Hostess Brands Inc. plans to close for good due to strike

Raquel Erhard – Fourth Estate Cooperative Contributor

Irving, TX, United States (4E) – Hostess Brands Inc. announced plans Friday to shut down its plants and liquidate its 82-year-old business, a decision caused by a national strike by bakers who are protesting the new contract imposed on them.

Around 18,500 people working for the company will lose their jobs when the 33 bakeries and 565 distribution centers nationwide would be locked-up. The bakers’ union is representing about 5,000.

In a statement, chief executive officer Gregory Rayburn said “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.”

The demonstration that started November 9 was led by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union. They are protesting a new labor contract, impacting around two-thirds of the company’s 36 plants.

Rayburn stated that the strike made it impossible for the company to continue producing its baked goods, adding that Hostess will immediately lay off most of its 18,500 employees and focus on “selling its assets to the highest bidders.”

Earlier this week, the CEO called on employees to return to work or the company could face closure if the plants would stay closed.

As of Thursday morning, 13 plants were still working below 50% capacity and three remained shut down.

Hostess has filed for bankruptcy in January, the second time since 2004. It faced restructuring in 2009 after more than a four year process. It is now on the hands of a group of investment firms including hedge funds Silver Point Capital and Monarch Alternative Capital.

One of its major unions, the International Brotherhood of Teamsters, voted September to accept a new contract with reduced wages and benefits but the bakers’ union rejected the deal.

This prompted Hostess management to ask permission from a bankruptcy court for a new concession contract on workers which decreased pay by 8 percent in the first year of the five-year agreement. Salaries are set to increase 3 percent in the next three years and one percent in the final year.

Obligations to pension and the employees’ health care plan have also been reduced by the company. In exchange, the company offered a 25 percent equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.

The Hostess Brands, maker of baked goods like Twinkies, Devil Dogs and Wonder Bread, eliminated 627 jobs last Monday.

Article © AHN – All Rights Reserved
About the Author

Leave a Reply