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Hostess to lay off 18,500 employees, liquidate after union battle

In a crushing blow to Twinkies lovers around the globe, but an even deeper hurt to employees who are losing their jobs, Hostess has filed for liquidation with a bankruptcy court, and will now sell off all 36 plants and cut 18,500 jobs.

twinkies

twinkies

Hostess files for liquidation

Unable to reach a deal with a baker’s union representing over a quarter of all its employees, Hostess Brands, which includes the Twinkie and Wonder Bread products, have asked a bankruptcy court to allow it to shut down and liquidate all of its assets. In January, the brand filed for bankruptcy but in months following, saw strikes by unions, and while they have come to an agreement with the teamsters, the Bakery, Confectionery, Tobacco Workers and Grain Millers Union (BCTGM) continued to strike for the last week with no resolution. Hostess already shut down three plants earlier this week, and the liquidation move will permanently stop production lines at all 36 plants, and 18,500 employees will lose their jobs.

Although roughly 13,000 of the 18,500 employees were not on strike, their jobs were in danger, and the deadline to reach an agreement was last night at close of business. The deal rejected by the baker’s union as part of the Hostess Brand bankruptcy was an 8.0 percent pay cut in the first year, a 3.0 percent increase in the second year, and a 1.0 percent increase in the third year, leading to an overall decrease of 4.0 percent in take home pay.

Hostess will deliver what’s already been baked

In a statement, Hostess said they are unprofitable under their current cost structure, “much of which is determined by union wages and pension costs.”

The company added, “The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands’ 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands’ debt.”

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It is not likely that their most popular items such as Twinkies, Wonder Bread, Ding Dong, Ho Ho’s, Dolly Madison, and Hostess CupCakes will be gone forever, as the brands will be sold off to new owners, but there is no guarantee that the new owners will purchase the closed plants or rehire the employees who have lost their jobs.

Union says it’s not their fault

The BCTGM claims they are not at fault for 18,500 employees losing their jobs, and they’re victims of being the scapegoat for a company they say has been mismanaged since being sold as it emerged from Chapter 11 bankruptcy in 2011.

“The truth is that Hostess workers and their Union have absolutely no responsibility for the failure of this company,” the union said in a statement prior to Hostess filing for liquidation. “That responsibility rests squarely on the shoulders of the company’s decision makers.”

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Written By

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

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