Twinkie-Maker Hostess Fires 18,000 People: Blames Long-Suffering Workers

Bruce Vail

Hostess Brands is blaming its liquidation on this week’s strike, by workers such as these in Schiller Park, Ill. The company’s financial woes, however, are years old.

Today, the own­ers of Host­ess Brandsthe com­pa­ny that makes wide­ly rec­og­nized baked goods such as Twinkies and Won­der Breadmade good on a long­stand­ing threat to close down oper­a­tions, elim­i­nat­ing as many as 18,000 jobs.

Com­pa­ny spokesper­son Lance Ignon told Work­ing In These Times that some 22 bak­eries around the nation com­plet­ed their last pro­duc­tion runs ear­ly on Fri­day morn­ing, while deliv­ery dri­vers fin­ished their final routes this after­noon. The com­pa­ny has no plans to resume operations. 

In a state­ment, Host­ess CEO Greg Ray­burn blamed the shut­down on a strike this week by the Bak­ery, Con­fec­tionery, Tobac­co Work­ers and Grain Millers Inter­na­tion­al Union (BCT­GM).

How­ev­er, his scape­goat­ing of the union obscures a larg­er and more com­pli­cat­ed sto­ry of cor­po­rate mis­man­age­ment and naked greed. In fact, the com­pa­ny has been in severe finan­cial dis­tress for more than a decade, man­age­ment has been in dis­ar­ray, and vul­ture cap­i­tal­ists have been cir­cling in search of finan­cial prey.

Host­ess might be con­sid­ered an old econ­o­my” com­pa­ny in the sense that it man­u­fac­tured, pro­duced and mar­ket­ed pop­u­lar cakes to a mass mar­ket. In its newest incar­na­tionunder the slick­er, greed­i­er sen­si­bil­i­ty of Wall St.it is some­thing else altogether.

Host­ess claims that a BCGTM strike begun on Novem­ber 9 was the com­pa­ny’s undo­ing. The strike start­ed at four scat­tered Host­ess plants and spread across the coun­try, forc­ing 11 bak­ery clo­sures, accord­ing to Ignon.

The union, how­ev­er, notes that the strike came only after months of fruit­less con­tract nego­ti­a­tions and the impo­si­tion by Host­ess of dra­con­ian cuts” to wages and ben­e­fits. Pri­or to that, employ­ees of Host­ess were work­ing under reduced incomes for almost 10 years. From 2004 to 2008 the com­pa­ny, then called Inter­state Bak­eries, went through a Chap­ter 11 bank­rupt­cy in which all union work­ers took forced cuts.

BCT­GM Pres­i­dent Frank Hurt was not avail­able for com­ment on today, but told Work­ing In These Times ear­li­er this week that the BCGTM strike was the trag­ic” result of the company’s ill-con­ceived plan to bust the unions, dis­mem­ber the com­pa­ny and sell off the pieces to high­est bid­ders. Host­ess man­agers have made clear that they care lit­tle for the hard­ships imposed on the work­ers, Hurt said, leav­ing the union no choice but to strike in hopes of the bring­ing the com­pa­ny back to the bar­gain­ing table.

Hurt has made oth­er com­ments over the last three months in which he made clear that he believes the own­ers of the com­pa­ny have no real desire to return the ail­ing Host­ess to prof­itabil­i­ty. Rather, they want to strip the com­pa­ny of its valu­able assets while dis­card­ing the long-term employ­ees and finan­cial liabilities.

Host­ess con­firmed at least part of Hurt’s analy­sis on Fri­day when the com­pa­ny also announced it wants to move quick­ly to sell its bak­eries, dis­tri­b­u­tions facil­i­ties, retail out­lets and pop­u­lar brands.”

Accord­ing to an arti­cle in Friday’s Kansas City Busi­ness Jour­nal, that means the com­pa­ny will sell brand names such as Host­ess, Twinkies, Won­der Bread, Ding Dongs and Ho Hos. Food indus­try ana­lyst John Stout Jr. believes such sales would allow oth­er busi­ness­es to resume prof­itable man­u­fac­tur­ing of these prod­ucts in oth­er facilities.

Such a plan will require the approval of Judge Robert Drain of the U.S. Bank­rupt­cy Court for the South­ern Dis­trict of New York. Host­ess filed a Chap­ter 11 bank­rupt­cy peti­tion in Judge Drain’s court ear­ly this year, and under bank­rupt­cy law most major busi­ness deci­sions at Host­ess require his approval. Indeed, the impo­si­tion of the bru­tal wage and ben­e­fit cuts on BCT­GM mem­bers was specif­i­cal­ly approved by Judge Drain in October.

Host­ess spokesper­son Ignon said the com­pa­ny plans to be back in Judge Drain’s court next week to seek his okay for mea­sures to fur­ther wind down oper­a­tions. Host­ess will not seek a for­mal con­ver­sion to a Chap­ter 7 liq­ui­da­tion pro­ceed­ing, but rather a con­tin­u­a­tion of the sta­tus quo, in which the cur­rent own­ers and man­agers main­tain con­trol of the com­pa­ny, he said.

What­ev­er hap­pens in Judge Drain’s bank­rupt­cy court next week, an esti­mat­ed 18,000 Host­ess work­ers will have no job to return to Monday.

The com­pa­ny has been main­tain­ing a pay­roll of 18,300 to 18,500 work­ers, Ignon says, and most were laid off Fri­day. An unde­ter­mined num­ber of man­age­r­i­al and admin­is­tra­tive work­ers will be retained for the imme­di­ate future, he adds, but it is too ear­ly to give exact numbers.

About 5,000 BCT­GM work­ers will lose their jobs, along with 7,500 mem­bers of the Inter­na­tion­al Broth­er­hood of Team­sters and hun­dreds of mem­bers of ten oth­er unions rep­re­sent­ing small­er sec­tors of the Host­ess workforce.

CEO Rayburn’s Fri­day state­ment made no men­tion of any assis­tance that the com­pa­ny plans to offer the new­ly job­less employees.

Bruce Vail is a Bal­ti­more-based free­lance writer with decades of expe­ri­ence cov­er­ing labor and busi­ness sto­ries for news­pa­pers, mag­a­zines and new media. He was a reporter for Bloomberg BNA’s Dai­ly Labor Report, cov­er­ing col­lec­tive bar­gain­ing issues in a wide range of indus­tries, and a mar­itime indus­try reporter and edi­tor for the Jour­nal of Com­merce, serv­ing both in the newspaper’s New York City head­quar­ters and in the Wash­ing­ton, D.C. bureau.
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