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End of an era as Hostess shuts down

Posted November 16, 2012

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— Hostess Brands Inc. filed a motion in federal bankruptcy court early Friday, seeking permission to shutter operations and end production of the snack cakes and breads known to generations of Americans.

The Texas-based company said in a statement on its website that it will try to sell its assets, including the iconic Twinkie, Ding Dong and Wonder Bread brands. Bakery operations have been suspended at all 36 plants, including one in Rocky Mount, following a week-long strike by thousands of workers protesting 8 percent wage cuts and benefit concessions.

In its statement, Hostess said the strike “crippled the company’s ability to produce and deliver products at multiple facilities.”

Already-baked products will continue to be delivered, and the company said its retail stores will remain open for a few days to sell off remaining stock.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Chief Executive Gregory Rayburn said. “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 strikers Hostess workers ready to move on after strike, shut down

Workers at the Rocky Mount plant, which employed 275, said Friday that they were relieved the situation was over. They said they knew the strike could end the company, but the members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union voted 92 percent in favor of the work stoppage, saying they couldn't continue to be the ones paying for company mismanagement.

"It's the price we've got to pay. That's what we paid today so we can help someone else," Ennis Powell said. "If you don't stand for anything, you're going to fall for anything."

Workers confident they'll find jobs

The Hostess flag outside the Rocky Mount plant flew at half-staff Friday, as the last bakery shipment went out the door.

Workers continued to man a picket line outside the plant, which made snacks, desserts and Wonder and Merita breads, saying they would remain until union leadership told them to disband.

Thousands of members of the bakers union went on strike last week after rejecting the company's contract offer in September. In addition to the wage and benefits cuts, union officials said the company stopped contributing to workers' pensions last year.

Hostess said it had offered its 12 unions a 25 percent ownership stake in the company, representation on its board of directors and $100 million in reorganized Hostess Brands’ debt. The company had set a deadline of 5 p.m. Thursday for striking workers to return to the production line.

"It was a really bad taste in my mouth because we gave so much back to them before, and they didn't follow through what they said they were going to do," said Lamont Phillips, president of the union local in Rocky Mount.

Phillips, who worked at the plant for 23 years, said he would file for unemployment and begin looking for another job to support his two children.

"It hit us in the face, and we're still standing strong. We're not going to give in. (I have) no regrets at all," he said.

Charles Rosser, a barber in Rocky Mount, said the workers' attitude won't help them find new jobs in a tough market.

The Rocky Mount metro area had a 12 percent unemployment rate in September, according to the state Division of Employment Security.

"Everybody's got the same tune that I spoke with," Rosser said. "Things are tight. Things are difficult."

Hostess got its start in the late 1800s with the production of Drake's cakes. That sweet treat was followed by Ding Dongs, Donettes, Ho Hos, Snowballs and a variety of breads and desserts that were found in virtually every grocery store and lunchbox in America. The company had its own pavilion in the 1939 World's Fair.

Despite annual sales of $2.5 billion, the company said its current cost structure was unprofitable, largely because of union wages and pensions. It has been in bankruptcy since January.

Rayburn said the bakers union misled its members by suggesting a buyer was prepared to rescue the company. Without giving details, he said that there has been interest in some of its 30 brands, which include Dolly Madison, Drake's and Nature's Pride snacks.

Company officials also contended that the union sacrificed its Hostess members to prevent other bakery operations from seeking similar concessions in their union contracts.

730 Comments

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  • WooHoo2You Nov 16, 7:59 p.m.

    WooHoo - "You miss the point they were giving themselves huge raises while their company was BURNING TO THE GROUND..."

    Where'd you see that? It's not in the financial analyst's reports.-Heuman Bean

    The multiple bankruptcies and a billion dollars in debt????

  • junkmail5 Nov 16, 7:58 p.m.

    FYI the company did not file for Chapter 11. That's reorganizing but staying in business. The company is liquidating.

  • Dynol Yn Cael Ei Nov 16, 7:56 p.m.

    WooHoo - "You miss the point they were giving themselves huge raises while their company was BURNING TO THE GROUND..."

    Where'd you see that? It's not in the financial analyst's reports.

  • Dynol Yn Cael Ei Nov 16, 7:56 p.m.

    Storch - "Heuman Bean and ddm76, those salaries are outrageous and it certainly distributes the blame."

    Doesn't matter.

    They have contracts that award them that much, and contracts like those are not unusual in the business world.

  • Dynol Yn Cael Ei Nov 16, 7:55 p.m.

    For those of you blaming the management, and the unions, and Lord only knows what else - when was the last time YOU bought one of their products?

    Competition and a higher number of people seeking healthier diets led to a downturn of the sales of their products. That trickled down into all other areas of the business.

    So if YOU haven't been buying their product, maybe YOU are to blame.

    (And by the way, this is sarcasm, not meant to be taken as reality, but as food for thought.)

  • WooHoo2You Nov 16, 7:53 p.m.

    uragoner2, so what if the executives earned a high salary? This is to be expected of people in those positions.- paulej

    You miss the point they were giving themselves huge raises while their company was BURNING TO THE GROUND...

  • Dynol Yn Cael Ei Nov 16, 7:52 p.m.

    "Business Insider reports that Hostess, maker of the Twinkie and Ding ####, is now controlled by a group of investment firms that will sell its assets to the highest bidder. Possible buyers could pick up Hostess’s more popular products at auction and package them at other companies. Beyond labor costs, CSM notes that increased competition in the snack space and Americans being increasingly conscious about healthy eating also could be attributed to Hostess’s fall."

  • storchheim Nov 16, 7:51 p.m.

    Heuman Bean and ddm76, those salaries are outrageous and it certainly distributes the blame. I don't want to be too harsh, but this is another thing for workers to be aware of. It was a sign of rats looting a sinking ship or at least displaying too much greed for me. You need to be aware of the world around you and how it affects your financial well-being, just as you need to track the worth of all your assets, of which earning power is one.

    The long and short of it is, know when something stinks and quietly start your job search at that moment. Or since there may not be many jobs in some areas, at least prepare for the worst as best you can. Good luck to us all. We're all going to need it.

  • WooHoo2You Nov 16, 7:51 p.m.

    Hostess wanted their employees to trade a SECURE retirement fund for the ability to hold 100 million in BAD DEBT that would never be worth the paper it was written on and you all are surprised they did not take the deal? I know a dead man who is giving out IOUs for the deed to your house.....

  • troff Nov 16, 7:50 p.m.

    STRONG UNIONS................................. Ooooooooooops!

    ROFLMAO

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