Hostess is set to close as a result of what it calls a crippling union fight.
Approximately 18,500 jobs will be lost, not to mention the tax revenue that comes from shops and plants of the company across the U.S. The union has been stubborn in its talks with the snack food icon and the collapsed talks are blamed for Hostess’ intended closure.
The 82-year old firm had its capacity to deliver and produce interrupted at 12 of 33 plants due to a nationwide strike that had began last week by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM) members. The Chief Executive of Hostess said that since the smaller union had refused to accept concessions, they would be forced to dismiss its staff and sell assets, as a nationwide strike would cripple it. Gregory Rayburn, the Chief Executive, says that they will have to close down bakeries, delivery routes and plants as well. The company however, said that its well-known brands would be shipped out until stocks run out. Hostess had given an ultimatum for striking workers to return to their jobs on Friday, but the strike continued.
The larger union, the International Brotherhood of Teamsters, had agreed to concessions offered by the company, but the smaller union had not and with that, the decision to file for bankruptcy was arrived at. Teamsters on the other hand blasted their smaller counterpart for not engaging in negotiations or seeking a solution. BCTGM officials attributed the crisis to years of mismanagement that was proven by there having been seven CEO’s in only 10 years.
The company has reported to a federal bankruptcy court that from November 9 to 19, the company would lose approximately $9.5 million, owing to increased costs and lost sales. The company also said that baked goods currently being transported would have to be returned and orders canceled that were currently in process. Almost 5,550 delivery routes, 570 bakery outlet stores, and 565 distribution centers face closure and the sale of Sno Balls, Ding Dongs, Twinkies and Ho Ho’s and other brands will be sold.
Meanwhile the U.S. Bankruptcy Court agreement is being sought as lenders agreed for the company to get financing of $75 million to fund its sale and winding down process.
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