Business

Ding Dong, are Twinkies dead?

Posted November 15, 2012 12:18 p.m. EST
Updated November 15, 2012 11:55 p.m. EST

— A Thursday deadline set by Hostess Brands Inc. for striking workers to return to the production lines has passed, but it was unclear whether the company will go through with its threat to go out of business and begin liquidating its assets.

The Texas-based maker of Twinkies and Ding Dongs says a nationwide strike by its bakers union has affected production at about a dozen of its 36 plants. Officials said they would make an announcement Friday morning on whether the company would continue production or begin selling off assets next Tuesday.

Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week  to protest 8 percent wage cuts and benefits concessions. Officials say the company stopped contributing to workers' pension last year, and the union rejected the company's contract offer in September.

Workers at a Rocky Mount plant that makes Wonder and Merita bread and Hostess snacks and desserts have been honoring picket lines set up by workers from other Hostess plants. Workers cannot legally strike until the company puts in place pay and benefits concessions at the plant where they work, which would be Sunday for the Rocky Mount workers.

"If we go back to work, we lost," union representative Dave Hoffman said. "We did all we can do and all we're going to do."

Still, Hoffman conceded, continuing the strike will not garner a win for Hostess employees.

"Either way, they know they are going to lose," he said. "They are going to either lose their job or they are going to have to go back in there and lose their pension."

Hostess has already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. Citing its financial experts who had access to the company's books, the Teamsters say that Hostess' warning of liquidation is "not an empty threat or a negotiating tactic" but a certain outcome if workers continue striking.

The Teamsters urged the smaller bakers union to hold a secret ballot on whether to continue striking, noting that the strike put its union members in the "horrible position" of deciding whether to cross picket lines.

Hostess announced Monday that it would close bakeries in Seattle, St. Louis and Cincinnati, but officials said Thursday that the company's financial picture continues to deteriorate, leaving them with no choice but to shut down completely if the strike continues.

"If we can't lower our costs so that we become profitable again, we have to shut the doors," said Hostess spokesman Lance Ignon. "We are very concerned a lot of these jobs will vanish forever if the company is forced to liquidate."

The company has about 18,300 employees, including about 275 in Rocky Mount.

"We're not in the dark. We know exactly what's going to happen," Hoffman said, "They're going to shut the plant. They're going to shut down all the (plants in the) United States."

Workers said they were hopeful that another company would buy Hostess and negotiate with them on a new contract.

Privately held Hostess filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing, and it argued that workers must make concessions for it to exit bankruptcy and improve its financial position.

Managers at the Rocky Mount plant went out to workers Thursday to hand out what is likely their last paycheck.

"I feel like they took enough, and it's over with," said Michael Lyons, who has worked for Hostess for 36 years. "We've got to do what we've got to do. We put up with it long enough."

The company, which was founded in 1930 and also makes Dolly Madison, Drake's and Nature's Pride snacks, is fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating.