Hostess Brands Says It Will Liquidate

[katmai]

[CountDeMoney]

Hostess lives another day to mediate with union

WHITE PLAINS, N.Y. (AP) — Twinkies will live to see another day.

Hostess Brands Inc. and its second largest union agreed on Monday to go into mediation to try to resolve their differences after a bankruptcy court judge concluded that the parties hadn't gone through the critical step. That means the maker of the spongy cake with the mysterious cream in the middle won't go out of business yet.

The news comes after the maker of Ho Ho's, Ding Dongs and Wonder Bread last week moved to liquidate and sell off its assets in bankruptcy court. The company cited a crippling strike started on Nov. 9 by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that started, which represents about 30 percent of Hostess workers.

''Many people, myself included, have serious questions as to the logic behind this strike,'' said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. ''Not to have gone through that step leaves a huge question mark in this case.''

The mediation talks are expected to begin Tuesday, with the liquidation hearing set to resume on Wednesday. After Monday's hearing, Jeff Freund, an attorney for the bakers union, said any guess as to how the talks will go would be ''purely speculative.''

In an interview following the hearing, CEO Gregory Rayburn said that there is enormous financial pressure to come to an agreement with the union by the end of the day Tuesday. He noted that it's costing Hostess about $1 million a day in payroll costs alone to keep the company alive.

''We didn't think we had a runway, but the judge just created a 24-hour runway,'' said Rayburn, who added that even if a contract agreement is reached, it's unclear whether all 33 Hostess plants operate again.

Hostess, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, the company, which is based in Irving, Texas, asked the court for permission to sell assets and go out of business.

Hostess, which is in its second bankruptcy in less than a decade, said that it was saddled with costs related to its unionized workforce. So the company brought on Rayburn as a restructuring expert to renegotiate its contract with labor unions.

Hostess, which had been contributing $100 million a year in pension costs for workers, offered them a new contract that would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits. But the bakery union decided to strike.

By that time, Hostess had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.

Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The company's announcement on Friday that it would move to liquidate prompted people across the country to rush to stores and stock up on their favorite Hostess treats. Many businesses reported selling out of Twinkies within hours and the spongy yellow cakes turned up for sale online for hundreds of dollars.

Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies along brought in $68 million so far this year.

[Ed Anger]

There went the eBay bubble.

[crazy canuck]

Why are anti-union states called "right to work" states?  Is this one of those Orwellian terms Republicans like to come up with?

Yep, it is one of the most nonsensical terms ever created.  The theory is increasing labour mobility by giving employers the power to fire at will (ie without having to pay any form of severance) will give the most qualified workers the ability to  find employment at the most competitve rates.  This is sold as a something to help workers.

Of course, in practice this type of legislation is anything but.  Skilled workers who are in demand do not require this kind of legislation to find jobs.  This legislation is designed to treat unskilled workers like so many inputs into production so that the company can engage in just in time labour to adjust downward at a moments notice without cost - unless one considers the worker of course.

[Barrister]

Why are anti-union states called "right to work" states?  Is this one of those Orwellian terms Republicans like to come up with?

Yep, it is one of the most nonsensical terms ever created.  The theory is increasing labour mobility by giving employers the power to fire at will (ie without having to pay any form of severance) will give the most qualified workers the ability to  find employment at the most competitve rates.  This is sold as a something to help workers.

Of course, in practice this type of legislation is anything but.  Skilled workers who are in demand do not require this kind of legislation to find jobs.  This legislation is designed to treat unskilled workers like so many inputs into production so that the company can engage in just in time labour to adjust downward at a moments notice without cost - unless one considers the worker of course.

Aw fuck it, it's quitting time.

[crazy canuck]

I had lunch with my friend today. He said most of the BCTGM members were furious with union leadership. Only about a third of them at his plant had actually gone on strike and there had been mass membership withdrawals over the past few weeks. The Teamsters are also pretty steamed about not having been told ahead of time about the strike that has now cost them their jobs as well.

It says something when the Teamsters is the most responsible organization in the picture.

It also says something about how messed up US Labour laws are when only 1/3 of the union wants to strke and a strike is mandated by the union.  Dont you guys even know how to create decent legislation that requires majority strike votes?

Either that or your friend is exaggerating a few details...

[CountDeMoney]

It says something when the Teamsters is the most responsible organization in the picture.

Teamsters are a sizable portion of Hostess' sales force, and the drivers receive a commission on sales they make to stores they deliver Hostess products to.  One of the reasons different products have to go on different trucks, redundant distribution routes, etc.  It was the model Hostess wanted.

[Sheilbh]

Demand for coal disappears because of cheap new sources of natural gas in the North Sea to power electricity generation plants, it must be a plot by that Nazi Thatcher. 

This isn't right.  At the time of the miners' strike most electricity in the UK was from coal generated power plants.  It remained so, overwhelmingly, for a decade after the miner's strike.  Natural gas only started to take off in the mid-90s.  It was however cheaper to begin to import coal and privatise the profitable mines than to subsidise, through the nationalised coal industry, domestic production.  But it wasn't a shift in demand - that's why my dad spent the two years before the miners' strike shipping coal to stockpiles near the power plants.

Also the miner's strike, on both sides, was politics.  Thatcher wanted to exorcise the legacy of the miners' strike in 1972 and to send a message to the trade unions.  The NUM was the most militant union and for them and many on the left they thought they could bring her government down and knew that if they lost this fight it'd be the end of union power in this country.

Edit:  In 1990, five years after the miners' strike gas accounted for 0.05% of UK energy production, coal was over 66%.

[derspiess]

Yep, it is one of the most nonsensical terms ever created.  The theory is increasing labour mobility by giving employers the power to fire at will (ie without having to pay any form of severance) will give the most qualified workers the ability to  find employment at the most competitve rates.  This is sold as a something to help workers.

Of course, in practice this type of legislation is anything but.  Skilled workers who are in demand do not require this kind of legislation to find jobs.  This legislation is designed to treat unskilled workers like so many inputs into production so that the company can engage in just in time labour to adjust downward at a moments notice without cost - unless one considers the worker of course.

It's a damned good thing you don't practice law or whatever down here.  Because that is not what "right to work" laws are about at all.  They simply prohibit employers and unions from creating contracts that require employees to join a union or pay union dues. 

[Caliga]

I believe he is confusing "right to work" with "at will employment".

[MadImmortalMan]

Yep, it is one of the most nonsensical terms ever created.  The theory is increasing labour mobility by giving employers the power to fire at will (ie without having to pay any form of severance) will give the most qualified workers the ability to  find employment at the most competitve rates.  This is sold as a something to help workers.

Of course, in practice this type of legislation is anything but.  Skilled workers who are in demand do not require this kind of legislation to find jobs.  This legislation is designed to treat unskilled workers like so many inputs into production so that the company can engage in just in time labour to adjust downward at a moments notice without cost - unless one considers the worker of course.

It's a damned good thing you don't practice law or whatever down here.  Because that is not what "right to work" laws are about at all.  They simply prohibit employers and unions from creating contracts that require employees to join a union or pay union dues.

It's not always that simple right? I mean my mom has to pay union dues even if she doesn't join the union. I'm pretty sure this is a RtW state. There must be some exceptions. I bet it's not the same in every state either.

[Admiral Yi]

It's not always that simple right? I mean my mom has to pay union dues even if she doesn't join the union. I'm pretty sure this is a RtW state. There must be some exceptions. I bet it's not the same in every state either.

The casinos are heavily unionized.  I would be surprised if Nevada were a right to work state.

[viper37]

In the meantime, try to get your hands on Jos Louis or May West cakes.  In the long term, my portfolio will thank you

[viper37]

It's a damned good thing you don't practice law or whatever down here.

There is no such thing as "right to work provinces" in Canada, everyone has to pay their union dues, it's a Federal judge decision and it applies to all provinces, even if work codes are provincial affairs.  Another reason to dislike federalism

[Camerus]

One thing that doesn't make sense about this story is how could it be the case that a tiny fraction of union leadership could be so unrepresentative of the wishes of its members, and its members have utterly no recourse?  Such a system opens the door to so many potential abuses.  Seems like either the law there is totally fucked or, more likely, details are being misrepresented.