The
owners of Hostess Brands, the company that makes baked goods
such as Twinkies and Wonder Bread, made good on a longstanding threat to close
down operations, eliminating as many as 18,000 jobs.
Company
spokesperson Lance Ignon said some 22 bakeries around the nation completed
their last production runs early on Friday morning, while delivery drivers
finished their final routes this afternoon. The company has no plans to resume
operations.
In a
statement, Hostess CEO Greg Rayburn blamed the shutdown on a strike this week
by the Bakery, Confectionery, Tobacco Workers and Grain Millers International
Union (BCTGM).
However,
his scapegoating of the union obscures a larger and more complicated story of
corporate mismanagement and naked greed. In fact, the company has been in
severe financial distress for more than a decade, management has been in
disarray, and vulture capitalists have been circling in search of financial
prey.
Hostess
might be considered an "old economy" company in the sense that it
manufactured, produced and marketed popular cakes to a mass market. In its
newest incarnation—under the slicker, greedier sensibility of Wall St. —it is something else
altogether.
Hostess
claims that a BCGTM strike begun on November 9 was the
company's undoing. The strike started at four scattered Hostess
plants and spread across the country, forcing 11 bakery closures,
according to Ignon.
The union,
however, notes that the strike came only after months of fruitless contract
negotiations and the imposition by Hostess of “draconian cuts” to wages
and benefits. Prior to that, employees of Hostess were working under reduced
incomes for almost 10 years. From 2004 to 2008 the company, then called
Interstate Bakeries, went through a Chapter 11 bankruptcy in which all union
workers took forced cuts.
BCTGM
President Frank Hurt was not available for comment on today, but earlier
this week said that the BCGTM strike was the “tragic” result of the
company’s ill-conceived plan to bust the unions, dismember the company and sell
off the pieces to highest bidders. Hostess managers have made clear that they
care little for the hardships imposed on the workers, Hurt said, leaving the
union no choice but to strike in hopes of the bringing the company back to the
bargaining table.
Hurt has
made other comments over the last three months in which he made clear that he
believes the owners of the company have no real desire to return the ailing
Hostess to profitability. Rather, they want to strip the company of its
valuable assets while discarding the long-term employees and financial
liabilities.
Hostess
confirmed at least part of Hurt’s analysis on Friday when the company also
announced it wants to move quickly to sell its bakeries, distributions
facilities, retail outlets and “popular brands.”
According
to an article in
Friday’s Kansas City Business Journal, that means the company will sell
brand names such as Hostess, Twinkies, Wonder Bread, Ding Dongs and Ho Hos.
Food industry analyst John Stout Jr. believes such sales would allow other
businesses to resume profitable manufacturing of these products in other
facilities.
Such a plan
will require the approval of Judge Robert Drain of the U.S. Bankruptcy Court
for the Southern District of New York. Hostess filed a Chapter 11 bankruptcy
petition in Judge Drain’s court early this year, and under bankruptcy law most
major business decisions at Hostess require his approval. Indeed, the
imposition of the brutal wage and benefit cuts on BCTGM members was
specifically approved
by Judge Drain in October.
Hostess
spokesperson Ignon said the company plans to be back in Judge Drain’s court
next week to seek his okay for measures to further wind down operations.
Hostess will not seek a formal conversion to a Chapter 7 liquidation
proceeding, but rather a continuation of the status quo, in which the current
owners and managers maintain control of the company, he said.
Whatever
happens in Judge Drain’s bankruptcy court next week, an estimated 18,000
Hostess workers will have no job to return to Monday.
The company
has been maintaining a payroll of 18,300 to 18,500 workers, Ignon says, and
most were laid off Friday. An undetermined number of managerial and administrative
workers will be retained for the immediate future, he adds, but it is too early
to give exact numbers.
About 5,000
BCTGM workers will lose their jobs, along with 7,500 members of the
International Brotherhood of Teamsters and hundreds of members of ten other
unions representing smaller sectors of the Hostess workforce.
CEO
Rayburn’s Friday statement made no mention of any assistance that the company
plans to offer the newly jobless employees.
> The
article above was reprinted from In These Times.
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