Twinkies maker continues plans to liquidate
NEW YORK 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.
Twinkies maker Hostess to close
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.
After making its case to liquidate on Monday, the bankruptcy judge hearing the case noted that the two sides hadn't yet tried resolving their differences through private mediation. The judge noted that 18,000 jobs were on the line and urged the company and union to try to resolve their differences. Both sides agreed to hold mediation proceedings on Tuesday.
In a statement late Tuesday, Hostess announced that mediation "was unsuccessful." The company said it will have no further comment until the court hearing scheduled for tomorrow.
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Hostess shut down its three dozen plants late last week after it said the strike by the bakers union hurt its ability to maintain normal production. The bakers union says the company's demise was the result of years of mismanagement, however, and that workers have already given steep concessions over the years.
Hostess, weighed down by management turmoil, rising labor costs and the changing tastes of Americans, is making its second trip through Chapter 11 bankruptcy restructuring. The company, based in Irving, Texas, had brought on CEO Gregory Rayburn as a restructuring expert in part to renegotiate its contract with labor unions.
The company reached an agreement with its biggest union, the International Brotherhood of Teamsters, on a contract that dramatically reduced pension contributions, as well as slashing wages and health benefits. But the company said the bakers union stopped returning its calls about a month ago. The Teamsters urged the smaller union to hold a secret ballot on whether members wanted to continue striking. Many workers in the bakers union decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.
Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The bakers union meanwhile pointed to the steep raises executives were given last year as the company was spiraling down toward bankruptcy.
The company's announcement last week that it would move to liquidate prompted a rush on Hostess treats across the country, with many businesses selling out of Twinkies within hours.
Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Though Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies along brought in $68 million so far this year.
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The market reality that people will not willingly overpay for a Twinkie is the only thing that holds the unions in check. Government doesn't care what you want to pay.
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Really??? You better check again. The pay raises were in lieu of bonuses. However, top management did not take the pay raise and reduced their salary to $1. The rest did not take the raise and reduced their salary back to the same level it was before. Do you think the union bosses reduced their compensation to $1. Ah, didn't think so. They just talked the poor union minions into loosing their jobs. And you think other people are sheep.
Start with Exec pay/bonuses or Union costs/benefits. Whatever order that works for you as not to lean one side or other. The bigger picture is that both sides killed the company due to unsustainable expenses that are not in line with revenue.
Both sides need to be realistic on the amount of fruit this tree can bear and only take what is sustainable to keep company healthy for future generations to enjoy.
I figured way back then, it was just a matter of time for this company: because they were idiots. And it appears that I was right.
I hope somebody kept a copy of the original Twinkies recipe.
1 Billion in debt. Massive bonuses passed out this year to all the upper management. Skipped right over the Union and wanted to go right into liquidation. Blame the Union. Classic.
The only thing management wants to do now is head for the exit doors so they can enjoy their retirement. They set the course to crash the business aa long time ago. They implemented their escape plans and it's time to bail. all the Judge is doing is slowing them down.
Labor costs are a major portion of the expenses. To blame problems on the salaries of management is a rather narrow view. Perhaps the company was overly generous to the unions years ago and is now paying the price. There is not enough information provided anywhere that I can see to give the average reader as to even judge what is wrong.
I suspect it is a complex set of interrelated issues. I think few people commenting even have enough information to pin the blame. Profit is the goal of companies and of the unions. I am sure there is enough blame to go around.