Hostess Asking Court For Permission To Liquidate

Hostess Brands, the eighty-two year old company and maker of kids favorites, Twinkies and Devil Dogs, has asked the federal bankruptcy court for permission to liquidate its assets.  The cause cited, was failure to reach an agreement with the striking bakers union which represents 5,000 of the 18,500 Hostess employees.  According to CEO Gregory Rayburn, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.”  In order to emerge from bankruptcy, Hostess was going to impose an 8% wage cut this year, followed by increases of 3% over each of the next three years and a 1% increase in the final year.  In addition, according to MSN business, “Hostess also reduced its pension obligations and its contribution to the employees’ health care plan. In exchange, the company offered concessions, including a 25% equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.”  I have no issue with unions per se, but the short sightedness can only lead one to believe the union leadership is unintelligent, uninformed, or both.  The lack of simple common sense is astounding.  Union workers would prefer unemployment, to working, with benefits and stake in the company?  Are bakers positions so readily available they would be willing to give up their jobs?  An therein lies the problem with unions.  Theoretically, unions exist to keep employers, big business and government from taking advantage of workers but they don’t necessarily negotiate in the best interests of the employees.  Hostess was bleeding money, filed for bankruptcy protection and asked for help in its reorganization.  Without concessions, the company could not continue as an entity and that’s where the story ends.  The liquidation of the company translates to 18,500 people laid off; 33 bakeries and 565 distribution centers shut down.  Just how does that benefit the Union?  Does it consider this a win or does it simply demonstrate to other unions, how committed it is to not offering concessions.  Whatever the reasons, the only losers are the 18,500 employees who will be joining the ranks of the unemployed.

2 thoughts on “Hostess Asking Court For Permission To Liquidate

  1. This is a classic story of the parasite killing the host. The US has tariffs on sugar, raising the cost of US production over that of companies south of the boarder as well as other domestic regulatory costs which purchasers of Twinkies aren’t interested in supporting with higher Twinkie prices. Clearly this is a failure of management, still the unions are in this as well creating the perfect background to an exit strategy and with its exit, include 18,000 jobs.

    If you want to be stupid, better be tough.

    • In my experience, when companies fail, it’s generally the failure of management. But in this case there was an attempt to find a solution and the union wanted no part of it. As I stated, I would prefer to have a job then being unemployed. Thank you for your comment.

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