Hostess (they make Twinkies, Ho-Hos, etc.) moves to liquidate after crippling strike

JFC

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Personally, I find snack cakes like Twinkies to be too sweet/sugary; still...it's a shame that this has happened to a pretty well-known brand name.

Hostess moves to liquidate after crippling strike
16/11/2012 10:47:00 AM | Candice Choi,Tom Murphy, The Associated Press


Hostess Brands Inc. says it's going out of business after striking workers across the country crippled its ability to make its Twinkies, Ding Dongs and other snacks.

The company had warned employees that it would file a motion with U.S. Bankruptcy Court Friday seeking permission to shutter its operations and sell its brands if plants hadn't resumed normal operations by a Thursday evening deadline. The deadline passed without a deal.

The closing would mean the loss of about 18,500 jobs across the United States.

"I don't know if they thought that was a bluff," CEO Gregory Rayburn said on CNBC Friday. He said the financial impact of the strike makes it "too late" to save the company even if workers have a change of heart. That's because the clients such as retailers decide to stop carrying products when supplies aren't adequate.

Rayburn said he's hopeful that the company will find buyers for its roster of about 30 brands, which also include Ho Hos, Dolly Madison, Drake's and Nature's Pride snacks and Wonder Bread. The company books about $2.5 billion in sales a year.

In Canada, George Weston Ltd. of Toronto (TSX:WN) counts Wonder Bread among its brands while Montreal-based Saputo Inc. (TSX:SAP) has rights to the Hostess brand but doesn't include Twinkies in its current lineup of snack cakes.

Weston holds the rights to the Wonder Bread name in Canada independently and company spokesman Geoff Wilson said Friday that it has no interest in acquiring the manufacturing assets or brand names of Hostess in the U.S.

Hostess, based in Irving, Texas, said its stores will remain open for several days to sell remaining products. Operations at its 33 factories were suspended Friday. The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.

The move comes after thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages and benefits in September. The bakers union represents about 30 per cent of the company's workforce.

Rayburn said the union's leadership had misled members into believing there was a buyer in the wings who would rescue the company. He said the union hadn't returned the company's calls for the past month.

A union representative did not immediately return a call seeking comment.

Hostess had said earlier this week that production at about a dozen of its plants were seriously affected by the strike. Although many workers decided to cross picket lines, the company said it wasn't enough to keep operations at normal levels. Three plants were closed earlier this week.

Hostess had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. The Teamsters had urged the bakery union this week to hold a secret ballot on whether to continue striking.

Hostess said the company is unprofitable under its current cost structure, in large part because of union wages and pension costs. Rayburn said in a statement on the company website that all employees will eventually lose their jobs, "some sooner than others."

"Unfortunately, because we are in bankruptcy, there are severe limits on the assistance the (company) can offer you at this time," Rayburn wrote.

Hostess, founded in 1930, was fighting battles beyond labour costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating.

-With files from The Canadian Press
FULL ARTICLE LINK - http://finance.sympatico.ca/home/hostess_to_close_cites_nationwide_worker_strike/8794e43d
 
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Figures. The only food that will survive the end of the world and someone stops producing it


At least there's still canned food
 
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We don't get twinkies over here, but i always did laugth reading the comic-adverts you'd find. My sympathy to all the people that will end up jobless because of this.
 
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Dr Kain

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My reaction:

Oh no! Hostess is going under! No more Twinkies! Guess now I'll have to get the same thing from generic and off brand sources now... : Phelous :
 
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So....because of the greed of unions combined with the financial troubles inherent in Hostess in general, I assume these same workers don't need their jobs and are perfectly well off?

I have to laugh at these idiots ,whom deserve the Darwin Award alongside the striking Walmart workers.
 
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Hell, some department store workers should go on strike. I know people at Lowe's who have to be on government assistance because of their low pay. And because of the structuring of the schedules, they're unable to even get a second job, which would mean missing out on over $10 an hour during the summer when everyone practically gets full time or longer if they were to quit.
 
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