Thank your Union goons.
By Chris Isidore and James O’Toole
NEW YORK (CNNMoney) — Hostess Brands — the maker of such iconic baked goods as Twinkies, Devil Dogs and Wonder Bread — announced Friday that it is asking a federal bankruptcy court for permission to close its operations, blaming a strike by bakers protesting a new contract imposed on them.
The closing will result in Hostess’ nearly 18,500 workers losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide, as well as 570 outlet stores. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union represents around 5,000 Hostess employees.
”We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said CEO Gregory Rayburn in a statement.Hostess will move to sell its assets to the highest bidder. That could mean new life for some of its most popular products, which could be scooped up at auction and attached to products from other companies.
A letter that Hostess sent to its network of stores that carry its product said it expects “there will be great interest in our brands.” But it said it could not give a time frame for when the sales would take place and its products would be available again.
But even if those brands are bought and restarted, the Hostess workers will not get their jobs back.
“The industry has overcapacity. We’re overcapacity. Our rivals are overcapacity,” said Rayburn in an interview on CNBC. Asked if the shutdown decision could be reversed if the Bakers’ union agreed to immediately return to work, he responded, “Too late.”
While approval of the bankruptcy court is needed before the company can start selling its assets in liquidation, the company said production at all of its bakeries has ceased effective Friday, and that stores will no longer receive products from Hostess Brands after the final round of deliveries of products that were made Thursday night.
But products that are already in stores can be sold, and the outlet stores will remain open for about a week to sell the products they already have.
Hostess had annual sales of about $2.5 billion. The company said it had been making 500 million Twinkies and 127 million loaves of Wonder Bread annually before Friday’s shutdown.
Its bread brands, including Wonder Bread, Nature’s Pride and Butternut, make the company the No. 2 bread baker in the country, according to Symphony/IRI Group. Bimbo Bakeries, maker of the Arnold and Stroehmann brands, is the No. 1 bread baker.
The company had given a 5 p.m. ET Thursday deadline for the bakers to return to work or face a shutdown of the company. The unions at Hostess could not be reached immediately for comment on the decision.
Hostess filed for bankruptcy in January, its second trip to bankruptcy court since 2004. It previously emerged from restructuring in 2009 after a four-and-a-half year process.
The company is now controlled by a group of investment firms, including hedge funds Silver Point Capital and Monarch Alternative Capital.
In September, one of its major unions, the International Brotherhood of Teamsters, voted narrowly to accept a new contract with reduced wages and benefits. The Bakers’ union rejected the deal, however, prompting Hostess management to secure permission from a bankruptcy court to force a new concession contract on workers.
The Teamsters union, which represents 7,500 Hostess workers, has been sharply critical of the smaller Bakers’ decision to strike, saying it was forcing the company to the cusp of liquidation. The Teamsters said Thursday that the Bakers’ union should hold a secret ballot on the company’s offer, rather than the voice votes that were held in union halls around the country that authorized the decision to strike.
“It is difficult for Teamster members to believe that is what the [Bakers' union] Hostess members ultimately wanted to accomplish when they went out on strike,” said the Teamsters’ statement.
The Bakers’ union has made several statements earlier in the week saying management is to blame for the condition of the company, not the strike.
The new contract cut salaries across the company by 8% in the first year of the five-year agreement. Salaries were then scheduled to bump up 3% in the next three years and 1% in the final year.
Hostess also reduced its pension obligations and its contribution to the employees’ health care plan. In exchange, the company offered concessions, including a 25% equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.
How many of those Union workers soon to be out of work voted for Obama?
So, the union strikers were bakery workers—and now they’re just loafers.
It’s both sad and amusing how people fail to learn from others’ mistakes and make them over and over and over again. This chain of events has happened countless times in various fields and industries in many, many countries. I guess exactly that is why I have strong tendency to lean toward being amused.
Twinkie, Twinkie, you’re no more
Won’t see you in my food store
Industries just fold, it seems
When unions skim off the creme
Twinkie, Twinkie, you’re no more
Won’t see you in my food store
No more Twinkies, no more real Ho-Ho’s, Obama got re-elected… all proof I have died and gone to hell.
Apparently my city will be losing our Sweetheart bread bakery since they were bought out a few years ago by Hostess. That also means we will lose our Sweetheart Outlet stores.
Several hundred jobs just went bye bye in a town with no jobs.
Mars wrote:
Yet so far, no one seems to give a crap except conservatives. It’s sad that innocent people have to suffer, but I must admit that part of me is happy that those who voted for this a-hole are going to feel the pain too. Something most of us learned a long time ago: Be careful what you wish for — you just might get it.
fyi. Employee FAQ sheet.
http://hostessbrands.info/employee-faq/
If Obama can manage to abrogate the shareholders’ rights while intervening, I have no doubt he will do that, in order to “save” the Hostess jobs.
Maybe to appease Michelle he’ll direct the bakeries to make a Chevy Volt-type cupcake, made of whole grains and minimally sweetened, which can then be mandated as a dessert purchase for federally-funded school-lunch programs.
@ buzzsawmonkey:
Even if that happens, what swill will be the product once the Wookie gets a hold of things? Twinkies will be replaced by celery sold in cellophane. Ho Ho’s will be transformed into sugarless balls of slim fast fiber bars. A government run Continental Baking Corporation will be no more successful than the government run General Motors. These people do not understand the simple economics or market forces sufficiently well to run a successful lemonade stand, let alone the single most complex bakery ever conceived of.
@ Flyovercountry:
Of course not. But the union jobs will be saved and the bakeries will have a guaranteed, compelled line of customers via the schools which will be forced to buy the product for “nutritionally-balanced school lunches.” It will be locally-produced and sustainable, as they say.
Wonder Bread will become WookieBread™—the must-have for the new Obama Shit Sandwich that everyone will be required to eat.
@ buzzsawmonkey:
ROTFLMAO!
Flyovercountry wrote:
aka “hate whitey” bread.
Maybe they’ll be bought up by that Mexican confectionary baker “Bimbo”.
Bimbo Ho-Hos
250 of those jobs here in OBama country. seattle