Bloomberg News

Hostess Says Plants to Close Unless Workers Ignore Strike

November 12, 2012

Hostess Brands Inc., the maker of Wonder bread and Twinkies, said it will begin permanently closing plants unless enough members of its striking bakery workers’ union cross the picket lines to keep them open.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 at some plants over what the union called the “unilateral imposition of a horrendous contract” rejected by 92 percent of its members. By late yesterday, the strike affected 23 of Hostess’s 36 plants, the company said in a message to union members today.

Enough union members are crossing picket lines at about half of the struck plants to allow “full operations,” the company said. Hostess, based in Irving, Texas, is asking bakery workers to “reconsider and return to work immediately.” The union said it represents about 5,000 Hostess workers

Drivers represented by the Teamsters union aren’t honoring the strike, Erik Halvorson, a company spokesman, said in an e- mailed statement. Hostess is making deliveries today, he said.

If workers don’t return, the company said it will decide today whether “to permanently close certain locations due to our inability to resume full-scale production.”

Teamsters members ratified a new contract with 8 percent in wage concessions and 17 percent in benefit reductions. The U.S. Bankruptcy Court in White Plains, New York, imposed the same concessions on some members of the bakery workers’ union who voted down the proposed contract.

‘Simply Leave’

“We know the concessions are tough, but it would make more sense for unhappy employees to simply leave the company voluntarily than to strike and cause the company to close down, forcing everyone to lose their jobs,” Hostess said in a Nov. 9 statement.

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

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

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

Hostess filed a proposed 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: Bill Rochelle in New York at wrochelle@bloomberg.net; Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net

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


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