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Bret Hartman / REUTERS
A box of Hostess Twinkies is seen on the shelves at a Wonder Bread Hostess Bakery Outlet on Friday in Glendale, Calif.
Hostess Brands said Tuesday night that it failed to reach a deal in mediation with the Bakery, Confectionary, Tobacco and Grain Millers Union.
The bankrupt maker of Twinkies and Ding Dongs said it will have no further comment until a hearing scheduled for Wednesday at 11 a.m ET before the U.S. Bankruptcy Court for the Southern District of New York.
A union representative did not immediately respond to a request for comment.
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The ailing company, which also makes Wonder Bread and Drake's cakes, sought permission from bankruptcy court on Monday to liquidate its business, claiming that its operations were crippled by the bakers' strike and that winding down was the best way to preserve its dwindling cash.
On Friday, Hostess closed 33 factories and announced plans to lay off 18,500 workers over an acrimonious labor dispute. But on Monday, U.S. Bankruptcy Judge Robert Drain urged the parties to come to an agreement through mediation.
Most insiders had anticipated that the two sides would come to an agreement, but the union and company could not find common ground.
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The company has blamed union wages and pension costs for contributing to its unprofitably. Hostess Chief Executive Gregory Rayburn has also said the company's labor contracts have deterred would-be bidders for the company and its assets.
Here's what each side previously agreed to:
Teamster Union concessions:
- 8 percent immediate pay cuts, which would go down to 5 percent next year
- Hostess will reduce contributions to the health plan by 17 percent
- Hostess will freeze pension contributions until 2015
Management concessions:
- Gave Teamsters 25 percent share of company stock
- Gave Teamsters two seats on the board
- Gave Teamsters a $100 million claim in bankruptcy
- Won't permanently freeze pensions contributions
- Former CEO's head on a platter: board ousted Brian Driscoll in March, 2012, after it was revealed his salary was tripled to $2.5 million at the same time he demanded steep pay cuts for workers
The next step is to go back to the bankruptcy judge, who will hold in his hands the fate of the 82-year-old company and its well-known brands.
In the coming months, several different scenarios could play out, depending on whether a buyer emerges for the company's brands.
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"There's a lot of goodwill that comes with the brand name," said John Pottow, a bankruptcy law professor at the University of Michigan. "A lot of companies could buy the name and recipe for Twinkies and make them."
Potential buyers wouldn't have to make the snack foods at Hostess factories either. They could make them in new facilities not burdened under old worker agreements that, for instance, required employing separate drivers for two different kinds of Hostess products rather than trucking them together. Among the alternatives:
Twinkies get absorbed by a big American conglomerate
Some of the likely suitors include ConAgra, Tastycakes maker Flowers Food, or McKeeFoods, makers of Little Debbie. These companies would likely seek to attach the Twinkies to a more efficient delivery system. For instance, does it really make sense to deliver Twinkies in their own special Twinkies trucks?
"Twinkie The Kid" trades his cowboy hat for a sombrero...
A Mexican firm, like Grupo Bimbo, which Forbes reports put in a bid for Hostess several years ago, could move production south of the border. A South American company could get access to lower sugar prices and a cheaper non-unionized workforce. Or, they could keep product in the US, but make them in a non-unionized factory.
...or develops a Canadian accent.
A Canadian company called Saputo has the Canadian rights to Hostess brand products. They're not affected at all by the Hostess liquidation and they could conceivably arrange it to sell Twinkies in America.
Twinkies dies
Pure speculation: No one buys the Twinkies recipe. Fans are forced to make their own at home. Prices for unopened boxes of Twinkies skyrocket on eBay. An "Occupy Twinkies" movement launches to build an unauthorized Twinkies knockoff factory with no leaders and online-only sales... and is surprisingly profitable.
Related: Relax, Twinkies likely to live on
Court filings showed that the company is asking for permission to pay $1.75 million in retention bonuses to 19 different managers as an incentive for sticking around during the liquidation process.
The U.S. trustee, Hope Davis, an official appointed by the Justice Department to protect the interest of creditors, objected to this idea, filing a motion on Monday which argued that Hostess officials "have failed to demonstrate that the proposed bonuses are true incentive bonuses and not disguised retention payments."
Davis also moved to convert the bankruptcy from a Chapter 11 to a Chapter 7. That would take control of the wind-down proceedings away from Hostess and into the hands of a court-appointed trustee.
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In their joinder filed Monday, the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union said that "blaming the BCTGM for the Company’s liquidation is no more credible than blaming an isolated gust of wind for blowing over a tree, when it was the tree’s shallow, rotted root structure that was actually responsible."
But kids, both young and old, don't care about the blame game. They want to know whether they'll still be able to find their favorite creme-filled yellow cake treat on the shelves.
The decades-old brand is legendary in consumers' minds and evokes strong feelings of nostalgia in every bite. Some still remember the brand's signature character "Twinkie The Kid" lassoing it up on early television commercials and proclaiming "Big Delight in Every Bite!"
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The foodstuff has even entered the legal canon. "The Twinkie Defense" was famously, and successfully, used to argue that a suspect on trial for murder suffered from depression and that his high-sugar diet was a symptom of this mental state.
Ben Popken and Reuters contributed to this report.
On Monday, Hostess brands and its second-largest union agreed to a final mediation session in an attempt to avoid liquidation and a sale of assets. Even if the talks fail, several potential buyers are interested in the rights to Twinkies, Wonder Bread and other Hostess brands. TODAY's Natalie Morales reports.
Leave a Comment:
My friend worked at Boeing. They could not move their rolling scaffolds 6 feet down the side of the aircraft to continue their work because they were not members of the "riggers union". Sometimes they would wait for hours while on the clock for a simple push of the scaffold that they could have done themselves in 5 minutes. In short. Unions suck.
Exactly right! Or the janitor that can't change a light bulb because he doesn't belong to the electrician's union! Just ludicrous demands from labor, and some very stupid management negotiating with them that agree to such bizarre demands.
I once worked in a very large company where the culture of the organization was so bad... it sounds a lot like Boeing. I know there are these kinds of organizations out there. And employees don't leave because the earn damned good hourly rates, aren't challenged, and learn to accept apathy. The organization is so large and unwieldy that management looses control. When management and supervisors cannot or don't supervise... this is what happens. So the workers get their way. Then it becomes a standoff as demands become more ridiculous.
If management would take steps the FIRE incompetent or abusive employees... it would not be hard to find replacements in a lot of cases. But management and supervision sometimes don't want the hassle or do not get backing and sometimes feels like the buck has been passed. And what supervisor wants to stand alone feeling like they have no support. This IS a senior management problem. THAT is why unions have gotten out of control. POOR organization leadership and supervision... in my opinion.
Sounds like both are to blame. Labor bites the hand that feeds it and the blanken owners try to get as much as possible before closing. Seems like a microcosim of our societies problems, Get yours and screw the other guy. Heaven forbid try to do whats right for everyone.
Key word in your post OWNERS. It's their company. Like it or leave it. No employee is forced to stay.
I don't get this article. The Teamsters already agreed to terms with Hostess. The Baker's union didn't agree.
What could POSSIBLY be the reason that Twinkies had to be trucked by themselves?
If you think losing 18,500 jobs is bad, just wait until the end of 2013! It will make that 18,500 look like a drop!
sadly, you will probably be correct in your prediction.
Perfect....now let all the idiot union members run those a$$hole union leaders out of town...stop paying your dues to those crooks!!!! How does your pride buy those groceries now boys!
Oh, we already know from Wisconsin that when union members have to pay their own dues (not deducted from their paychecks), many simply drop the union. THAT is what really scares the unions---they are afraid the cash cow is about to die.
Union or not it doesn't matter. The company sees what Romney/Bain Capital see, millions in profits. No one cares where the company ends up as long as every cent is sucked out of the employee's pension funds. You think yours is safe? Better think again on how to protect it and come up with some new rules for employers. Joining groups that take over these companies may be the only way we save our jobs. What I'm talking about is forming companies of our own (employee owned). Twinkies could continue to be made right here in the United States if we (American's) put our money where our hearts are. 300,000,000 people in this country, how many would it take to buy Hostess if we put in $50.00 each? How about $100.00 each or what ever you could afford. How much of a return could we get from just a small one time investment? People we need to join up and make things work for our selves. Stop relying on others to give us 40 hour/week jobs.
Very low return on investment, I bet. The unions would be the ones making the big bucks. Hostess will not come out of bankruptcy with a profit. It will have to liquidate all of its assets. There won't be anything left when the creditors are paid back only partially what they are owed.
there are plenty of examples of employee-owned businesses. ----- problem is, it's not easy to come up with the appropriate amount of capital to get things started.
Bye Bye Hostest Fruit Pie, Drove my Chevy to the grocery store but the shelfs were all dry, them good ole union boys drinking whiskey and rye, singing this is the day Twinkie died. This is the day Twinkie died.
union greed is destroying america, so sad
NICE!
Company discloses books. Employees discount the records.
No bluff, YAF'ed.
G'bye!
OK I will give you bad management. But it takes two trucks and six different employees to get the products from the factory to the retail outlet. This is not a high margin product. One loader who drives and unloads and you cut labor by 5/6. I know union members are incapable of comprehending such difficult equations. In such a situation you should expect bad management since anyone who could get a better slot would not take this gig.
Good job union leaders.
Some of the best paying jobs are in the car assembly plants in Al, Ga and Mis. They don't have unions. The workers are not so greedy that they want it all. Average pay is 70K - 80K a year. Not bad for a bunch of red necks?
We're STILL talking about this after a number of days. No wonder we have an obobesity problem-- look how obsessed we are with this stuff!
Hows that picket line working out for ya? Is your family yet asking how are we gonna eat, pay rent, buy gas, pay the bills???? You had a frickin' job i a crappy economy and to prove a point you are now unemployed. Do you know how many people would love a job right now? Don't you think hundreds of Americans like me working overseas, living in tents and crappin in porta potties every day wouldn't love to come home to a job but are stuck here, ""becoming millionaires" as so many misinformed people think", but the job market is so tough. I was turned down, all in 1 day, for 3 positions I was amply qualified for but went to one of the other thousand or so applicants. Morons, each and every one of you. And to blame a CEO. Don't you realize that they are responsible for an entire comapny and its 10s of thousands of employees?? Ya maybe they are paid too much, but you threw away your responsibilities to your families. Hope you are standing just as proud in the unemployment line as you are on your picket line. Jackazzes.
I might not be able to buy another Ding Dong but it is comforting knowing we still have one left in the Whitehouse. Another 18,500 people on the takers list.
Thank God Mittines didn't Win the white house and to all you Obama hatters...hows it feel to be LOOOOOOSERS....lol
Eastern Airlines was eventually done in by the International Association of Machinists (IAM) in the 1980s. Somewhere along the line, they allowed baggage throwers, ramp servicemen, etc to join the IAM. Up until then, it was only highly skilled workers - mechanics. As in jet engine mechanics, etc. Soon, the highly skilled workers were outnumbered by at least 10-1. But, who controlled the union? The unskilled workers. They continued to vote themselves big raises, refused to bargain with management, etc. And, eventually - Eastern went bankrupt. Was management partly responsible - absolutely. But those same unskilled workers laughed at my attending college and graduate school because they were being paid unsustainable wages and told me Eastern "had 2 sets of books." They said the company "had lots of money." This was the mentality of the voting majority of the union. Sound familiar?
Sorry but the 'Twinkie Defense' was NOT successful.
That company deserved to go under, mismanagement, blind workers and selfish unions.
Its survival of the fittest, evolution! the weak and the stupid die off. Just as all the companies who paid 5 & 6 employees to do the work of 3. Ancient business models, unprofitable work rules, crippling legacy costs and a large percentage of its current employees really aren`t very smart. Look up the demise of Bethlehem Steel it says it all. I feel sorry for the creditors, bond holders & shareholders, they are ones who lose, not the ignorant employees & managers. Now the lawyers and liquidators are the winners by far!
GloriaAlbert6 What do you think this is your own ADD PAGE??.get a f-ckin life ok and go pay for your adds like everyone else has to do...this is not your own personal website im amazed no ones turned you in....
Bill Clinton signed the North American Free Trade agreement before he left office. After he did so, many American Manufacturing jobs went to Mexico. The Auto Industry basically moved down to Mexico... I work for an Auto Manufacturer.
Hostess employee's: Hostess WILL move to Mexico, and Mexican's will have your jobs... They will import the product to the United States. They are probably building the plant as I write this comment. Don't be stupid and send another 18,000 jobs to Mexico. Make the concessions! Do not lose your jobs to Mexico! That is what Hostess and many other Manufacturers in America want! They want cheap labor and more profits!
Let's be clear about this. The North American Free Trade Agreement BEGAN with negotiations started by George H.W.Bush in 1986. Following a lengthy term or negotiations and change in leadership in Canada and the U.S. due to elections... Clinton signed off on the agreement just BEFORE the deadline when negotiated agreement would expire. Doesn't take much to look up these facts on the Internet.
I discovered that I did forget to mention that in 1979 Ronald Reagan actually initiated the discussion leading to negotiations for NAFTA.
Its not difficult to see that this agreement harmed American labor and prosperity when the economy started to decline.
Jobs leaving the US started happening long before NAFTA. When the federal government allowed Japan to start dumping steel at a price that could not be met by US Steel producers, a series of bankruptcies spread throughout the Steel industry. Also, the newly created EPA targeted the steel industry (rightfully) to reign in the pollution caused by the factories. US auto companies used Japanese steel, further impacting the US Steel industry. That was in the 70s. It was all down hill from there.
How about this story! AL sent electrical workers to help in the storm damage in NJ and NY. They were sent home because, you guessed it, those rednecks did not belong to a union. I really feel sorry for people in that area who have to suffer because of the stupidy of the people in control.
Sorry for those workers,but that stuff kills you and your children.They get fat first and than they get diabetes.
I am still waiting for some union to actually BUY a company that it helps put out of business. Might be interesting to see what the union would pay it's own members while still trying to remain profitable. Let's see them put there money where their mouths are. They seem to want to be pretty free with other people's money. Politicians in the making?
Possible new owners should tell the Unions to 'GO POUND SAND'. These greedy SOB's are killing their own rank and file. The unions are necessary any longer. Haven't been for years. I'm certain that if given a choice of continuing to work at the same pay levels, but with no unions, I'd been the people would rather be working than sitting doing nothing. Especially in this economy.
Prior to banktrupcty, bakers at Hostess made $63K/yr.
The union made concessions and the bakers to a cut to $37K/yr. In the meantime, the CEO got a raise from $750K to $2.5MM. 11 other executives got 80% raises in pay.
This time, the company asked those same bakers to take a cut to $24K along with cuts in benefits. The union said no.
You guys are right. These damn unions are killing America. At least they're killing rich people who want to pay their workers the same type of wages we find in China.
you musta skipped over that part of the article which mentions that CEO getting fired.
Love to see some proof that the bakers took that big of a cut, especially when the WSJ says the company wanted a cut of 8% earlier this year, which the union did not object to.
@SouthernOregonGolfer: I hope you don't keep score golfing like you do math.
The company was asking for an 8% pay cut. Your scenario of going from 37k to 24k simply is a lie.
And WHY in the world would a baker make 63K?????????????????
Oh what will become of the world without all these Ding Dongs?
Well we still have plenty of them too go around just like the ones running the country right now with there Twinkies falling short in the cream of things.
Lets sell the company to Iran that will win the war LMAO!