Hostess moves to liquidate after crippling strike

About 18,500 workers laid off

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A Twinkies sign is shown at the Hostess plant in Ogden, Utah. Hostess, the maker of Twinkies, Ding Dongs and Wonder Bread, announced Friday 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.   FILE/ASSOCIATED PRESS
FILE/ASSOCIATED PRESS
A Twinkies sign is shown at the Hostess plant in Ogden, Utah. Hostess, the maker of Twinkies, Ding Dongs and Wonder Bread, announced Friday 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.

NEW YORK — Twinkies may not last forever after all.

Hostess Brands Inc., the maker of the spongy snack with a mysterious cream filling, said Friday it would shutter after years of struggling with management turmoil, rising labor costs and the ever-changing tastes of Americans even as its pantry of sugary cakes seemed suspended in time.

Some of Hostess’ beloved brands such as Ding Dongs and Ho Hos likely will be snapped up by buyers and find a second life, but for now the company says its snack cakes should be on shelves for another week or so.

Hostess, whose roster of brands dates as far back as 1888, hadn’t invested heavily in marketing or innovation in recent years as it struggled with debt and management changes.

As larger competitors inundated supermarket shelves with an array of new snacks and variations on popular brands, Hostess cakes seemed caught in a bygone time. The company took small stabs at keeping up with Americans’ movement toward healthier foods, such as the introduction of its 100-calorie packs of cupcakes.

CEO Gregory Rayburn, who was hired as a restructuring expert, said Friday that sales volume was flat to slightly down in recent years. He said the company booked about $2.5 billion in revenue a year, with Twinkies alone generating $68 million so far this year.

Hostess’ problems ran far deeper than changing tastes, however. In January, the company filed for Chapter 11 bankruptcy protection for the second time in less than a decade.

Hostess, based in Irving, Texas, said it was saddled with costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs for workers; the new contract offer would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.

Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling.

The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended.

Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

In a statement, the bakery union said Hostess failed because the six management teams over the past eight years weren’t able to make it profitable — not because workers didn’t make concessions.

“Despite a commitment from the company after the first bankruptcy that the resources derived from the workers’ concessions would be plowed back into the company, this never materialized,” the union said.

Ken Hall, general secretary-treasurer for the Teamsters, said his union members decided to make concessions after hiring consultants who found the company’s financials were in a dire situation. But he said that he believed the company could’ve survived.

“Frankly it’s tragic, particularly at this this time of year with the holidays around the corner,” Hall said, noting that his 6,700 members at Hostess were now out of a job.

Kenneth McGregor, a shipper for Hostess in East Windsor, Conn., arrived at the plant Friday morning and said he was told he was laid off immediately.

In a statement on the company website, CEO Rayburn said there would be “severe limits” on the assistance the company could offer workers because of the bankruptcy. The liquidation hearing will go before a bankruptcy judge Monday afternoon; Rayburn said he’s confident the judge will approve the motion.

“The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products,” he said. “There’s no other alternative.”

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Sweet son
10736
Points
Sweet son 11/16/12 - 12:27 pm
12
4
Union Busting at it's Best!

I feel sorry for the non union folks who will loose their jobs because of this but have no feelings at all for the dumb union members and their representatives.

scgator
1042
Points
scgator 11/16/12 - 12:28 pm
13
5
I worked union for about 10

I worked union for about 10 years earlier in my career; so I FULLY understand the HOSTESS Company decision; union workers, please call 1-800-OBAMALAUGHS @ YOU for assistance.

OpenCurtain
10049
Points
OpenCurtain 11/16/12 - 12:44 pm
11
4
Once Again

Thanks Union members.
You managed to increase the unemployment roles, just before Christmas.

Wondering out loud, if Michele O. Is jumping with joy, that one of the best junk foods with a nuclear shift life is off the market.

If only temporary... Because they will sell the rights to a company that sets up shop in Mexico and under the NAFA treaty.

Minus 18,500 USA jobs.

Granddaddy John
101
Points
Granddaddy John 11/16/12 - 12:43 pm
0
1
Before the middle of next
Unpublished

Before the middle of next year unemployment will be over 10%.Hope ya'll enjoy your OREO president.

bclicious
728
Points
bclicious 11/16/12 - 01:23 pm
12
2
Hate to see it go.

I really hate to see a world without Hostess or Twinkies, etc. It is a darn shame that this had to happen. All I can say is that the company tried to tell them, and they didn't listen.

Darn shame.

razordog
195
Points
razordog 11/16/12 - 01:43 pm
9
2
Tell me again...

why Unions are so great??? On a lighter note, what will American's do without their Ho Ho's, Twinkies, and Ding Dongs?

justus4
105
Points
justus4 11/16/12 - 01:56 pm
0
0
Junk food cost billions in
Unpublished

Junk food cost billions in health problems over a life time and Twinkies contribute to those health cost. The greedy CEO is trying to make a statement since the recent elections, but getting rid of such harmful food products is a good thing. Good riddance and score one for healthy living.

Humble Angela
41338
Points
Humble Angela 11/16/12 - 01:57 pm
14
4
Where's all the union
Unpublished

Where's all the union supporters and their rationalization for how they killed Hostess? I'm up for a good laugh.

resident
501
Points
resident 11/16/12 - 02:04 pm
11
2
So Sad to See this

If you look it up on the web some of them were making like $35 per hour...To bake stuff????? I have to have certifications, college degree etcc..and my pay is not that. Unions have inflated costs so much as well as those greedy employess demanding pay raises all of the time, free medical and pensions, but do not want to take their extra earnings and pay a cent more for stuff. It does not take a college education to figure out what happened here. Lets just say $15 per hour take that X 18,500 employees and you get $277,500 in pay alaone per hour for baking stuff or simply pushing buttons and watching a packaging machine, drive forklift, etc... So lets factor in the costs of the taxes (bunches plus the new obamacare), workmans comp, fuel, electricity and all other things and it is not hard to see the unsustainable situation. You also have to factor in the cost of Raw ingredients going up quite a bit due to speculators on Wall Street. So they blame the CEO salary that is a very small number compared to all of the other costs but I am pretty sure they did take a hit as well if you look them up. The union should have been telling their membership a job is better than unemployment but no too greedy to care since they are paid on membership and percentages of their salaries. Well I wonder how much percentage of ZERO they like!!!!!! No more Orange Cupcakes, not big on twinkies but love those cupcakes, apple pies were great when heated up, Ding Dons were a good treat now and then..Let's hope Little Debbie does not suffer the same Fate....

142
Points
Dan White 11/16/12 - 02:30 pm
13
3
Just the beginning

I am pessimistic about the future of our nation's economy as it seems to be moving more and more to Marxist-Socialism and away from Adam Smith-Capitalism. I fear that the shuttling of Hostess is just the beginning of more company shut downs because of impossible mandates from ObamaCare and other Socialistic laws that may cripple our capitalistic system along with intransigent Union demands. John Metz, the franchiser of Hurricane Grill and Wings, and owner of more than 30 Denny's and Dairy Queen restaurants in Florida said that he will add a 5 percent surcharge to customers’ bills in order to offset President Obama's healthcare plan. Plus, small businesses are going to cut employees to under 50 employees, and they are going to cut employee's hours to under 30 hours per week so that they can avert ObamaCare's expensive requirements for health insurance. We could be seeing massive unemployment in the next 6 months and a collapse of our capitalistic economy which made this nation the richest in the world. I also have a suspicion that this is what Obama wants so that he can fully implement government take-over of private buisness and the property that private business owns which is a tenant of Marxist ideas. He did it with General Motors and the health care industry and other major corporations. All of this is scary to me.

142
Points
Dan White 11/16/12 - 02:33 pm
9
2
Twinkies

Another thought - I guess Michelle Obama and the food czars are smiling that one of the great bakeries of Twinkie "Fat" cakes has gone under. Little Debbie better watch out and guard the ovens! Bring on the carrots and cabbage!

David Parker
7923
Points
David Parker 11/16/12 - 02:34 pm
5
0
GASP!

"Americans are increasingly conscious about healthy eating."

billcass
806
Points
billcass 11/16/12 - 02:55 pm
11
4
Hmmmm

No pro-Obama or pro-union replies so far. Wonder why? Congrats to the union. We now have one less person in the 1% and 18,500 unemployed. This is just the beginning. Denny's frachisee is going to charge a sur charge for Obama care, and an Appelbee's franchisee is going to cut the hours of a bunch of his employees. So the gap between rich and poor will grow larger thanks to this administration.

dichotomy
34406
Points
dichotomy 11/16/12 - 03:05 pm
12
4
Did you eat a Twinkie?

I think the union just got flipped the bird. No point in being in business when you can't make some of them ugly, nasty profits. Another 18,500 for the unemployment and free Obamacare roles. More Obamanomics to come. Middle class working folks, you can't get the Twinkies but you will get the bill. I don't feel sorry for these formerly employed, way overpaid workers. Self inflicted wound. My compassion level is low nowadays. I don't want to see ANY of them on the TV crying about what they are going to do for Christmas.

Do you reckon Obama will confiscate the company and gift it to the union with a nice stimulus loan from the working taxPAYERS? Then we can all eat government subsidized Twinkies made by government subsidized union workers, delivered by government subsidized union truck drivers, pay an extra "fat tax" to eat them, and be turned down for care under Obamacare when we have our heart attack because we admitted to eating a Twinkie.

142
Points
Dan White 11/16/12 - 03:20 pm
10
3
good point

Yes, Obama confiscating Hostess would be exactly according to his game plan, but he won't do it because Twinkies are politically incorrect these days. One correction. It's not Obamanomics. It's Marxist-Socialist economics implemented by Obama who is a Marxist idealogue. Marx believed all wars were between the haves and have nots. Eliminate the economic classes of rich and poor, make only one class, eliminate economic injustice, and everyone will be happy by eliminating the greed from the rich and the envy of the rich by the poor. Peace and happiness would ensue forever through a fair and just socialistic economic system.

Jane18
12332
Points
Jane18 11/16/12 - 03:27 pm
11
2
Goodbye Twinkies

Well, there you go! I knew it wouldn't be long before a major company with Union idiots officials would cause the company to close or go under..........you have just made an old saying come true, "you have bit off your nose to spite your face"! Most of the employees were paid more than they were actually worth, and LORD only knows what kind of pensions were being paid out. I have said for years that at one time a union was a good thing, fair pay, benefits that were reasonable, insurance.....but people get greedy, especially if they have union leaders that are out and out crooks themselves. I agree with dichotomy, it's hard to feel any sympathy for people that didn't appreciate what they had..............

Humble Angela
41338
Points
Humble Angela 11/16/12 - 03:50 pm
8
4
Still no rationalization from
Unpublished

Still no rationalization from the union supporters? I'm surprised.

dichotomy
34406
Points
dichotomy 11/16/12 - 03:57 pm
8
3
"It's not Obamanomics. It's

"It's not Obamanomics. It's Marxist-Socialist economics"

They are synonymous. The insane persecution and punishment of corporations and business people who provide jobs by those who don't want to work and will not be satisfied until every family lives in an 800 sq. ft. apartment and stands in line to buy bread, which cannot be produced in sufficient quantities by their collapsed, BUT ABSOLUTELY EQUAL, socialist economy, and if there is any bread that day they pay for it with their government provided ration card.

PUPPYMOMMA
1353
Points
PUPPYMOMMA 11/16/12 - 05:16 pm
8
3
Wait till the job numbers

Wait till the job numbers come out. They will try to convince us that the economy is growing despite 18,500 jobs lost. Probably something like "there were 70,000 new jobs created which is the highest number since 2008" or something to that effect. Just wait until people realize that their hours will be cut to keep their employers from having to pay healthcare costs. The workers at the local IGA have already had their hours cut to 24. Try to eke out a living on that wage,higher gas prices,food costs and utilities. I guess the undocumented workers that are now documented (Thanks to Obama) can compete for the 24 hours worth of work. The government won't be happy until we have 3 families living in a single wide trailer relying on subsidies and entitlements.

Conservative Man
5577
Points
Conservative Man 11/16/12 - 05:26 pm
9
3
Hate to see....

...anyone lose their job of course. BUT I predict this will not be the last company that says enough!
What I'm waiting for is the "Obamabots" to start screaming "Profits before People". These are the same people who forget that companies are not in business to create jobs. They are in the business of (gasp!) making money....and when they can't make money......the doors close...period....

...Keep it up union goons....I hear Waffle House is hiring...

142
Points
Dan White 11/16/12 - 05:43 pm
9
3
More ObamaCare layoffs just announced

This just in. Medical supply giant Stryker is the latest company to announce job cuts in anticipation of coming costs associated with ObamaCare. The company will cut 1,170 jobs. That's 20,000 jobs lost in one day thanks to Obama.

CobaltGeorge
164589
Points
CobaltGeorge 11/16/12 - 06:34 pm
7
3
Yep

The No Shot Fired Revolution!

rmwhitley
5547
Points
rmwhitley 11/16/12 - 06:35 pm
0
0
Read the new book
Unpublished

that should be published: "democrats and unions, the demise of America".

Susie Q
57
Points
Susie Q 11/16/12 - 06:35 pm
10
3
Obama wins again

The beginning of Obamaism u that voted for him do you see what's the beginning of this? Or do you not care, welfare won't be here for all because taxpayers are out of work, go take care of yourselves now.

Jake
32872
Points
Jake 11/16/12 - 07:15 pm
4
2
Compromise

There is such a thing as compromise. Let this be a lesson for others as well.
Realistically, how much was this company producing in terms of profit anyway? I am guessing that Hostess Brands, Inc. will sell their brand and/or trademarked products to another baker who will in turn start producing them and will have to hire additional folks to do that. Does anyone see an America without Twinkies? This would be a total outrage!

Gage Creed
17857
Points
Gage Creed 11/16/12 - 08:17 pm
6
2
Yep....branding bought and

Yep....branding bought and operations moved to a right to work state.

A win win situation

OpenCurtain
10049
Points
OpenCurtain 11/16/12 - 08:25 pm
6
3
Y'all better read or watch

Atlas Shrugs I and II, written by Ayn Rand in 1957

Atlas Shrugs Deals with a dystopian United States where many of society's productive citizens start refusing to be exploited by ridiculous penalizing taxes and government regulations, just to support the freeloaders.

The wage earners give up losing 50% for working and the wealthy go on strike and skip the country. Kind of sounds like what is starting to happen quietly already?

Any company owner that can close down, an move his assets outside the country has until Jan. 1, 2013, when the New Wealth Transfer tax kicks at 55%. Believe it or not the union may have done him a favor by providing him a cover.

KSL
134384
Points
KSL 11/16/12 - 09:41 pm
7
2
Not until after the election.

Not until after the election. Not until after the election. Are you Obama voters getting the message?

Techfan
6461
Points
Techfan 11/17/12 - 06:22 am
3
9
" nearly a dozen executives

" nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling. "
" six management teams over the past eight years weren’t able to make it profitable"
Private equity firms, golden parachutes, increase executive pay when the company isn't doing well. Yep, blame the union. This has been one screwed up company for a long time, and it had nothing to do with the unions.

Independent
509
Points
Independent 11/17/12 - 07:53 am
2
6
Sales were going down, the

Sales were going down, the management decides to reduce labor cost by paying lower wages, employees go on strike, and management spins their failure presenting its closure as a union's fault. Anyone with some knowledge of management knows that products have life cycles and twinkies have past their decline phase. Hostess did not invest in R&D to avoid this situation and stay competitive in the market. Yes, it's sad that too many people lost their jobs, but the big shots of this company have some/huge responsibility in all this.

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