Twinkies Could Disappear If Hostess Liquidates Amid Labor Strife
NEW YORK (CBS/AP)— Hostess Brands Inc. said it likely won't make an announcement until Friday morning on whether it will move to liquidate its business, after the company had set a Thursday deadline for striking employees to return to work.
The maker of Twinkies, Ding Dongs and Wonder Bread had warned employees that would file a motion in U.S. Bankruptcy Court to unwind its business and sell off assets if plant operations didn't return to normal levels by 5 p.m. EST Thursday. That would result in the loss of about 18,000 jobs.
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A spokesman for Hostess, Lance Ignon, said the company would likely make an announcement Friday after assessing plant operations Thursday evening.
Hostess bakeries in Illinois are located in Schiller Park, Hodgkins in the Chicago area and Peoria downstate, and the flagship Hostess product, the Twinkie, was invented by Schiller Park bakery manager James Dewar in 1930 under a precursor company, Continental Baking Co. Twinkies were originally banana-flavored until banana rationing during World War II prompted the company to switch to vanilla cream.
Hostess, based in Irving, Texas, has already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second biggest union went on strike late last week after rejecting a contract offer that cut wages and benefits in September. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year.
Striking Hostess workers standing in solidarity outside the company's Schiller Park plant say, after taking pay cuts in 2004 and 2011, they can't do it again.
"It's just so much that we're just tired," BCTGM Local 1 president Donald Woods tells CBS 2's Suzanne Le Mignot outside the Schiller Park bakery, which employs nearly 200.
Lance Ignon, a spokesman for Hostess, said that production at about a dozen of its 33 plants has been seriously affected by the strike. He said that a decision on whether Hostess will have to move to liquidate the company may not come until Friday morning, after it's had a chance to assess plant operations at the end of Thursday.
The Teamsters meanwhile is urging the smaller union to hold a secret ballot on whether to continue striking. Citing its financial experts who had access to the company's books, the Teamsters say that Hostess' warning of liquidation is "not an empty threat or a negotiating tactic" but a certain outcome if workers continue striking.
The Teamsters also noted that the strike put its union members in the "horrible position" of deciding whether to cross picket lines.
Hostess, a privately held company, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess has argued that workers must make concessions for it to exit bankruptcy and improve its financial position.
The company, founded in 1930, is fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks.
Hostess said it will file the motion to liquidate Friday, with a hearing scheduled for Monday. If the motion is granted, Hostess would begin closing operations as early as Tuesday.
Chicago-area Hostess fans feared the worst could happen.
"I hope that it don't last much longer because I need my Twinkies. Without them, the world wouldn't be the same," Michael Provenzano tells CBS 2.
(TM and © Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
