Hostess says talks to stave off shutdown fail
Hostess Brands Inc. lived to die another day.
The maker of Twinkies and Ding Dongs said late Tuesday that it failed to reach an agreement with its second biggest union. As a result, Hostess plans to continue with a hearing on Wednesday in which a bankruptcy court judge will decide if the company can shutter its operations.
The renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started on Nov. 9 by the union, which represents 30 percent of Hostess workers.
After making its case to liquidate on Monday, the bankruptcy judge hearing the case noted that the two sides hadn't yet tried resolving their differences through private mediation. The judge noted that 18,000 jobs were on the line and urged the company and union to try to resolve their differences. Both sides agreed to hold mediation proceedings on Tuesday.
In a statement late Tuesday, Hostess said it would not comment on the breakdown in talks other than to say that mediation "was unsuccessful."
Hostess shut down its three dozen plants late last week after it said the strike by the bakers union hurt its ability to maintain normal production. The bakers union says the company's demise was the result of years of mismanagement, however, and that workers have already given steep concessions over the years.
Hostess, weighed down by management turmoil, rising labor costs and the changing tastes of Americans, is making its second trip through Chapter 11 bankruptcy restructuring. The company, based in Irving, Texas, had brought on CEO Gregory Rayburn as a restructuring expert in part to renegotiate its contract with labor unions.
The company reached an agreement with its biggest union, the International Brotherhood of Teamsters, on a contract that dramatically reduced pension contributions, as well as slashing wages and health benefits. But the company said the bakers union stopped returning its calls about a month ago. The Teamsters urged the smaller union to hold a secret ballot on whether members wanted to continue striking. Many workers in the bakers union decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.
Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The bakers union meanwhile pointed to the steep raises executives were given last year as the company was spiraling down toward bankruptcy.
The company's announcement last week that it would move to liquidate prompted a rush on Hostess treats across the country, with many businesses selling out of Twinkies within hours.
Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies along brought in $68 million so far this year.
The maker of Twinkies and Ding Dongs said late Tuesday that it failed to reach an agreement with its second biggest union. As a result, Hostess plans to continue with a hearing on Wednesday in which a bankruptcy court judge will decide if the company can shutter its operations.
The renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started on Nov. 9 by the union, which represents 30 percent of Hostess workers.
After making its case to liquidate on Monday, the bankruptcy judge hearing the case noted that the two sides hadn't yet tried resolving their differences through private mediation. The judge noted that 18,000 jobs were on the line and urged the company and union to try to resolve their differences. Both sides agreed to hold mediation proceedings on Tuesday.
In a statement late Tuesday, Hostess said it would not comment on the breakdown in talks other than to say that mediation "was unsuccessful."
Hostess shut down its three dozen plants late last week after it said the strike by the bakers union hurt its ability to maintain normal production. The bakers union says the company's demise was the result of years of mismanagement, however, and that workers have already given steep concessions over the years.
Hostess, weighed down by management turmoil, rising labor costs and the changing tastes of Americans, is making its second trip through Chapter 11 bankruptcy restructuring. The company, based in Irving, Texas, had brought on CEO Gregory Rayburn as a restructuring expert in part to renegotiate its contract with labor unions.
The company reached an agreement with its biggest union, the International Brotherhood of Teamsters, on a contract that dramatically reduced pension contributions, as well as slashing wages and health benefits. But the company said the bakers union stopped returning its calls about a month ago. The Teamsters urged the smaller union to hold a secret ballot on whether members wanted to continue striking. Many workers in the bakers union decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.
Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The bakers union meanwhile pointed to the steep raises executives were given last year as the company was spiraling down toward bankruptcy.
The company's announcement last week that it would move to liquidate prompted a rush on Hostess treats across the country, with many businesses selling out of Twinkies within hours.
Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies along brought in $68 million so far this year.
Sounds to me the Hostess-Wonder execs were looking for a way to shut the company down, liquidate assets, steal all the employee pension accounts, take their own "Golden Parachutes", and blame the whole thing on the unions. Just another form of Madoff.
There will always be those who at first hint of any company in trouble, and where any union might be involved, leap out there to blame the union, meaning those greedy lazy workers, to be the sole source of the problem. They will ignore, and/or even deny that the management teams might be real problem. If a company has trouble in selling their product, but despite that, the CEO's continue to pass raises to themselves and their bonuses, and include "golden parachute" clauses in the CEO's portfolios, that gets ignored. The employees are not the ones who deal with the promotions of the product. The union workers already made financial and benefit concessions a few years before. But as was learned recently, whatever those concessions were obviously did not impress the management to also do their part, they went the other way, they increased their financial rewards. What would be interesting to see, is what the sales chart shows over say about the last ten years. A company exists to sell a product, when those sales take a dip, there is a reason. But it seems that there isn't much talk from the union basher's about that, nor about the management taking more personal gain while demanding more concessions from the employees.
I bet those unions must be real proud of themselves. Now instead of negotiating better wages, they are out of work entirely.
 @Just a dude  The union already did their part. They took an 8% pay cut and made major concessions only 3 years ago. This company was driven into the ground by poor management and the last CEO brought in is a well known company killer. The management knew this was a sinking ship 2 years ago, which is why many executives gave themselves 80% pay raises and the CEO went from 700,000 a year to 2.55 million a year. Loot, raid, part off, leave.
@quidproquo @Just a dude Oh and what did the Union workers make 70 grand a year running automated machines booo hooo! enjoy the unemployment line suka!
If you won't pay higher wagers to the Union - we'll force you out of business. Â What about us, the unemployed? Â No problem. Â Obama will take care of us. Â Okay, I mean the taxpayers - the ones without Union jobs.
Â
Who says the Union does not create jobs?
 @sentryone http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/ is a long read but it is a really good breakdown of how poor management eventually led up to this.
When this is all over, We're better off without that kind of food.
 @NoiseMan If you don't like it don't eat it, and it's not gone another company will buy them up.
@DarkParty @NoiseMan YEP and GO NON UNION!
 @DarkParty No, Wynooheeman is most likely a stanch rejector of unions just like me.
 @wynooheeman You really are a troll aren't you?
That's a shame
Wow, they gave these union numbskulls a second chance and they still turned it down?! Lets see... 8% initial loss in pay with a total 10% increase over 4 years.... or 100% loss in pay. What idiots! This is a case where the minority screwed the majority over hardcore. While I don't believe the upper management should have taken the huge bonuses they got, the union is now equally to blame for the failure of Hostess.
 @SilverGryphon The reality is Hostess was already a dead horse..... When venture capitalist stepped in in 2004 to buy up the debt (read that as effectively take control of the company) They did nothing to reduce the debt that was crippling it. If I had my guess, they bought the brand hoping liquidate years ago but Hostess hung on longer than expected.
 @SilverGryphon They already lost 8% and made major concessions 3 years ago. This is 100% the managements fault.Â
 @quidproquo While yes, the management did have a large role in the downfall, the union was given the chance to save the other 13k jobs affected by this and they chose to be dumbasses.
Â
Personally, a temporary decrease followed by a greater increase in pay is preferable to 100% loss of pay and benefits.
Â
And I bet the union won't support their members for long either.
 @quidproquo  @SilverGryphon George Bush's fault.  Can't be the Union's.
 @sentryone LOL
 @sentryone  @SilverGryphon http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/This is a good read / break down of how poor practices and management eventually led to this demise. I'm pretty sure you're just plain unhinged due to that random Bush comment you threw in. Â
I have told my friends to email Franz bakery for them to make a bid on all that is recipes, etc of Hostess. GIVE THE RECIPES TO FRANZ!! That'd work AND it's be a better product, too. More jobs and well, more jobs.
Several things have contributed to the demise of Hostess. Greedy management, lack of keeping up with the market needs and innovation to keep up with changes in the market, and a greedy union that is being condemned by other unions for their actions. Although the union is not the only fault it seems to be bent on driving the final nail into the coffin of Hostess. Again a classical demonstration of a union that cares nothing about the business, the workers, or anyone else but their pockets. Now we have another 18400 people out of work and that does not include the support services that depended on Hostess to purchase from them and those that took care of those who worked there. I wonder if they are celebrating in Union Town tonight???Â
 @LongBeachBum Greedy union for not accepting an 8% pay cut when they took a major pay cut among other major concessions just a few years ago? That is not greed, that is standing up for workers who couldn't afford to have their pay go any lower. The management of Hostess's financing for the past 10 years is the real blame, the death blow really came when the upper management gave themselves all massive pay raises while demanding the workers (who really make a company work) take a pay cut.
It takes some real talent to drive an iconic company like Hostess into the ground. Â And those decisions that led to this sorry state were not being made by minion union members.Â
@NWNative No kidding, the union was given a second chance and they still chose to throw 18,500 jobs away.
@silvergryphon  I know you're really really trying to sell this idea that its the unions fault but the union already did their part. They took an 8% pay cut and made major concessions only 3 years ago. This company was driven into the ground by poor management and the last CEO brought in is a well known company killer. The management knew this was a sinking ship 2 years ago, which is why many executives gave themselves 80% pay raises and the CEO went from 700,000 a year to 2.55 million a year. Loot, Raid, part off, leave.
 @quidproquo  @silvergryphon The reality is is your statement has been repeated constantly and is still wrong...
Â
 "CORRECTION: An earlier version of as well as an earlier headline of this post incorrectly stated that Greg Rayburn received a 300 percent raise as CEO of Hostess as the company approached bankruptcy. Rayburn wasn't CEO of Hostess until afterthe company filed for bankruptcy. The post also incorrectly stated that he was paid a salary of up to $2,550,000 per year. His salary when he joined the company was $100,000 per month, according to a company spokesman."
Â
"Hostessâ creditors accused the company in April of manipulating executive salaries with the aim of getting around bankruptcy compensation rules, the Wall Street Journal reported at the time. In response, Rayburn announced he would cut his pay and that of other executives to $1 until Dec. 31 or whenever Hostess came out of bankruptcy."
Â
http://www.huffingtonpost.com/2012/11/16/gregory-rayburn-raise_n_2147043.html
Â
I am not defending management because they obviously failed to take this company into the 21st century.....I am not blaming the union workers....of course they dont want to loose their wages .... but the reality is this company was saddled with debt and shrinking sales, I'm amazed they came out of bankruptcy at all. The sensationalism and misreporting of this is disgraceful, the unions grabbed this information and ran with it deliberately inflaming an already bad situation. Did the management give themselves raises? yep, and the CEO that was hired to fix it, squashed it, and took salaries back down.
Â
This does not overlook years of failing to get it under control, too little too late. Their Balance sheet sits with Liabilities 400 million higher than Assets... Their sales have declined to the point they have not made a profit since 2003. They made 3.5 billion in sales in 2003 last year they made 2.5 billion with the same crippling debt they had.Â
Â
 @NWNative I will not deny that.......the biggest mistake Hostess made was not getting with the times and becoming more health conscious.Â
I see it like this. Another "high bonus to C.E.O. paying while filing bankruptcy," "union greed strongarmed" American company is more than likely moving to Mexico. This is news? Looks like THIS guy will never enjoy a Twinkie again. Hostess was an AMERICAN enterprise, and is part of American history. I'll be damned if I'm going to buy "Grupo Bimbo Twinkies," so I wish to extend my middle finger to the unions and the C.E.O.'s of Hostess.....you people are idiots.
 @Wolfen those folks in that union are decent hard working Americans with families and kids and houses, mortgages, health care issues, families, cars, worried about the future just like the rest of us. they are patriots, many of whom likely served in the military. That's who you are cursing. So go ahead and "see it like this". People reading these comments are seeing you a certain way I guarantee it.
 @tufa23  @Wolfen You cannot base someone's pay based on whether they are good Americans, have families or mortgages or not.........pay should be based on skill and knowledge and what the market supports. Not years on the job. This is the thinking that has priced many of the US manufacturing companies right out of business and driven them overseas. Many of the jobs in manufacturing are simply repetition, can be trained easily and do not require any special training other than what can be given on the job. The only ability needed is to follow directions. While they can really get good at what they do and become more productive the reality is that it is not a highly skilled labor job. Believing this does not make me an awful person and hate my fellow man, it is simply the truth.Â
 @Wolfen While you are at it..........dont forget to solute the Venture Capitalist that did nothing about the debt almost 10 years ago through current day........I think they always had the intention of gutting the company, but it hung in there longer than they projected...
The top brands will be sold to the highest bidder and will be back in a new wrapper in no time. WAIT...why doesn't the union buy the brand and open up shop? Shouldn't they have the expertise? Or could it be they do not know how to create jobs?
 @John Gault The teamsters tried that in trucking,they failed. The U.S. Government also took over a business through the IRS ,a whore house and they failed.  The only thing in common other than failure is ,gee failures.
 @John Gault From what I have read, a Mexican company Grupo Bimbo (no, I absolutely am not making that up) is currently the top contender for the brand. Apparently there is an issue with high sugar tariffs in this country and Mexico has the best cost advantages to produce the snacks......they would most like do away with high fructose corn syrup and use *gasp* real sugar LOL
 @Susabelle  @John Gault I'd be very surprised if it is actual sugar cane...they probably use sugar beats, most of which now are GMO and just as bad for you as HFCS (if not worse). If people want a Twinkie there is a recipe floating around Facebook on how to make home made ones.
 @Susabelle  @John Gault You and I both...it's really sad when other countries have either outright banned or severely restricted GMOs and we don't even require labeling! I do know a great deal of our wheat, soy, corn, and cotton are GMO products. So unless they say Organic or non-GMO they are more then likely from Monsanto's lab.
 @MoonDragonWitch  @John Gault Well, I'm certainly not a sugar expert but I would like to have a say in the GMO thing....... I would love to get that labeling passed.
No loss. I'm sure some enterprising local baker can come up with a better version of the Twinkie to satisfy whatever demand was left.
I hope that it can be worked out.
The company didn't keep up with the times. Wonder bread is / was terrible. Then they chose to borrow money from raiders. Then the executives took higher salaries rather than stock options. Two chapter 11's and here you are. They got Bained.
 @rockguy "Then the executives took higher salaries rather than stock options."
Not to mention that they are asking the judge to allow bonuses for the executives amounting to over $1 M...
It's the Romney mentality on steroids.
 @rockguy I cant blame them about the stock options....they lost public trading in 2004 with the last bankruptcy and the company should never have been allowed out of bankruptcy in the first place they NEVER improved their debt problem that stayed with them from the first one.
@rockguy NO the got Haffa'ed! The workers Bit off the hand that feed them.
 @wynooheemanÂ
"Haffa'ed"? Â
Â
I guess that's no surprise considering you can't even spell where you live.
The company should have fought the union when it still had financial strength. Boeing watch out!!
 @contraryjim Boeing better watch out, they have a very strong union there and with the contract offers they have been getting from the company some of the cuts they want to do are absolutely screwy given the fact that the company is making record profits! My father works for Boeing and I saw what they were offering his union for the upcoming contract, it was completely unfair. If the company doesn't wise up and not make such a stupid offer, instead maybe offer to keep the current contract going another few years, then they are going to have a strike on their hands.
@MoonDragonWitch More like the union needs to watch out. I too saw what Boeing was offering the union this past round and it was still damn good. Their employees with high school diploma level education make more, and have better benefits than what I do as an aviation electronics repair technician with 3 years Navy experience and 5 1/2 years commerical experience in my field.
 @SilverGryphon  @MoonDragonWitch The Machinist did get a good contract, however I am talking about SPEEA workers and their contract. Sorry, I should have made that a bit more clear. My dad was a SPEEA rep for a number of years, they're not greedy, they just want the company to be fair and what they are doing with their (SPEEA) contract is BS.
And there is a big difference in the product being produced and the skill set needed to do it. There is nothing complex about a twinkie. If it was China you would probably have a bunch of 10 year olds doing it. Designing and building jet aircraft is a completely different situation.
 @contraryjim Right, because the union was behind the massive 250% pay increases management gave themselves right before filing for Chapter 11 in January.
Â
Put another way, if you're the captain of a sinking ship, you don't go around punching extra holes in the hull below the water line, then blame the crew for not being able to bail fast enough.
 @Mikeftm  @contraryjim "CORRECTION: An earlier version of as well as an earlier headline of this post incorrectly stated that Greg Rayburn received a 300 percent raise as CEO of Hostess as the company approached bankruptcy. Rayburn wasn't CEO of Hostess until afterthe company filed for bankruptcy. The post also incorrectly stated that he was paid a salary of up to $2,550,000 per year. His salary when he joined the company was $100,000 per month, according to a company spokesman."
Â
"Hostessâ creditors accused the company in April of manipulating executive salaries with the aim of getting around bankruptcy compensation rules, the Wall Street Journal reported at the time. In response, Rayburn announced he would cut his pay and that of other executives to $1 until Dec. 31 or whenever Hostess came out of bankruptcy."
Â
http://www.huffingtonpost.com/2012/11/16/gregory-rayburn-raise_n_2147043.html
Â
If you are going to report on the salaries........report on all of it.
 @contraryjim They won against the union 3 years ago. The union took an 8% paycut and some other concessions.