The Tribune Democrat, Johnstown, PA

Latest News

November 16, 2012

Twinkie-maker Hostess reaches the end of the line

NEW YORK — Twinkies may not last forever after all.

Hostess Brands Inc., the maker of iconic childhood treats including Ding Dongs, Wonder Bread and Drakes, is winding down its operations after struggling to keep up with rising labor costs and the ever-changing tastes of Americans, who have grown accustomed to a dizzying array of new snacks flooding supermarket aisles every year.

The company, whose roster of brands date as far back as 1888, filed a motion to liquidate Friday with U.S. Bankruptcy Court after striking workers across the country crippled its ability to maintain production.

Hostess CEO Greg Rayburn said in an interview that there was no buyer waiting in the wings to rescue the company. But without giving details, he said that there has been interest in some of its 30 brands, which include Dolly Madison and Nature’s Pride snacks. Experts agreed that it was likely the biggest brands would survive.

Hostess, based in Irving, Texas, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than three years. Unlike many of its competitors, Hostess had been saddled with high pension, wage and medical costs related to its unionized workforce. The company also faced intensifying competition from larger companies such as Mondelez International, the former snack unit of Kraft Foods that makes Oreos, Chips Ahoy and Nabisco.

The shuttering of Hostess means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended Friday. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

The move to liquidate comes after a long battle with its unions. Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages and benefits. The bakers union represents about 30 percent of the company’s workforce.

A representative for the bakers union did not immediately return a call seeking comment.

Although many workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels; three plants were closed earlier this week. Rayburn said Hostess was already operating on thin margins and that the strike was a final blow.

“The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products,” Rayburn said.

The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking.  

Ken Hall, general secretary-treasurer for the Teamsters, said his union members decided to make concessions after hiring consultants who found the company’s financials were in a dire situation.

“We believed there was a pathway for this company to return to profitability,” Hall said, noting that the liquidation could’ve been prevented if the bakery union had agreed some concessions as well.

Although Hall agreed that it was unlikely anyone would buy the entire company, he said “people are going to look for some fire sale prices” for some of the brands. For now, he expects Hostess products will be on shelves for another week or so.

“Frankly it’s tragic, particularly at this this time of year with the holidays around the corner,” Hall said, noting that his 6,700 members at Hostess were now out of a job.

Kenneth McGregor, a shipper for Hostess in East Windsor, Conn., arrived at the plant Friday morning and said he was told he was laid off immediately.

He blamed the bakery workers union for rejecting a proposed contract.

“They screwed us big time,” he said.

In a statement on the company website, CEO Rayburn said there would be “severe limits” on the assistance the company could offer workers because of the bankruptcy. The liquidation hearing will go before a bankruptcy judge Monday afternoon; Rayburn said he’s confident the judge will approve the motion.

“There’s no other alternative,” he said.

The company’s demise stoked nostalgia among customers as well.

Adil Ahmed, whose family still eats Hostess treats during the holidays, said he rushed to the supermarket Friday morning after hearing the news. Growing up in New Jersey, he said his Southeast Asian family bought Wonder Bread to dip in curries and loaded up on sweets from a nearby warehouse for the holidays.

“I have nephews and nieces – we have to pass on the tradition to the next generation,” said Ahmed, a 25-year-old union worker in Baltimore. He bought four boxes of Twinkies and other snacks for a family get together this weekend.

Samantha Caldwell of Chicago also took a quick detour on her way to work Friday morning after she heard the news on NPR. The 41-year-old attorney stopped at a CVS store.

She got a package of two Twinkies to have with her morning tea, and another for her 4-year-old son, who has never had one.

“This way he can say, ‘I had one of those,”’ she said.

–––

AP Reporters Stephen Singer and Ashley Heher contributed to this report.

Follow Candice Choi at www.twitter.com/candicechoi

 

1
Text Only | Photo Reprints
Latest News
  • Flower2 Flowers' color doesn't have to fade

    Those pots of bright yellow daffodils, Easter lilies and hyacinths gracing the home this weekend do not have to end up in the trash bin when the blooms start to fade.

    April 20, 2014 2 Photos

  • Refinancing could lower Richland School District's debt by $2.2M

    When Richland School District borrowed funds for its high school project a decade ago, board members circled “2014” on their calendars as a likely first option to refinance the debt.

    April 20, 2014

  • Pipeline to carry shale byproducts

    An 8-inch transmission line crossing Pennsylvania, including four municipalities in Cambria County, is being repurposed to carry some of the by-products from Marcellus and Utica shale production.

    April 20, 2014

  • Judge Creany, Timothy Vets courts gain support

    Signs of success are mostly anecdotal in Pennsylvania’s special courts for veterans, but judicial officials and lawmakers are so convinced of the program, they’re lobbying to expand it.

    April 20, 2014 1 Photo

  • pow21 Person of the Week: ‘I wanted to help’: Teen uses birthday to show love for children, animals

    Anastasia Machik’s love for children and animals inspired her to forgo her birthday gifts for the sake of the two.

    April 20, 2014 1 Photo

  • Students taking steps to call attention to child abuse

    An upcoming community walk will help raise awareness of child abuse.

    April 20, 2014

  • In brief: PennDOT reports weekly work schedule

    April 20, 2014

  • Halfway house inmates can ease back into society

    Prison life can be a time warp.
    When inmates are locked away – for months, years, decades – society moves forward: Technology evolves, major events occur, pop culture changes. From a personal perspective, families and friends live their lives: weddings, funerals, graduations, births, retirements. All the while, criminals bide their time, existing in a regimented world of cement walls and metal bars.
    Almost all of them eventually rejoin society, though.

    April 19, 2014

  • Crime board took aim at house

    Johnstown’s unemployment rate is around 8 percent.
    One-third of the city’s population lives in poverty.
    Burglaries and assaults significantly increased between 2010 and 2012. There is a thriving illegal trade in heroin and prescription drugs.
    Given those conditions, it can be challenging for Johnstown Community Corrections Center residents to find jobs when living in the facility or to avoid falling back into a criminal lifestyle upon their release.

    April 19, 2014

  • Homicides linked to center

    Three homicides that took place in Johnstown last year involved either a suspect or victim who previously resided in the Community Corrections Center.
    Police Chief Craig Foust confirmed the name of one victim, who spent almost two months in the facility on Washington Street during 2007, a time period verified by the Pennsylvania Department of Corrections.

    April 19, 2014

Poll

Would you like to see the Johnstown Community Corrections Center remain open after its lease runs out on Oct. 11, 2015?

Yes
No
I'm not sure
     View Results
Order Photos


Photo Slideshow

House Ads