Twinkies Maker Will Close After Strike

[Bolo Boffin]

Source: ABC News

Hostess Brands Inc., the maker of the iconic snack, announced today that it will liquidate the entire company because not enough striking employees returned to work by a Thursday evening deadline set by the company.

"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."

...The strikes began on Nov. 9, when the company imposed a contract that would cut workers' wages by 8 percent. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) said the contract would also cut benefits by 27 to 32 percent.

..."Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years," union president (Frank) Hurt said in a statement earlier this week. "Our members are not just striking for themselves, but for all unionized workers across North America who are covered by collective bargaining agreements."

Read more: http://abcnews.go.com/Business/twinkies-maker-hostess-liquidate-company-strike/story?id=17736898#.UKYvz4d1GuI

---

I think Mr. Rayburn should get Jerk of the Year for this move. And it's been a long year.

ETA: This is not just junk food Twinkies that are affected. Here's a list of Hostess' brands from Wikipedia:


Baker's Inn
Beefsteak
Blue Ribbon
Bread du Jour
Butternut Breads
Colombo
Cotton’s
Di Carlo
Drake's
Dolly Madison
Dutch Hearth
Eddy’s
Good Hearth
Holsom
Home Pride
Hostess
J.J. Nissen
Merita
Millbrook
Mrs. Cubbison’s
Nature's Pride
Parisian
Standish Farms
Sweetheart
Toscana
Wonder Bread

There are good products here among the snack foods. And this are all union jobs.

Get more information about the strike here:

http://bctgm.org/category/hostess-strike/

[vicman]

1. Mr. Rayburn is actually saying

that if we expend anymore of our financial resources now, we won't be to give myself and the other exectutives obscene payouts for rrunning this company into the ground.

[Atman]

2. Bluff

Why would you just walk away from all that? Either business sucks already, or they're lying just to break the unions.

[littlewolf]

3. I do not think they are bluffing

the Teamsters took a look at the books and settled
the bakers decided they could do better, and stuck
and now the company will probably go under
something like 19k jobs - gone.
just a side note, Teamster do not generally settle
for a lot less unless things are really bad.

[Maine-ah]

7. from the article:

Hostess, which is privately owned by two hedge funds, has struggled in recent years with two bankruptcy filings. The company said it "has done everything in its power to pursue a reorganization of its business as a going concern, including spending the better part of 18 months negotiating with its key constituents to obtain a consensual agreement."



Business sucked, and it looks like they were trying to save money by cutting pay and benefits. I wonder if those at the top of the company were willing to take a cut in pay and benefits like they were trying to do to the employees.

[PeaceNikki]

11. no, the executives got huge raises in July

http://online.wsj.com/article/SB10001424052702304072004577323993512506050.html

[PeaceNikki]

10. no it's not. people I know are losing their jobs today.

[Atman]

49. Yeah...I appear to be wrong.

Hostess is going down. Seriously mixed emotions...like a seeing a police car going over a cliff with a pound of weed in the trunk.

[blackspade]

65. Thanks for the LOL!

[GatorLarry]

4. Coordinated GOP Theater

All these GOP businessmen who are simultaneously raising prices in the most public manner possible -- WAY ahead of incurring any actual costs -- the public lay-offs because they could afford to stay in business the day before the election but not the day after (temper tantrums) and now the closing of a company because workers dared to require that company to comply with the law is all just coordinated Republican BS designed to produce outrage in non-thinking citizens.

So if a corporation can't exploit workers it can't/doesn't chose to stay in business?

Don't worry, the void will be filled by other companies and these sleaze balls will be out of the picture soon enough.

[RedstDem]

15. Nail meet hammer

Bulls-eye!

hard for me not to see things that way as well. hostess will do what they want to break the union.
afterwards, everyone needs to remember this & when they come out of bankruptcy, don't buy their crap!!!!

[Lefty Thinker]

22. Hostess isn't coming out of bankruptcy

They are liquidating -- ending their company. Some else (hopefully more friendly to labor) could buy the equipment and maybe even some of the brand names.

[Bolo Boffin]

27. No, the hedge funds will sell everything off to another hedge fund

Probably themselves in some convoluted way. Then they fire up the Twinkie molds again, but with a non-union workforce, and all debt discharged for pennies on the dollar.

[KurtNYC]

42. Bingo!

[Buzz Clik]

5. Carnak: The answer is, "Mitt Romney and Wonder Bread"

Carnak: And the question is, "What are the two whitest things in the world?"

[olddad56]

68. it is time to invest in Twinkies

buy them now and your children can sell them on Ebay in 25 years. They have a shelf life of about a millennium.

[UpInArms]

6. maybe some Good will come of this - I stopped buying

Last edited Sun Nov 18, 2012, 01:10 PM - Edit history (1)

That nasty crap when I learner about partially hydrogenated oil - unsafe at any consumption. That crape is a heart attack wrapped in plastic.

[Roland99]

8. But have you tried one deep fried???

[exboyfil]

9. When they liquidate they will probably sell the popular brand

names to another company. They have been on life support for many years. They offered 25% stake in company to union workers and to have two members sit on the board.

It appears their website is down.

I guess the top management got tired of working for a $1. They received excess pay which alarmed their creditors last year and they negotiated to take no pay this year (at the highest executive level). At the next level they gave their pay back (suckers).

http://online.wsj.com/article/SB10001424052702303772904577333602976713584.html

From April 9th, 2012

Gregory F. Rayburn, a restructuring expert who took the helm at Hostess last month, said in an interview that the top four executives working under him had agreed to cut their annual salaries to $1 until the company emerges from bankruptcy or Dec. 31, whichever comes first. The executives—Gary Wandschneider, John Stewart, David Loeser and Richard Seban—had seen their salaries increase by 75% to 80% last July, at a time when the baking company had already hired restructuring lawyers, according to creditors.

Further down the totem pole at the Twinkie maker, four additional executives agreed to return to the salaries they were receiving before the July increase.

"I just think that it's the right thing to do," Mr. Rayburn said Sunday, noting that word of the salary bumps, disclosed in redacted papers filed by the creditors committee Tuesday, had caused "a high level of internal strife in the organization and certainly external strife."

Even as the ship is going down, the plunderers continue to rip pieces off of the company.

[Javaman]

12. They will file bankruptcy. reorganized and come back as a non-union shop.

mark my words.

hostess is evil.

[Bolo Boffin]

13. If they don't just sell off all the profitable brands and walk away.

Those new employers will be non-union, though.

[former9thward]

62. Your words are marked and are wrong.

They are not filing bankruptcy. They are liquidating. Ending the company. They are not "reorganizing".

[Javaman]

72. Mexico is now floating a bid for hostess.

Mission accomplished.

Bimbo & Twinkies: Mexican Mega Bakery May Save Brands From Hostess Liquidation
http://www.huffingtonpost.com/2012/11/18/bimbo-twinkies-mexican-hostess-liquidation_n_2155070.html

First try and destroy the unions. When that fails, declare bankruptcy then sell it to the third world country you originally wanted to relocate to, because of cheap non-union labor.

[former9thward]

73. You are mixing up things.

Owners who want to maintain a company file bankruptcy and they try re-organization. If it works they remain the owners and control. The debts largely vanish such as the GM bankruptcy. The workers remain with their working conditions usually changed.

With liquidation the owners are no more. They or the courts sell off bits of the company to this investor or that investor, pay whatever debts they can , and move on. That is what Hostess is doing. Mexico or some other investor might buy a piece of the company and someone else another piece. The workers will vanish.

[blueclown]

14. The Teamsters union accepted concessions.

But this bakers union didn't. And now the company will go out of business. And everyone will lose their jobs.

Why not accept the cuts rather than let the entire company liquidate over your selfishness?

This is a failure of negotiation, and part of the blame resides with the bakers union.

[Bolo Boffin]

16. Just barely, and the bakers' union got an outside evaluation of the reorganization plan.

And they saw that the company was still doomed. This was just squeezing more out of labor. The scam didn't work, so now Rayburn and his jerk squad are cracking Hostess open.

Thanks for playing, though, blueclown.

From the bakers' union's original press release about the strike action:

http://bctgm.org/PDFs/NationalStrikeHostessBrands_11_9_12.pdf (pdf)

Striking members know that the Wall Street investors currently in control of the company have no intention of building a world class wholesale bread and cake company. They will simply take the money from the workers’ severe concessions and the sale of assets, pay themselves and then liquidate the company.

The company’s business plan, when reviewed by a highly-respected financial analyst retained by the company, was determined to have little or no chance of succeeding in saving Hostess.

The current CEO, Greg Rayburn, was originally brought on as a consultant because of his expertise in corporate liquidations. He has absolutely no experience running a baking company and the Wall Street investors that own the company have absolutely no interest of rebuilding the baking business.

[Kablooie]

60. But if they had agreed to the concessions the owners would get the blame instead of the union.

As it is now the union will get all the blame for killing the company.
Take a look at comments around the web.
Even other union workers are furious for the bakers to kill everyone else's jobs.

I think the Baker's union handled this badly.
They should have conceded like the Teamsters, worked for a short time more and then let the greedy bankers pull the company down.

[RedstDem]

17. your username is rather fitting

I think the company will be better off under new management.....
and stick your anti union crap up your ass....clown.

[blueclown]

20. I'm not anti-union at all.

But in a situation like this, where there are virtually no other options available and the other bigger union accepted cuts, it is beyond selfish for this union not to do so and cost everyone else in the company their jobs.

The union had no leverage. And while it's a shame that the union was in a position where they had to accept benefit and wage cuts to survive, it was necessary.

[RedstDem]

31. are you confusing bakers with bankers?

I'm sure bakers aren't pulling down 6 figures.
Think about their current wage and bennies. you think that pool is deep enough to handle huge givebacks?
Don't you understand what the corporation was trying to do?
they know they're going down, usually from mismanagement, so in order to line they're pockets before the crash, they get everyone to work for less so they get the dough, instead of the overpaid union "wall street BAKERS".

[smccarter]

39. We're all entitled to our opinion

Seems to me that the evidence suggests that the company was being dismantled. That appears to be the real reason that it's going out of business.

Take a look at how a leveraged buy-out works. Some companies make a go of it, but sadly, many times the LBO is just a mechanism for some to bleed a company dry for the profit of a few.

Seems to me that the Union had only one option, that was to strike. They were trying to save their company, but there really doesn't appear that there was any hope.

Toward the end of the process, after all of the leveraging of assets, management fees, executive pay increases and bonuses... you know, the breaking of the company - sucking every dollar possible out of the company and funneling all of it upward and away from the folks that actually do the work - the Union workers.... The LBO process ends by filing bankruptcy and selling off all of the assets.

It's been done to many companies. Sounds to me like there was no hope for the workers. This was going to happen with or without a strike. The strike just gave the company a tremendous PR opportunity.

[crim son]

47. You would be right IMO if

the company had any intention of standing by their employees over the long haul. This doesn't appear to be the case.

[lonestarnot]

29. Well said!

[Hugabear]

63. Welcome to DU!

Sadly, you'll find this type of attitude really isn't that uncommon around here.

[durablend]

18. Hey, by your logic

Why don't they work for a dollar an hour? Because clearly ANY job is better than no job, right?

Expect more of this shit as payback for "installing" the "wrong" president. Guarantee that.

[blueclown]

19. I never said that.

The Teamsters union accepted their benefit and wage cuts because they knew it was for the benefit of the business. The bakers union refused to do so.

[smccarter]

41. Two very different situations

Teamsters drive trucks (primarily). There will always be freight to haul. The Teamsters took their lumps in the 80's under Regan. Sounds to me like they probably understood exactly what was going in this situation and decided to leave well enough alone.

The folks that worked directly for Hostess had no other choice. That was their job and they were fighting to keep it.

This country is screwed up. Capitalism is the ONLY economic system that makes any sense, but this kind of thing has to stop. We're dismantling our country piece by piece.

There is and always will be a market for the goods that Hostess produces (produced). If not the same blood suckers selling it off, someone else will pick up the pieces and the workers will go back to work. For lower pay, fewer benefits, and .. the biggie... without the protection of the union.

Very sad.

[DesMoinesDem]

40. Strawman argument

They weren't being offered a dollar an hour. They were being offered 8% less than what they were currently making. Considering the company was going though bankruptcy that wasn't a bad offer. I'm sure most employees in the company would rather have an 8% pay cut than a 100% pay cut. Too late now.

[Omaha Steve]

48. They had already taken concesions to save the company before and lost their pensions

“Our members rejected the company’s outrageous proposal by 92 percent in September. Rejection came from every corner of the country. They were being asked to vote on a proposal with massive concessions, knowing that their plant could very well be one of those to be closed.

“Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars.”

Over the past eight years since the first Hostess bankruptcy, BCTGM members have watched as money from previous concessions that was supposed to go towards capital investment, product development, plant improvement and new equipment, was squandered in executive bonuses, payouts to Wall Street investors and payments to high-priced attorneys and consultants.


Over the past 15 months, Hostess workers have seen the company unilaterally end contractually-obligated payments to their pension plan. Despite saving more than $160 million with this action, the company continues to fall deeper and deeper into debt. A mountain of debt and gross mismanagement by a string of failed CEO’s with no true experience in the wholesale baking business have left this company unable to compete or survive.

The BCTGM represents more than 80,000 workers in the baking, food processing, grain milling and tobacco industries in the United States and Canada.

Follow the BCTGM:

Web: www.bctgm.org

Facebook: http://facebook.com/BCTGM

Twitter: http://twitter.com/BCTGM

[SomeGuyInEagan]

71. And the company broke the contract by not paying into the pension plan ...

... the pension is underfunded by $1 billion due by the company (employees kept up to date on contributions).

The pension plan will be first in line of creditors, but Hostess has been bled dry.

This all started decades ago, when ITT sold them to Purina. ITT had problems, but compared to what followed with Purina's dipshittery, they were a good corporate owner. Likewise, Purina's misinformed MBAs looked like management gods compared to what was to come.

What happened to Hostess is Reagan's America.

[lonestarnot]

28. Bwwwa ah hahahah ha ha ha.

[blackspade]

66. Fail.

This is exactly the kind of thinking that continues to depress wages and erode the national standard of living.
This is corporate terrorism.

[KansDem]

21. Is Hostess being "harvested?"

Maybe Bain will by Hostess and proceed with its usual routine:

Seize pensions
Sell-off assets
Send jobs to China
Give Bain CEOs huge bonuses...

[Strelnikov_]

32. I have no doubt the numbers were run

and they found selling off the brand names proved to be too lucrative.

Twinkies and Ding Dongs will soon be made in China.

Shipping time should not be a problem.

[KansDem]

33. "Twinkies and Ding Dongs will soon be made in China."

And considering what happened to our pets, we need to be vigilant.

Numbers of affected animals

By the end of March, veterinary organizations reported more than 100 pet deaths amongst nearly 500 cases of kidney failure,[1] and experts expected the death toll to number in the thousands, with one online database already self-reporting as many as 3,600 deaths as of 11 April.[2][3][7] The U.S. Food and Drug Administration has received reports of approximately 8500 animal deaths, including at least 1950 cats and 2200 dogs who have died after eating contaminated food, but have only confirmed 14 cases, in part because there is no centralized government database of animal sickness or death in the United States as there are with humans (such as the Centers for Disease Control).[4][5][40] For this reason, many sources speculate the full extent of the pet deaths and sicknesses caused by the contamination may never be known.[6] In October, the results of the "AAVLD survey of pet food-induced nephrotoxicity in North America, April to June 2007," were reported, indicating 347 of 486 cases voluntarily reported by 6 June 2007 had met the diagnostic criteria, with most of the cases reported from the United States, but also including cases of 20 dogs and 7 cats reported from Canada.The cases involved 235 cats and 112 dogs, with 61 percent of the cats and 74 percent of the dogs having died. Dr. Barbara Powers, AAVLD president and director of the Colorado State University Veterinary Diagnostic Laboratory, said the survey probably found only a percentage of the actual cases. She also said the mortality rate is not likely to be representative of all cases, because survey respondents had more information to submit for animals that had died. A number of dogs were also reported affected in Australia, with four in Melbourne and a few more in Sydney. No legal action or repercussions have as yet occurred regarding these cases.[41][42][43][44] Dr. Powers elaborated further: “But there absolutely could be more deaths from the tainted pet food.... This survey didn’t catch all the deaths that happened. In order to be counted in our survey, you had to meet certain criteria.... If someone had a pet that died and they buried it in their back[yard], they weren’t eligible for our survey. We had to have confirmed exposure to the recalled pet food, proof of toxicity, and clinical signs of renal failure. So this is only a percentage of the deaths that are out there. There’s no way to guess how many pets were affected.” [45]

In a potentially related incident in China, on 22 February 2006, Xinhua reported at least 38 cats dying shortly after being fed with Xiduoyu, a brand of a "Tianjin-based cat food manufacturer". A veterinarian referred to in the story said "test results from Beijing Animal Hospital showed the dead cats had suffered from kidney exhaustion and that the sick ones have kidney damage." Suspicions at that time focused on lead poisoning though Gu Junhua, a chief engineer from China's "national feedstuff quality check centre under the Ministry of Agriculture", was reported as saying: "But at present, he said it was difficult to draw any conclusions because the country has not drafted any food safety criteria for pets in terms of the quality and quantity of each element of the ingredients." No mention of melamine was made.[46]

http://en.wikipedia.org/wiki/2007_pet_food_recalls#Numbers_of_affected_animals

[Strelnikov_]

45. Yea. From the land that produces 'stainless' steel bolts for my bikes

. . . that corrode faster than normal steel.

That's who I want making my industrofood.

[Kablooie]

58. What? Don't you like the taste of melamine in your food?

[The Second Stone]

23. How about they close down and their competitor's buy

their assets?

[MyTwoSense]

24. One could say...

that Hostess Shrugged.

[jpak]

25. One could say Ayn Rand was an asshole and a bad writer of fiction

yup

[SomeGuyInEagan]

55. Who also died alone and unloved.

Sad, really.

[Hassin Bin Sober]

74. And on Medicare.

[hexola]

30. A lot of those brands were probably individual, regional, businesses at one time?

Is it correct to say that?

Wouldn't "Drakes" for example, been their own business? - who was at some point absorbed by Hostess?

I dont really have a point here - just trying to understand.

[surrealAmerican]

37. Some relevant history:

from wikipedia:

The company's founder, Newman E. Drake, baked his first pound cake in Brooklyn, New York, in 1888.
...
By the late 1960s, the resulting Drake Bakeries was owned by the huge Borden food company, along with Cracker Jack and Wise Potato Chips. In 1987, Borden sold the company to Ralston Purina, which owned ITT Continental Baking Company, makers of rival Hostess Cakes and Wonder Bread
...
Drake's was acquired by the Canadian company Culinar in 1991.
...
In 1998 Drake's was sold by Culinar, Inc., to Interstate Bakeries Corporation, which had previously acquired ITT/CBC and its Hostess and Wonder brands. The resultant market concentration was not overturned because other companies such as Little Debbie avoided it, having sufficiently expanded market share since the previous monopoly arbitration. In the New York City area Drake's and Hostess operations were combined, sharing the same trucks, delivery routes, and store racks.

The point you may be heading to is that, if we would enforce our anti-trust laws in this country, these sorts of problems could be largely avoided.

[smccarter]

43. Bingo

[sybylla]

44. Yep. I would agree that these brands were at one time individual companies

consumed by a larger corporation. Just like Kraft, ConAgra and many others buy up what once were regional manufacturers.

It explains why there were two unions involved. Teamsters, besides covering truckers, also cover some manufacturing industries. The Land O Lakes dairy plants in my area are almost all unionized by Teamsters, for example.

Hostess had to deal with whatever union had unionized each manufacturing/baking plant before it was acquired. From the sounds of it, the Teamsters made a different decision than the Bakers. Knowing a couple of teamsters myself, I'm sure it had a lot more to do with the factors on the ground facing their union members than the bullshit the Wallstreeters were throwing at them.

[Ash_F]

34. I guess twinkies won't survive the apocalypse after all.

[hexola]

35. Gosh - it would be awful if we had to start patronizing our local bakeries...

..for sweets.

I live in south central PA - and we still have plenty of ma-and-pa bakeries and candy makers.

Doubt they are crying their eyes out over the Twinkie...

[onecent]

36. But...but...but...I was raised on Wonder Bread. I can't do without it. lol n/t

[MrYikes]

46. a point of clarity, we used to call wonder bread a cake because it is made from a batter,

whereas bread is made from dough.

I worked at hostess in the 60's, made almost 15k a year (more than engineers) when my boss started with them he made more than doctors, now the route drivers make stock clerk level wages. He said I was stupid the day I drove up in my new 64 tbird, sadly he was right. I was on the teamsters negotiation committee the year they went from 10% down to 8% commission(base pay raised from $32 to something, can't remember), the teamster rep kept saying how this was good for everyone, I kept arguing. At that time we wholesaled a twinkie for 9 cents and retailed for 12 cents and the product had a 72 hour shelf life.

[FarCenter]

38. BCTGM should have held a secret ballot vote to strike.

[JDPriestly]

50. Don't worry. Other companies will step in to fill the demand for

bread and other baked products. The Hostess brand was getting stale anyway. The workers should try to buy the factories and equipment and start making healthier, more substantial baked products.

[Kablooie]

59. I wish someone would buy it that's interested in producing products, not simply wealth.

But that's a long shot.
The almighty dollar is what owners covet.
Not the pride of producing something that people desire.

[maddogesq]

51. Given the trend towards relaxation of marijuana laws...

this is a really bad business decision on their part.

[mahatmakanejeeves]

52. Zippy the Pinhead, May 22, 2007

I recalled that Ding Dongs were Zippy's favorite food. Google images came up with this frighteningly prescient comic:

[PatrynXX]

53. that'll suck in waterloo, ia

some have been after that building for decades because it's so old.


http://www.kwwl.com/story/20100958/hostess-if-workers-do-not-end-strike-thursday-company-will-close

[no_hypocrisy]

54. What does that practically mean?

Will Hostess be put up for sale whole to another private equity firm or another corporation in another country?

Or will the bakeries be disassembled and the equipment, etc. be sold to anyone who offers the best price at auction? And the products no longer be produced and marketed and sold?

[PatrynXX]

57. well according to

kwwl.com that building will likely be shut next week. the one in waterloo ia.

your actually asking 2 questions here. both will happen.

probably in another country.

[Kablooie]

56. When investment firms own companies this is what happens.

It's sad that most popular companies are not owned by people who are interested in making the products.
The owners now know nothing about producing or distributing products.
They only know how to increase their own wealth and that's all they are interested in.

The popular brands won't disappear.
Some other investment firm will buy them up.
If Bonomo's Turkish Taffy can revive, and it did, so will Hostess products.

[HuckleB]

61. Still lots of crap in all those products, many of them very overpriced.

Yes, this action was likely simply union busting at it's worst. Still... most areas have far healthier products available from local purveyors.

[blackspade]

64. Corporate terrorism

Call it what it is.

[shanti]

67. Sacramento too has a plant

and they are also closing....that's about 70 jobs, i believe.

[El Supremo]

69. I'll bet you that Bimbo takes their brands.

Grupo Bimbo is the largest bakery in the world. They already took over Sara Lee's baked goods, Mr's Baird's Bread in Texas and even Wonder Bread in Mexico.

[Beacool]

70. I'm not happy about this.

Another American company down the tubes. Why did the unions choose to strike when Hostess was trying to restructure? Now they all lost their jobs.

I'm heartbroken about Wonder bread. I love their Wonder Smart. Lost of fiber, not bad tasting and only 50 calories per slice.