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.
"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. But products that are already in stores can be sold, and the outlet stores will remain open for several days to sell the products they already have.
Hostess had annual sales of about $2.5 billion. The company said there are had been 500 million Twinkies made annually.
Its bread brands, including Wonder Bread, Nature's Pride and Butternut, make the company the No. 2 bead baker in the country, according to Symphjony/IRI Group. Bimbo Bakeries, maker of 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 vote 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.
-- Edited by Calvin on Friday 16th of November 2012 07:40:06 AM
Uke said
6:08 PM, 11/16/12
There's a location here in Seattle that bakes under contract for Hostess... Don't know how many folks there are out, since they also bake other branded bread, etc.
Originally published Friday, November 16, 2012 at 4:39 AM
Hostess says it's going out of business after striking workers across the country crippled its ability to make its Twinkies, Ding Dongs and other snacks.
Hostess Brands Inc., which makes Ding Dongs, Wonder Bread and other snacks, filed a motion Friday with U.S. Bankruptcy Court seeking permission to shutter its operations. The move comes after the company said striking workers across the country crippled its ability to maintain production.
The closing would mean the loss of about 18,500 jobs. The company said employees at its 33 factories were sent home and operations suspended Friday and its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
Hostess CEO Greg Rayburn said in an interview that there was no buyer waiting to buy the company. But without giving details, he said that there has been interest in some of its 30 brands, which include Dolly Madison, Drake's and Nature's Pride snacks.
Rayburn said the financial impact of the strike makes it too late to save the company even if workers have a change of heart. That's because the company was operating on thin margins and stalling production meant the loss of critical sales.
"The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products," Rayburn said.
Hostess, based in Irving, Texas, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade, as it struggled with increased competition, Americans' move toward healthier eating and the high pension, wage and medical costs related to its unionized workforce.
The move to liquidate comes after a long battle with its unions. Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages. The bakers union represents about 30 percent of the company's workforce.
Rayburn said the union's leadership had misled members into believing there was a buyer in the wings who would rescue the company. He said the union hadn't returned the company's calls for the past month.
A representative for the bakers union did not immediately return a call seeking comment.
Although many workers decided to cross picket lines this week, the company said it wasn't enough to keep operations at normal levels; three plants were closed earlier this week.
The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters. The Teamsters had urged the bakery union this week to hold a secret ballot on whether to continue striking.
Hostess has said the company is unprofitable under its current cost structure, in large part because of its union wages and pension costs. Rayburn said that sales volumes had been flat to slightly down leading up the bankruptcy filing. In a statement on the company website, he said all employees will eventually lose their jobs, "some sooner than others."
"Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the (company) can offer you at this time," Rayburn wrote.
The liquidation hearing will go before a bankruptcy judge Monday afternoon. Rayburn said he's confident the judge will approve the motion.
"There's no other alternative," he said.
The move to liquidate was unwelcomed news to some customers.
Adil Ahmed, whose family still eats Hostess treats during the holidays, said he rushed to the supermarket Friday morning after hearing the news. Growing up in New Jersey, he said his Southeast Asian family bought Wonder Bread to dip in curries and loaded up on sweets from a nearby warehouse for the holidays.
"I have nephews and nieces - we have to pass on the tradition to the next generation," said Ahmed, a 25-year-old union worker in Baltimore. He bought four boxes of Twinkies and other snacks for a family get together this weekend.
----
Snippy said
3:21 AM, 11/17/12
Those same shelves will carry the same crap before you know it. It will just be scabs baking and delivering them. This is an orchestrated union busting scheme.
The brands will emerge under a new management/corporate name headquartered in the South. Snippy ain't a betting man, but he would bet on McKee.
-- Edited by Snippy on Saturday 17th of November 2012 03:24:14 AM
The Krink said
9:13 AM, 11/17/12
Hostess has been making junk food before it was known as junk food. My heydey with Hostess products was probly 1966-72. Loved those Hostess Berry Pies. Ate a bunch of those. Ding Dongs...ate a bunch of those tuu. Of course the Hostess "perfect all-white" bread that every kid on the planet wanted to eat...minus the crusts. Since Hostess seemed determined to make the junk food despite 20 years or more heavy criticism and being stereotyped its really fortunate for the food buying public that Hostess is going to be no more. That 8ft wide shelf X 4 high will no longer carry the "worst bakery" ever. It will be re-placed by some heathy eats.
Uke said
10:33 AM, 11/17/12
Yeah... I agree with Snippy. The company (Hostess) blames their unions for driving the company inta bankruptcy... Truth of the matter is piss-poor management, and lack of innovation, and dependency on outdated products brought 'em ta the brink!
On the other side of it, you'll see another, bigger outfit buy the pieces (Twinkies, Ho-Hos, Fruit Pies, breads, etc.) from Hostess, ta gain market share in the 'snack-food' category. The Sno Balls, and other 'edgy' crap...let those go, nobody buys that stuff anyway!
Tell ya what I liked from Hostess, their Cherry Fruit Pies. They were perfect along with a good cup o' black coffee at break time!
-- Edited by Uke on Saturday 17th of November 2012 10:39:36 AM
Uke said
11:04 AM, 11/17/12
Okay...have at 'em! They're all yours!
Just keep yer grubby paws off'n my special nips!
-- Edited by Uke on Saturday 17th of November 2012 11:08:58 AM
Thats at the "far extreme" of my nipple appreciation which means "they're acceptable". That woman I think could blow your mind and the mind in the head of your dick.
Hostess Brands closing for good
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.
"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. But products that are already in stores can be sold, and the outlet stores will remain open for several days to sell the products they already have.
Related: Cake Wreck -- From icon to bust
Hostess had annual sales of about $2.5 billion. The company said there are had been 500 million Twinkies made annually.
Its bread brands, including Wonder Bread, Nature's Pride and Butternut, make the company the No. 2 bead baker in the country, according to Symphjony/IRI Group. Bimbo Bakeries, maker of 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.
Related: The history of labor battles at Hostess
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 vote 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.
Related: How brands can survive bankruptcy
"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.
-- Edited by Calvin on Friday 16th of November 2012 07:40:06 AM
There's a location here in Seattle that bakes under contract for Hostess... Don't know how many folks there are out, since they also bake other branded bread, etc.
Originally published Friday, November 16, 2012 at 4:39 AM
Hostess moves to liquidate after crippling strike
Twinkies may not last forever after all.
By CANDICE CHOI and TOM MURPHY
Associated Press
MARK LENNIHAN / AP
Hostess says it's going out of business after striking workers across the country crippled its ability to make its Twinkies, Ding Dongs and other snacks.
Related
Poll
No
NEW YORK
Twinkies may not last forever after all.
Hostess Brands Inc., which makes Ding Dongs, Wonder Bread and other snacks, filed a motion Friday with U.S. Bankruptcy Court seeking permission to shutter its operations. The move comes after the company said striking workers across the country crippled its ability to maintain production.
The closing would mean the loss of about 18,500 jobs. The company said employees at its 33 factories were sent home and operations suspended Friday and its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
Hostess CEO Greg Rayburn said in an interview that there was no buyer waiting to buy the company. But without giving details, he said that there has been interest in some of its 30 brands, which include Dolly Madison, Drake's and Nature's Pride snacks.
Rayburn said the financial impact of the strike makes it too late to save the company even if workers have a change of heart. That's because the company was operating on thin margins and stalling production meant the loss of critical sales.
"The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products," Rayburn said.
Hostess, based in Irving, Texas, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade, as it struggled with increased competition, Americans' move toward healthier eating and the high pension, wage and medical costs related to its unionized workforce.
The move to liquidate comes after a long battle with its unions. Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages. The bakers union represents about 30 percent of the company's workforce.
Rayburn said the union's leadership had misled members into believing there was a buyer in the wings who would rescue the company. He said the union hadn't returned the company's calls for the past month.
A representative for the bakers union did not immediately return a call seeking comment.
Although many workers decided to cross picket lines this week, the company said it wasn't enough to keep operations at normal levels; three plants were closed earlier this week.
The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters. The Teamsters had urged the bakery union this week to hold a secret ballot on whether to continue striking.
Hostess has said the company is unprofitable under its current cost structure, in large part because of its union wages and pension costs. Rayburn said that sales volumes had been flat to slightly down leading up the bankruptcy filing. In a statement on the company website, he said all employees will eventually lose their jobs, "some sooner than others."
"Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the (company) can offer you at this time," Rayburn wrote.
The liquidation hearing will go before a bankruptcy judge Monday afternoon. Rayburn said he's confident the judge will approve the motion.
"There's no other alternative," he said.
The move to liquidate was unwelcomed news to some customers.
Adil Ahmed, whose family still eats Hostess treats during the holidays, said he rushed to the supermarket Friday morning after hearing the news. Growing up in New Jersey, he said his Southeast Asian family bought Wonder Bread to dip in curries and loaded up on sweets from a nearby warehouse for the holidays.
"I have nephews and nieces - we have to pass on the tradition to the next generation," said Ahmed, a 25-year-old union worker in Baltimore. He bought four boxes of Twinkies and other snacks for a family get together this weekend.
----
-- Edited by Snippy on Saturday 17th of November 2012 03:24:14 AM
My heydey with Hostess products was probly 1966-72. Loved those
Hostess Berry Pies. Ate a bunch of those. Ding Dongs...ate a bunch
of those tuu. Of course the Hostess "perfect all-white" bread that
every kid on the planet wanted to eat...minus the crusts.
Since Hostess seemed determined to make the junk food despite
20 years or more heavy criticism and being stereotyped its really
fortunate for the food buying public that Hostess is going to be no more.
That 8ft wide shelf X 4 high will no longer carry the "worst bakery"
ever. It will be re-placed by some heathy eats.
Yeah... I agree with Snippy. The company (Hostess) blames their unions for driving the company inta bankruptcy... Truth of the matter is piss-poor management, and lack of innovation, and dependency on outdated products brought 'em ta the brink!
On the other side of it, you'll see another, bigger outfit buy the pieces (Twinkies, Ho-Hos, Fruit Pies, breads, etc.) from Hostess, ta gain market share in the 'snack-food' category. The Sno Balls, and other 'edgy' crap...let those go, nobody buys that stuff anyway!
Tell ya what I liked from Hostess, their Cherry Fruit Pies. They were perfect along with a good cup o' black coffee at break time!
-- Edited by Uke on Saturday 17th of November 2012 10:39:36 AM
Okay...have at 'em! They're all yours!
Just keep yer grubby paws off'n my special nips!
-- Edited by Uke on Saturday 17th of November 2012 11:08:58 AM
means "they're acceptable". That woman I think could blow
your mind and the mind in the head of your dick.