Fin24

Twinkies maker to go out of business

2012-11-16 16:59

HOSTESS Brands, the bankrupt maker of Twinkies and Wonder Bread, said it had sought court permission to go out of business after failing to get wage and benefit cuts from thousands of its striking bakery workers.

Hostess said a national strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that began last week had crippled its ability to produce and deliver products at several facilities.

The liquidation of the company will mean that most of its 18 500 employees will lose their jobs, Hostess said on Friday.

The 82-year-old company said it took the decision to shut down after determining that not enough employees had returned to work by a deadline on Thursday.

The company, which filed for bankruptcy in January for the second time since 2004, said it had filed a motion with US Bankruptcy Judge Robert Drain in White Plains, New York, for permission to shut down and sell assets.

Irving, Texas-based Hostess has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Its brands include Wonder, Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita, but it is probably best known for Twinkies.

"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 in a statement.

"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," Rayburn added.

Union President Frank Hurt said on Thursday that the crisis at the company was the "result of nearly a decade of financial and operational mismanagement" and that management was trying to make union workers the scapegoats for a plan by Wall Street investors to sell Hostess.

Hostess said its debtor-in-possession lenders had agreed to allow the it to continue to have access to $75m to fund the wind-down process.

"There's no way to soften the fact that this will hurt every Hostess Brands employee. All Hostess Brands employees will eventually lose their jobs - some sooner than others," Rayburn said in a letter to employees.

The company has canceled all orders in process with its suppliers and said any product in transit would be returned to the shipper.

In its filing with the court, the company said it would have incurred a loss of between $7.5m and $9.5m from November 9 to November 19 in lost sales and increased costs.

"These losses and other factors, including increased vendor payment terms contraction, have resulted in a significant weakening of the debtors' cash position and, if continued, would soon result in the debtors completely running out of cash," it said.

Hostess had already reached agreement on pay and benefit cuts with the International Brotherhood of Teamsters, its largest union.

Comments
  • Dennis - 2012-11-16 17:06

    Gotta love unions the world over.

  • Shaun Rademeyer - 2012-11-16 17:10

    The pot of Gold has a limit, and now 18500 people and many more families will have to suffer. I hope this can start showing people that we can't always get what we want!!!!!!!!!

      warren.vanwyk.3 - 2012-11-17 10:23

      Actually it will be more than 18500 suffering families. There is always a ripple effect when a company of this size goes down, taking other companies with it & forcing others to drastically down size by means of retrenchments. I won't be surprised if the 18500 figure grows by 50%.

  • neal.badenhorst - 2012-11-16 17:37

    The world needs more Margaret Thatchers and less unionists.

      david.toit.7 - 2012-11-16 17:45

      I second that

  • jurgen.eksteen - 2012-11-16 17:38

    I bet Woody Harrelson's character in Zombie Land is going to be extremely pissed-off about this.

      jason.dutoit - 2012-11-17 09:45

      and hurley in lost :D

  • Shaun Rademeyer - 2012-11-16 18:04

    It is sad to see that 18500 people and many more families will be left without an income - however I hope we can all see that the pot of gold has a limit hope that our current incompetent leaders will start focusing on the counties interest and not the size of their villages!!!!!!!!!!

      hermann.hanekom - 2012-11-16 20:26

      18500 went on strike to strike down their source of income and security - their achievement. Wonder if our labour will take note, but I am not holding my breath.

  • Shaun Rademeyer - 2012-11-16 18:06

    What idiot my friends are - sorry Guys

  • Mandy Casey - 2012-11-16 18:40

    Okay union time for plan B, oops there is none. Congrats you have just lost 18000 union members.

  • gazaspells - 2012-11-16 19:39

    so this union thingy is not unique to south africa alone hey

  • rohan.vangraan - 2012-11-16 19:56

    Why is it that when people want a job,any terms is okay,but as soon as they are settled into the job,they start to demand more?

  • wwrer.ww - 2012-11-16 20:03

    Unions and the rest of the scum of the earth: 0.

  • wilma.vandermerwe.39 - 2012-11-16 20:14

    Ja, kyk nou!!!! Van staak kom toe maak!!!

  • dave.elmore.5 - 2012-11-16 20:16

    It certainly is hard to understand why such an iconic brand in the USA could go down like this, sad news, as an American brought up with this brand, sorta like losing part of your history.

  • strikeback.strikeback - 2012-11-16 20:49

    Now to make this all better, they should ensure that the 18 000 striking workers stay unemployed and never cause someone else to loose their income. Make sure striking workers remain unemployed. www.strikeback.co.za (now being upgraded)

      flysouth - 2012-11-17 14:01

      Wish you all the luck in the world in, as I understand it, creating an accessible database of strikers so that employers may know their enemy.

  • rontheogre - 2012-11-16 20:53

    They went on strike to prevent a salary and benefit cut of 8%, now have to suffer a 100% salary AND benefit cut. Brilliant! The employer was open and forthcoming about his financial situation due to the slowing economy and move to being more health conscious, but still they went on strike. Makes me wonder about the level of education on the part of the union representatives and what their commitments are, or do they just look out for themselves, as they do not seem to benefit the members in the long run. The effect of the spate of strikes in SA will only be seen in about four months when the job cuts start as predicted by the mining houses. Will the unions then protest because companies are going belly up or will they help negotiate to keep companies open and jobs alive?

      strikeback.strikeback - 2012-11-16 21:11

      Ronald, you have summed this up 100%. Unfortunately in South Africa when the employer informs the workers that the company cannot afford the increases, he is deemed a capitalist and comments are made on how much he takes home. Now lets imagine the Twinkies CEO or owner took home R2.5m a year. If he decided to share his annual income with all the employees, he would have contributed R138 per annum per employee. This amounts to R12 per employee per month. COSATU would have every employee believe that their standard of living could have been improved if the CEO was not paid so much and there was not such a big difference between rich and poor. Every employee would immediately believe that his wealth has been stolen and started looking for a stone to throw, burn the factory down, loot a couple of shops, get into the unemployment line and applied for a new job at the factory next door. Strikeback wants to isolate these people by keeping them unemployed. www.strikeback.co.za (under construction)

  • zwelethu.sabasaba - 2012-11-16 21:13

    I've know Twinkies since about 2000 and it was too expensive for anyone in Soweto to indulge in, that might be one of the reason the company is closing down- it sold to everyone, including wrong people

      strikeback.strikeback - 2012-11-16 21:23

      Zwelethu, Twinkies are cheap. For the price of a decent house in a rural area like Nkandla you can get 85000000 Twinkies. Yes that is 85 million Twinkies. Companies normally close down when expenditure exceeds income. Simple if you think about it! Dont try and pay more than you get in! www.strikeback.co.za (under construction)

      collin.chivell - 2012-11-16 21:36

      I think you are thinking of \tinkies\ sa brand. Twinkies usa brand. I havnt seen \twinkies\ in sa.

      zwelethu.sabasaba - 2012-11-16 21:45

      Strikeback, i have bookmarked the website and i'll visit it\r\n\r\nCollin, you're right- the names are too similar and i believe the product is the same

      blue.spheric - 2012-11-17 08:27

      JUST A PASSING BY COMMENT : I hope to heaven someone out there from Tinkies SA is taking note of the Twinkies catastrophe...because tinkies sa is also starting to go DOWNhill f>A>S>T.,,,their products are dry and oily...one used to get a nice large cream center..now all you get is a hidden idea of cream!!! CATCH A WAKE UP TINKIES!!!

  • dean.elliman - 2012-11-16 21:34

    Minimum wage in the US is between $7-$9H. Most of this company's hourly employees are earning $22/H, obviously negotiated (black mailed) by unions no doubt. No wonder they are bankrupt, even with the 8% cut they would still be earning double minimum wage.

  • jaysonpaul.beckwith - 2012-11-17 08:10

    NOOOOOOOOO!!!!!!! I love Twenkieeeees!!!!

  • diran.pillay - 2012-11-17 08:13

    18500 people lose their jobs because they are not happy with their above minimum wage salary! Now what do they do,no job,no money,no nothing!!! So what has the UNION did for them?

  • jason.marshall.1804 - 2012-11-17 09:24

    No more twinkies..aahh!

  • jason.dutoit - 2012-11-17 09:58

    the unions make money out of the their members. strikers do not get paid while they strike. the increases they negotiate rarely cover the lost income before the next strike a year later. so the workers make a loss. however, union fees are still payable during a strike, so the unions keep making money. it is in the interest of the union to strike, but very often not in the interest of the workers! fat-cat union bosses in their fancy cars. evil, ek sĂȘ. maybe they should charge lower union fees...

      jason.dutoit - 2012-11-17 09:59

      the union members should strike against the unions ;)

  • angelique.p.ervin - 2012-11-17 10:03

    Oh come on... Seriously???? Twinkies were one of the defining moments of my childhood.... I'm 24 and I still feel like a 10 year old about to burst with excitement when I get a twinkie....

  • ryan.a.smith.3958 - 2012-11-17 10:28

    nice to see there are american idiots too

  • Fernandes44 - 2012-11-17 12:37

    Twinkies are an american product produced in the usa ..... Although here in sa we have a similar product that is very similar called tinkies and by the way made by a independent company unrelated to there counter part in the usa ... So calm down tinkies is not out business

  • flysouth - 2012-11-17 13:59

    South African unions and workers should read this and take note - it will soon be happening here unless they ameliorate their demands very sharply. Our unions and strikers however understand nothing of business and furthermore seem to believe that their employer must just sit still whilst being beaten about the head, so to speak, as strikers march, destroy and demand! Even corporates have the right to self-defence!

  • giancarlo.groenewald - 2012-11-17 14:18

    WHAT!? no more twinkies NOOOOOOOOOOO my life will end.

  • christopher.tarboton - 2012-11-19 08:14

    Perhaps all the commentators missed it, but for the last decade the company had been creaking under very poor management control. the company closed down because management was useless. When you guys get the chop from your company that you have devoted your efforts to for the last thirty years, I am pretty sure that the Union will be one of the first people you go to. We need a balance in life and business. Oh, and BTW, I am a manager for a company.

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