Hostess Going Out Of Business, Cites Nationwide Worker Strike
IRVING, Texas (CBS/AP) — Hostess, the maker of Twinkies and Wonder Bread, is going out of business, closing plants, laying off its 18,500 workers and putting its brands up for sale.
The Irving, Texas, company said a nationwide worker strike crippled its ability to make and deliver its products. Its brands also include Ding Dongs, Ho Ho's and Dolly Madison.
Hostess had warned employees that it would file a motion in U.S. Bankruptcy Court to unwind its business and sell assets if plant operations didn't return to normal levels by Thursday evening. The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.
"Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands," CEO Gregory F. Rayburn said in a letter to employees posted on the company website.
He added: "We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike."
Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting in September a contract offer that cut wages and benefits by eight percent. Hostess had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters.
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"I'm very shocked about the way they're proceeding with this…. We were hoping they wouldn't do this but we're hoping for the best," a union representative told CBS2's Kara Finnstrom.
Salvador Perez, president of Local 37 of the Bakers and Confectioners Union told KNX 1070's Pete Demetriou the key issue for employees beyond pay and benefit cuts is mismanagement.
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"These companies aren't being run by bakers, they're being run by huge CEOs that really don't know what they're doing," Perez said.
Hostess has said that production at about a dozen of the company's 33 plants has been seriously affected by the strike. Three plants were closed earlier this week.
Approximately 400 jobs across Southern California are expected to be lost, including about 100 positions at a Hostess plant in Atwater Village.
The company, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks.
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