Economic Development, Food Service & Agriculture, and Human Resources

Hostess strike ends in bankruptcy, 381 state jobs in doubt

November 16, 2012
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Hostess strike ends in bankruptcy, loss of 381 state jobs
The distribution center in Wyoming is one of about 20 locations the iconic Hostess operates in Michigan. Photo by Mike Nichols

Twinkies might have memorably survived the post-apocalyptic world of “Zombieland,” but it could not survive the perhaps more frightening world of the consumer-goods industry.

Hostess Brands Inc., popular for baked goods like Twinkies, Ho Hos, Devil Dogs and Wonder Bread, announced this morning that it has declared bankruptcy and plans to close its doors for good.

This closing will lead to the shuttering of 33 bakeries and 565 distribution centers nationwide, causing the loss of 18,500 jobs, reports CNN Money.

Hostess is now controlled by hedge funds Monarch Alternative Capital and Silver Point Capital. The company plans to sell its assets to the highest bidder, meaning some of the popular products could be saved at auction and picked up by other companies.

Hostess has about 20 retail outlets and distribution centers across Michigan, employing a total of 381 people.

Hostess’s Wyoming warehouse, located at 5960 Burlingame Ave. SW, Suite C, was mostly empty Friday morning because many of the drivers were out on the road, said the remaining mechanics and drivers. Employees said they had been asked not to talk to the media, but offered that they had heard of corporate meetings going on in Northwood and Toledo, Ohio.

They had not been informed of the fate of their jobs yet, they said, but their forecasts were grim.

Hostess’s breaking point is reportedly due to an ugly conflict between the company and its unions. Hostess cites the cause as a baker’s strike in protest of a new five-year contract that would cut salaries across the company by 8 percent, before bumping them up 4 percent by the fifth year. The contract also reduced Hostess’s pension obligations and contribution to the employees' health care. As a concession, Hostess offered a 25 percent equity stake for employees and the allowance of two union representatives on the board of directors.

In September, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union rejected the contract. Hostess received permission from a bankruptcy court to force a concession contract, and the union went on a nationwide strike. The company, saying it could not sustain the major financial loss of a strike, gave a 5 p.m. Thursday deadline for the union workers to end the strike or face closure of the business.

Failure to meet that deadline prompted this morning’s announcement.

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