Hostess moves to liquidate after strike

Show caption
Robert F. Bukaty /
Associated Press photo by ROBERT F. BUKATY -- Striking worker Joe Locey pickets outside a Hostess Brands plant Friday in Biddeford, Maine. The maker of Twinkies and Wonder Bread plans to go out of business, lay off its 18,500 workers and sell its snack cake and bread brands.

Twinkies may not last forever after all.

Hostess Brands Inc., which makes Ding Dongs, Wonder Bread and other snacks, filed a motion Friday with U.S. Bankruptcy Court seeking permission to shutter its operations. The move comes after the company said striking workers across the country crippled its ability to maintain production.

The closing would mean the loss of about 18,500 jobs. The company said employees at its 33 factories were sent home and operations suspended Friday. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

Hostess CEO Greg Rayburn said that there was no buyer for the company. But 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.

Rayburn 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 company was operating on thin margins and stalling production meant the loss of critical sales.

“The strike impacted us in terms of cash flow,” Rayburn said. “The plants were operating well below 50 percent capacity and customers were not getting products.”

Hostess, based in Irving, Texas, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. It struggled with increased competition, Americans’ move toward healthier eating and the high pension, wage and medical costs related to its unionized workforce.

The move to liquidate comes after a long battle with its unions. 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. The bakers union represents about 30 percent 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 representative for the bakers union did not immediately return a call seeking comment.

Although many workers crossed picket lines this week, the company said it wasn’t enough to keep operations at normal levels. Three plants were closed earlier this week.

The company had 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 has said the company is unprofitable under its current cost structure, in large part because of its union wages and pension costs. Rayburn said that sales volumes had been flat to slightly down leading up the bankruptcy filing. In a statement on the company website, he said all employees will eventually lose their jobs, “some sooner than others.”

The liquidation hearing will go before a bankruptcy judge Monday afternoon. Rayburn said he’s confident the judge will approve the motion.

“There’s no other alternative,” he said.

The move to liquidate was unwelcome news to some customers.

Adil Ahmed, whose family eats Hostess treats during the holidays, said he rushed to the supermarket Friday morning after hearing the news. Growing up in New Jersey, he said, his Southeast Asian family bought Wonder Bread to dip in curries and loaded up on sweets from a nearby warehouse for the holidays.

He bought four boxes of Twinkies and other snacks for a family get-together this weekend.