Thread: Goodbye Twinkies .... No More Wonder Bread

Twinkies Maker Hostess Going Out of Business, CEO Blames Union Strike

“It’s over. This is it,” Gregory Rayburn tells "Today."

Friday, Nov 16, 2012 | Updated 8:56 AM CST

Hostess, the makers of Twinkies, Ding Dongs and Wonder Bread, is going out of business after striking workers failed to heed a Thursday deadline to return to work, the company said.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “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.”

Hostess Brands Inc. had earlier warned employees that it would file to unwind its business and sell off assets if plant operations didn't return to normal levels by 5 p.m. Thursday. In announcing its decision, Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products.

The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year.

NBC's Savannah Guthrie read a statement on "Today" from the bakers' union that said: “Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and the union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers.”

Rayburn responded that he had been “pretty straightforward in all the town hall meetings I’ve done at our plants to say that in this situation I think there is blame that goes around for everyone.”

He denied that the decision to shut down could be a last ditch negotiation tactic to get the union back to the table. “It’s over,” he said. “This is it.”

Rayburn, who first joined Hostess earlier this year as a restructuring expert, had earlier said that many workers crossed picket lines this week to go back to work despite warnings by union leadership that they'd be fined. "The problem is we don't have enough crossing those lines to maintain normal production," Rayburn told Fox Business.

Hostess said that production at about a dozen of the company's 33 plants had been seriously affected by the strike. Three plants were closed earlier this week.

The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess had argued that workers must make concessions for it to exit bankruptcy and improve its financial position.

The company, founded in 1930, was fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks.

If the motion is granted, Hostess would begin closing operations as early as Tuesday. "Most employees who lose their jobs should be eligible for government-provided unemployment benefits," Hostess said.

http://www.nbcdfw.com/news/national-...179643161.html

18,000 are not going to have a job soon.
http://www.myfoxdfw.com/story/201158...to-be-laid-off
Nov 16, 2012 10:17 AM CST By: Alice Wolke

IRVING, Texas - Say goodbye to your Twinkies. North Texas-based Hostess Brands, Inc. has decided to go out of business and liquidate its assets after failing to win back striking workers.

"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."

About one-third of the company's workers are union members who are unhappy about the company's cutbacks during its bankruptcy reorganization. But problems with several unions -- including the Bakery, Confectionery, and Tobacco workers and the Grain Millers International Union -- have prevented the company from moving forward.

Hostess said it will seek bankruptcy court permission to sell all of its assets. The company said bakery production has already shut down. Hostess owns 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States. Delivery will continue for now, and the Hostess Brands retail stores will remain open for "several days," the company said. "For employees whose jobs will be eliminated, additional information can be found at www.hostessbrands.info. The website also contains information for customers and vendors. Most employees who lose their jobs should be eligible for government-provided unemployment benefits," a news release from the company states.

Some Hostess products include Twinkies, Ding Dongs, Ho-Hos, Fruit Pies and Wonder Bread. The brand also ownd Drakes, Dolly Madison, Nature's Pride and Merita.

Union refused a 8% pay cut ... held out for a 100% shut down. Good planning

We had a chem plant where the Union had the workers on strike for two years.... in the end they took the same deal that had been offered 24 months previously. Like one of my friends said : "The Union Reps didn't care about the workers...they're eating steak while we're eating spam..." Unions were once needed and nessecary ... now they look out for themselves and their political clout then looking out for the "common man" Such as the Unions in New Jersey sending home Gulf Coast workers - electricians and linemen - because they were not "Union" and would not join THEIR Union there - while people go without power in freezing temps. Who are they taking care off - not the people on the East Coast shivering in the cold

Bankruptcy court judge says Hostess should try mediation with 2nd largest union
By The Associated Press | Associated Press – 3 hrs ago.

Twinkies won't die that easily after all.

Hostess Brands Inc. and its second largest union will go into mediation to try and resolve their differences, meaning the Irving, Texas-based company won't go out of business just yet.

The news came Monday after Hostess moved to liquidate and sell off its assets in bankruptcy court citing a crippling strike last week.

The bankruptcy judge hearing the case says that the parties haven't gone through the critical step of mediation and asked the lawyer for the bakery's union to ask his client, who wasn't present, if he would agree to participate.

The case is being heard by the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y.

http://news.yahoo.com/bankruptcy-cou...202233692.html

comments

If a Judge knows what is best for a million dollar business, why is he a Judge and not in Forbes top 10?

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Love the Twinkies but this company's owner can certainly sell his business without the objections of any union member. The union is not the owners of this company, just employees. Maybe they should buy the business and see how long they last when they aren't making money.

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Another case of litigating for the union, from the bench. There is NO requirement to mediate a blasted thing. This judge is trying to save the union's butt. Dump the brand and put it out of business.

The Twinkie Manifesto
PAUL KRUGMAN Published: November 18, 2012


The Twinkie, it turns out, was introduced way back in 1930. In our memories, however, the iconic snack will forever be identified with the 1950s, when Hostess popularized the brand by sponsoring “The Howdy Doody Show.” And the demise of Hostess has unleashed a wave of baby boomer nostalgia for a seemingly more innocent time.

Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.

Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”

Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.

Nor were high taxes the only burden wealthy businessmen had to bear. They also faced a labor force with a degree of bargaining power hard to imagine today. In 1955 roughly a third of American workers were union members. In the biggest companies, management and labor bargained as equals, so much so that it was common to talk about corporations serving an array of “stakeholders” as opposed to merely serving stockholders.

Squeezed between high taxes and empowered workers, executives were relatively impoverished by the standards of either earlier or later generations. In 1955 Fortune magazine published an essay, “How top executives live,” which emphasized how modest their lifestyles had become compared with days of yore. The vast mansions, armies of servants, and huge yachts of the 1920s were no more; by 1955 the typical executive, Fortune claimed, lived in a smallish suburban house, relied on part-time help and skippered his own relatively small boat.

The data confirm Fortune’s impressions. Between the 1920s and the 1950s real incomes for the richest Americans fell sharply, not just compared with the middle class but in absolute terms. According to estimates by the economists Thomas Piketty and Emmanuel Saez, in 1955 the real incomes of the top 0.01 percent of Americans were less than half what they had been in the late 1920s, and their share of total income was down by three-quarters.

Today, of course, the mansions, armies of servants and yachts are back, bigger than ever — and any hint of policies that might crimp plutocrats’ style is met with cries of “socialism.” Indeed, the whole Romney campaign was based on the premise that President Obama’s threat to modestly raise taxes on top incomes, plus his temerity in suggesting that some bankers had behaved badly, were crippling the economy. Surely, then, the far less plutocrat-friendly environment of the 1950s must have been an economic disaster, right?

Actually, some people thought so at the time. Paul Ryan and many other modern conservatives are devotees of Ayn Rand. Well, the collapsing, moocher-infested nation she portrayed in “Atlas Shrugged,” published in 1957, was basically Dwight Eisenhower’s America.

Strange to say, however, the oppressed executives Fortune portrayed in 1955 didn’t go Galt and deprive the nation of their talents. On the contrary, if Fortune is to be believed, they were working harder than ever. And the high-tax, strong-union decades after World War II were in fact marked by spectacular, widely shared economic growth: nothing before or since has matched the doubling of median family income between 1947 and 1973.

Which brings us back to the nostalgia thing.

There are, let’s face it, some people in our political life who pine for the days when minorities and women knew their place, gays stayed firmly in the closet and congressmen asked, “Are you now or have you ever been?” The rest of us, however, are very glad those days are gone. We are, morally, a much better nation than we were. Oh, and the food has improved a lot, too.

Along the way, however, we’ve forgotten something important — namely, that economic justice and economic growth aren’t incompatible. America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.

http://www.nytimes.com/2012/11/19/op...sto.html?_r=1&

comments

" ... a labor force with a degree of bargaining power hard to imagine today."

And where did the labor force of the 1950s get their bargaining power? From the fact that unemployment was around 3%. Workers didn't have to hang onto their jobs for dear life; if they were fired then they could find another job. This gave them the confidence to form unions and to strike for better wages, working conditions and benefits, including health insurance. And employers had to pay competitive wages or nobody would work for them.

Based on the Full Employment Act of 1946, amended in 1978 as the Full Employment and Balanced Growth Act, the unemployment goal is supposed to be 3% for people 20 and over and 4% for teenagers.

Economists have done a disservice to our nation by using as a target the Non-Accelerating Inflation Rate of Unemployment (NAIRU), which they calculate to be between 4.3% and 7.3%; they settled at about 5%, however some economists are now saying the new normal will be 6.5%. The Fed and lawmakers are targeting an unemployment rate where the workers will be cowed and the unions will be busted. In doing so they are controlling price inflation by preventing wage inflation. Is it any wonder why workers have lost earning power?

The US government and the Fed should target 3% unemployment, realizing that wage inflation is a good thing, for our workers because it will help them make up lost ground, and for our economy because it will create demand for goods and services

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A number of commentators have pointed out how American manufacturing had a distinct advantage in the 1950s, since our factories were not decimated by World War II. We can't go back to that time, but we can work toward leveling the playing field with more than simply increased taxes on the wealthy. We can also start talking about a tariff on imported goods produced in countries that don't pay their people anything approximating an American minimum wage. And how about environmental tariffs on those countries that exempt themselves from anything close to U.S. laws on pollution? The money from these tariffs could help a lot of Americans in need and take some of the steam out of those who want to destroy our safety net in order to balance the budget.

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Comparing the 50s to today is huge fallacy. 50s were a post war era where there was no country that could match the manufacturing base of the US. Prior to the war, Germany and the axis powers had a level of manufacturing that could easily match what the US produced.

Today however, we have tied ourselves down with two foreign wars, (at least one seems to have an end, but I think we will be in Afghanistan for another 5 years at least). Each war costs trillions of dollars over the entire span. The Iraq war was a total waste of resources.

Imagine using the same trillions to build a smarter workforce, educating our children, high speed rail, and a whole host of other products. Our lives could have remarkably been much better.

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n interesting side note of the twinkie story--the press has made it about either the changing of the dining habits of Americans or unions not willing to compromise, even though sales have remainded steady and the unions had repeatedly lowered wages and benefits. Not as widely reported is the true issue--a private equity firm had taken over the company and loaded it with almost a billion dollars in debt, took out the cash, and left the company floundering.

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Another difference in the 1950's.. corporations had large training budgets. They hired those they believed to be the best and the brightest and they trained them to be the perfect fit. Today Corporations get bribed by states to move to their locations, huge tax cuts and bonds and various other financial benefits but corporations now demand workers come to them perfectly trained and bemoan the lack of qualified workers so we the taxpayer put out money to built their roads, build their facilities and train their work force but they the corporation stand up and say "we built this" it's a sad state of affairs.

11th hour Hostess/union mediation fails; Twinkies re-declared DOA
By Doug Powers • November 20, 2012 09:17 PM

A bankruptcy judge had asked Hostess and one of the labor unions to go through a mediation session on Tuesday in order to try to come up with a deal to keep the company in business and save over 18,000 jobs.

It didn’t happen: http://www.cbsnews.com/8301-505123_1...-to-liquidate/

Hostess Brands lived to die another day.

The maker of Twinkies and Ding Dongs said late Tuesday that it failed to reach an agreement with its second biggest union. As a result, Hostess plans to continue with a hearing on Wednesday in which a bankruptcy court judge will decide if the company can shutter its operations.

The renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started on Nov. 9 by the union, which represents 30 percent of Hostess workers.

Yesterday I checked at my local store and the shelves that usually hold the Hostess products were more barren the list of MSNBC’s criticisms of Obama. Sad. So much for my traditional Thanksgiving turtwinken.

Pass the Kleenex…

A Pictorial Memorial For Hostess Brands Set To Sad Sarah McLachlan http://www.youtube.com/watch?feature...&v=2Ocmj6bpcqY

**Written by Doug Powers http://michellemalkin.com/2012/11/20...mediation-doa/


Hostess Sno Balls - Food Network http://www.youtube.com/watch?v=lcStF...eature=related

While things were looking up for Hostess earlier this week, plans for mediation with the bakers union fell through. In a hearing today, a judge gave Hostess the all-clear to begin shutting down operations and laying off employees: http://dealbook.nytimes.com/2012/11/...to-close-down/

In granting Hostess’s motion, Judge Robert D. Drain of the Federal Bankruptcy Court for the Southern District of New York cited the need for a quick and orderly shuttering of the company to avoid letting its assets molder. The alternative, a less-structured Chapter 7 liquidation would be far worse.

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During a hearing that stretched for more than four hours, company executives and advisers espoused a simple message: expedited sales of the company’s brands will raise the maximum amount of money possible. And letting Hostess begin shutting its doors for good sooner would be kinder to employees.

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Hostess’ chief executive, Gregory Rayburn, testified in court on Wednesday that he needed to lay off 15,000 of the company’s 18,500 employees that afternoon, so that they could begin applying for unemployment benefits. Such speed, he said, was necessary for maximizing the value of what remained of the 82-year-old company.

I made the decision to liquidate Hostess last night (Nov. 15). A number of factors have contributed to this. Hostess is 93 percent unionized, and it’s been formed by a number of acquisitions over the decades; a lot of old rules were just grandfathered into contracts from companies that no longer exist. There were all these crazy work rules, like one driver can only drive cake and the other can only drive bread. Hostess went through bankruptcy in 2004 and not enough work was done in that filing to deal with these issues.

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I look at this as a failure. I’ve spent a lot of time wondering why we didn’t make more progress. I’m a turnaround guy, I’m a pretty optimistic guy. I don’t think this was the inevitable end. We had a shot at surviving, but we couldn’t overcome the strike. We have potential buyers for our brands and we’ll contact them, but I haven’t even thought about that yet. We sent everyone home from the plants. That’s 18,500 people out of work.

Thank goodness the bakers union was doing all this for the workers, right? http://twitchy.com/2012/11/16/bctgm-...pling-hostess/

More from Zero Hedge: http://www.zerohedge.com/news/2012-1...oodbye-hostess

In the past five days, however, since Hostess officially launched its liquidation process, the company has received “a flood of inquiries,” said Hostess lawyer Heather Lennox, of Jones Day. The company expects to file a number a number of stalking-horse bids for its assets within the next few weeks, she said.

“The number of inbound calls has been surprising, on a number of fronts,” Scherer said. Those inquiries fall into four “buckets,” he explained. Offers have come from regional bakeries, national competitors, customers (such as Wal-Mart, Kroger and Giant Eagle), and a fourth catch-all category, including large consumer products companies. Scherer said the liquidation sale has generated “very significant interest” from international buyers as well.

Many of the buyers were uninterested in the assets when Hostess was weighed down by its union liabilities, he said. “We have very significant momentum right now with, from a selling perspective, positive press,” Scherer said. “It’s critical to maintain momentum and a competitive dynamic.”

So, while Hostess as we know it may cease to exist, Twinkie the Kid may not be ready to ride off into the sunset just yet.

http://twitchy.com/2012/11/21/bankru...-to-shut-down/