25% ownership stake in the company
now they get 100% of nothing
except free obamacare! whee!
This is a big deal in our town. Hostess started in Kansas City and still has a big bakery, on the Kansas side. Kansas is a right to work state. Hopefully someone will buy it and re-open it as a non-union shop. They interviewed this young man yesterday who was terrified of losing his job just before the holidays. I’m betting he voted O.
Richard Trumka won’t miss a paycheck
What is the shelf life of a twinkie?
About 10,000 years?
They probably know someone is just going to get a bargain on buying the facilities and the brand and they are going to move back into their new old jobs with another contract.
I’m going to pay close attention to who is making the new Hostess products when they come back out again. If its union run, I won’t ever buy from them again.
Can somebody please explain to me why unions can’t just be FIRED and replaced by other workers?
I mean, why do we have to have unions at all?
Why are schools unionized, or rather why must they continue to be?
Why couldn’t Hostess just say to these bakers: show up by Monday or your job will go to another worker?
I really don’t understand this.
Drake’s coffee cake was the best of all coffee cakes and I will be very sad not to eat it anymore.
I believe a large bakery, or several such large bakeries operating currently within a few hundred feet over our Southernmost border are smiling today as they see themselves as the new owners of certain Hostess trademarks, and copyrights, and begin shipping into the U.S..
A major bakery left California with good reason (CARB Regulations) a few years ago providing the Mexican bakery Bimbo the opportunity to expand their operation, and fill the void from just over the border in Mexico. Seems to me the same will happen to fill the void when Hostess assumes the dead Cockroach position.
(Hmmmm bad analogy, but...)
There will be more....just wait.
Key phrase from the write up: “Most employees who lose their jobs should be eligible for government-provided unemployment benefits.” So the government is complicit in this shut down.
I met a jerk yesterday who proudly told me he sued companies (workmans comp) by pretending injury, for a living, and ticked off the many 50K+ settlements he had gotten.
Wow!! THAT were Hostess` offer and the union turned it down?? In THIS economy??
If average Americans would look at anything besides the interior of their own asses, they`d be stunned.
The brands and trademarks will stay the same. I wouldn’t be surprised if you see Hostess off shelves for 3-6 months though.
This brand is too strong to just disappear.
I love snoballs. I just had one last weekend or so. Oh, and their crumb donuts. Sad day for America.
Columbus: I love Sno-Balls.
Tallahassee: I hate coconut. Not the taste, consistency.
Columbus: [eats a Sno-Ball] Fresh.
Tallahassee: [grimly] Oh, this Twinkie thing. It ain't over yet.
Bet the union idiots *still* think Hostess is bluffing and that the ‘fat cats’ will eventually ‘cave’ to the union demands.
They can go join the Studebaker workers in Indiana who are still waiting for Studebaker to knuckle under and reopen the plant.
It ain’t a ‘shelf life’. It’s a ‘half life’, like uranium.
Don't forget a free Obama Phone....so they can call in and have their unemployment checks sent to wherever they are on vacation....for 249 weeks...
Greed and stupidity have destroyed many a company.
A long time ago in large factories in some parts of the country, the management took unfair advantage of the workers...i.e. insisting on long hours for little pay in dangerous environments. Workers unions arose because of this, but as with any organization of human beings, corruption infiltrated the union leaders and then politicians figured out they could curry favor from unions and get re-elected etc... etc... and it all went downhill from there.
It is unfortunately Federally illegal to deny employment based on prior union membership. It is not, however, illegal to deny employment based on what political party they are a member of or how they voted in the last election. (It is illegal to make their continued employment after they are hired conditional on how they vote, though.)
They own it.
You have to look hard to find out any reporting on what “draconian” cuts the union claims the company was demanding
Here are a few clues to what the unions turned down. Mind these came from a company that was already in Banrkrupcty
Here is the 8% cut- only for one year. Then raises thereafter
Here is restructuring to put new hires under a 401K plan, which what nonunion and management get - and to reenter Teamster pension plans on a case-by-case basis
Also some changes to wasteful featherbedding work rules
Son gets off work in 20 mins or so, telling him to do the same thing. I really like having a snoball or mini donuts from time to time. And honestly, with the way the public is behaving anymore toward things that make us “fat,” I am not sure a company will fill that void. Would it be worth the investment in the current political/social environment.
“Another case of unions hanging themselves.”
The union here was idiotic, but there’s more to this story than the union’s stupidity. Hostess was ALREADY in bankruptcy, largely on account of $700 million of debt it had accumulated in recent years.
This looks like one of those ‘perfect storm’ cases, with mismanagement and union stubbornness leading to the collapse of an iconic American brand.
Because the union has a contract with the company. Because the union is forcing the company into bankruptcy, the union employees are basically firing themselves.
By getting rid of the union contracts, the value of the company will increase dramatically.
For the most part, management employees will be retained by the "new" company and only the best "former employees" will be offered jobs with the "new" company.
Once the company is sold, which could happen by the end of the month, production will be up and running by the end of the year.
-——I hope none of these union goons ever finds another job!
Having Hostess on a resume should mean automatic rejection for an hourly worker .
There isn’t going to be a “new” company.
Management probably have several deals in hand to sell the brands and recipes to Frito-Lay or some other such company who will use other non-union bakeries for production and their own drivers for distribution.
Hostess bakeries and drivers are now out-of-business.
Hey, we're just offering a list. What employers do with it is their business. They might find a more qualified employee.
It's my understanding from a thread yesterday that these terms were ordered (or agreed upon) by a bankruptcy court, so it's not like the company arbitrarily gave the union an ultimatum of some kind.
Unions = Organized Crime but tries to appear as an element that is for the good of the workers. They exist to collect union dues and act as liasons between the crime bosses and government for a cut of course.
Another boneheaded, stupid-assed move by a union. 18,000 jobs lost.
Congratulations for looking out for the working man. I bet the union heads still have their jobs, though.
What abject morons.
They should all be branded with a scarlet U, which will identify them as a pariah and never be employable again.