The Wonder Hostess Bakery Thriftshop is shown at the Utah Hostess plant in Ogden, Utah, Thursday, Nov. 15, 2012. Hostess Brands Inc. is warning striking employees that it will move to liquidate the company if plant operations don't return to normal levels by Thursday evening. The maker of Twinkies, Ding Dongs and Wonder Bread said Thursday it will file a motion in U.S. Bankruptcy Court to shutter operations if enough workers don't return by 5 p.m. EST. That would result in the loss of about 18,000 jobs, including hundreds in Ogden. (AP Photo/Rick Bowmer)
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, Wonder Bread 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 assets if plants didn?t resume normal operations by a Thursday evening deadline.
The closing would mean the loss of about 18,500 jobs, including nearly 600 in Utah.
"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 include Ho Hos, Dolly Madison, Drake?s and Nature?s Pride snacks. The company books about $2.5 billion in sales a year.
After Hostess filed for Chapter 11 in January, spokeswoman Anita-Marie Laurie said the company employs about 570 people in Utah. Salt Lake City and Ogden were home to two of its 36 regional bakeries, while 11 Utah cities had Hostess retail stores and nine cities also have depots where the company?s trucks drop off and pick up goods.
Hostess, based in Irving, Texas, suspended bakery operations at its 33 factories and said its stores will remain open for several days to sell already packaged products. The privately held company?s Chapter 11 filing earlier this year was its second trip to bankruptcy court in less than a decade.
Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting in September a contract offer that slashed wages and benefits. Hostess said Friday the company is unprofitable "under its current cost structure, much of which is determined by union wages and pension costs."
A union representative did not immediately return a call from The Associated Press seeking comment on the company?s announcement.
"Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands," Rayburn said in a letter to employees posted on the company website.
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He added 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 had said that production at about a dozen of its plants were seriously affected by the strike. Three plants were closed earlier this week.
The company 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, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake?s and Nature?s Pride snacks.
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Source: http://www.sltrib.com/sltrib/money/55292406-79/company-hostess-union-brands.html.csp
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