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Hostess to Liquidate Due to Baker’s Union Strike

Hostess Brands, Inc., the makers of Twinkies and Wonder Bread, announced this morning that after a one-week strike by the baker’s union, the company will move to liquidate all of its assets and shut down for good.

The members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) walked out of many of Hostess’s 36 bakeries on November 9 in protest of the new contract ordered by a bankruptcy court judge. Hostess filed for bankruptcy in January and has tried for several months to restructure. The deal offered to the BCTGM, similar to the one accepted by Hostess’s largest union, the Teamsters, called for wage and pension reductions that were necessary to keep the company afloat.

On Wednesday, the company gave BCTGM a 5:00 p.m. ET Thursday deadline to get back to work or face the layoffs of 18,500 employees. “We simply do not have the financial resources to survive an ongoing national strike,” CEO Gregory Rayburn said in a statement.

Earlier this week, Hostess shuttered three of its 36 bakeries permanently due to the strike. Nonetheless, BCTGM pressed on and defied the strike deadline on Thursday. Rayburn said Monday that he believed the BCTGM “is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions.”

In a statement released this morning, the company explained:

Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. 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.

Because of the strike, even the Teamsters, who agreed to the new deal, will be out of work. In all, Hostess’s liquidation will affect the remaining 33 bakeries, 565 distribution centers, 570 bakery outlet stores, and roughly 5,500 delivery routes. The assets will be put up for auction and sold to the highest bidder.

Categories: Center for Union FactsTeamsters