Bloomberg News

Hostess Closing Bakeries as Workers Won’t Cross Lines

November 12, 2012

Hostess Brands Inc., the maker of Wonder bread and Twinkies, began permanently closing plants after it couldn’t get enough members of its striking bakery workers’ union to cross the picket lines to keep them open.

“Very few” Hostess workers from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union are crossing the picket line in a strike begun Nov. 9, said Ray Scannell, the union’s research and education director.

Hostess announced today that bakeries in Seattle, St. Louis and Cincinnati will be closed as a result of the strike.

“Sadly this action will result in the permanent closure of three facilities and the loss of 627 jobs,” Hostess Chief Executive Officer Gregory Rayburn, said in a statement.

“We will close the entire company if widespread strikes cripple our business,” Rayburn said. The strike affects 23 of Hostess’s 36 plants, the company said today. Half the affected plants are operating, the company said.

The company can’t continue operating with one-third of the plants affected, Rayburn said in an interview. Hostess is “days away” from having to shut down entirely, he said.

The bakery workers’ union went on strike at some locations in reaction to what the union called the “unilateral imposition of a horrendous contract” rejected by 92 percent of the membership.

Teamsters Union

Drivers represented by the Teamsters Union ratified a new contract with 8 percent in wage concessions and 17 percent in benefit reductions. The Teamsters are honoring the bakery workers’ picket lines at some locations, Scannell said today in an interview.

The Teamsters weren’t honoring the picket lines, company spokesman Erik Halvorson said in an e-mailed statement. Irving, Texas-based Hostess said enough union members are crossing the picket lines to allow “full operations” at about half the struck plants.

“Some employees are apparently under the misimpression that if they force Hostess to liquidate, another company will buy our bakeries and offer them employment.” Rayburn said today in a statement.

The industry has “far too much capacity,” Rayburn said. “I believe the leadership of the bakers union knows this fact, but is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions.”

‘False Claims’

Hostess is making “false claims” in a “desperate attempt to break our members’ solidarity and scare our members into giving up their fight for their pensions, their health insurance, their wages and their families,” bakery union Secretary-Treasurer Dave Durkee said today in a statement.

The bakery workers’ union said it represents 5,000 Hostess workers.

Hostess previously said the bakery workers voted against the contract because they were erroneously told there was a white knight ready to buy the company and avoid wage cuts.

No Buyer

“There is no buyer waiting to purchase the entire company and there never has been,” a Hostess spokesman, Lance Ignon, said in an e-mailed statement.

Teamsters officials couldn’t immediately be reached for comment on the strike.

Hostess filed a bankruptcy reorganization plan last month that can’t be implemented without selling some assets or obtaining new financing. Both the Teamsters and the bakery workers’ union made voluntary concessions in the first Chapter 11 reorganization, which began in 2004.

Hostess filed under Chapter 11 for a second time in January, listing assets of $982 million against liabilities totaling $1.43 billion.

The new case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04- 45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).

To contact the reporters on this story: Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net; Bill Rochelle in New York at wrochelle@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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