A small union’s stubbornness in contract talks with Hostess is being blamedÂ for the shutdown of one of America’s snack food icons, the loss of 18,500 jobsÂ and much-needed tax revenue from hundreds of plants and shops across theÂ country.
The privately-held company had reached a deal with the Teamsters, but aÂ smaller union representing bakery workers refused to agree to concessions,Â prompting the mass layoffs and closing down of hundreds of plants, bakeries andÂ delivery routes. That prompted harsh words from both the company and fromÂ Teamsters officials.
“We deeply regret the necessity of today’s decision, but we do not have theÂ financial resources to weather an extended nationwide strike,” Chief ExecutiveÂ Gregory Rayburn said in a statement. “Hostess Brands will move promptly to layÂ off most of its 18,500-member workforce and focus on selling its assets to theÂ highest bidders.”
The company said it will continue to ship out its well-known products untilÂ inventory runs out.
The national strike by members of the Bakery, Confectionary, Tobacco WorkersÂ and Grain Millers International Union (BCTGM) that began last week decimated theÂ 82-year-old company’s ability to produce and deliver products at roughly 12 ofÂ its 33 plants. The company announced earlier in the week that the ax would fallÂ on Friday if the strikers didn’t get back to work, but the union didn’t blink.Â BCTGM President Frank Hurt said Thursday that the crisis was the “result ofÂ nearly a decade of financial and operational mismanagement” and chargedÂ management was scapegoating workers to allow the Wall Street investors who ownÂ Hostess to sell.
Calls seeking comment from Hurt were not returned early Friday.
The Irving, Texas-based company had already reached an agreement on pay andÂ benefit cuts with its largest union, the International Brotherhood of Teamsters.Â On Thursday, Teamsters officials blasted the smaller union for not seeking a “solution” in the process or to engage in negotiations.
“The BCTGM chose a different path, as is their prerogative, to notÂ substantively look for a solution or engage in the process,” the statement read. “BCTGM members were told there were better solutions than the final offer,Â although Judge Drain stated in his decision in bankruptcy court that no suchÂ solutions exist. Without complete information, BCTGM members voted by voiceÂ votes in union halls. The BCTGM reported that over 90 percent rejected the finalÂ offer and three of its units ratified the final offer.”
In a letter toÂ employees posted on the company’s website, Rayburn saidÂ all employees would eventually lose their jobs, some sooner than others.
“Many people have worked incredibly long and hard to keep this fromÂ happening, but now Hostess Brands has no other alternative than to begin theÂ process of winding down and preparing for the sale of our iconic brands,”Â Rayburn’s letter read. “As you know, for many months the Company has beenÂ working with our unions, lenders and other stakeholders to reach a consensualÂ resolution to legacy costs and labor contracts. Despite everyone’s considerableÂ efforts to move Hostess out of its restructuring, when we began implementing theÂ Company’s last, best and final offer, the Bakers Union chose to stage aÂ crippling strike.”
Because the company is privately held, its financials were not available. ButÂ has struggled for several years, with some blaming America’s increasing appetiteÂ for healthier fare. The company sought concessions from employees, but insteadÂ got a costly strike that further crippled it, according to officials, who told aÂ federal bankruptcy court it would lose up to $9.5 million from Nov. 9 to Nov. 19Â in lost sales and increased costs. The company has cancelled all orders inÂ process and said any baked goods currently in transit would be returned toÂ shippers.
“These losses and other factors, including increased vendor payment termsÂ contraction, have resulted in a significant weakening of the debtors’ cashÂ position and, if continued, would soon result in the debtors completely runningÂ out of cash,” the filing read.
Hostess will now sell its popular brands like Ding Dongs, Ho Ho’s and SnoÂ Balls, along with the closure of 565 distribution centers, 570 bakery outletÂ stores and roughly 5,550 delivery routes.
Lenders have agreed to allow Hostess to continue to access $75 million inÂ financing put in place at the start of the bankruptcy cases to fund the sale andÂ wind-down process, subject to U.S. Bankruptcy Court approval.
BCTGM workers began striking at some Hostess production facilities withoutÂ notifying Teamsters officials on Nov. 9, the Teamsters said.
“This unannounced action put Teamster members in the difficult position ofÂ facing picket lines without knowing their right to honor such a line withoutÂ being disciplined,” the statement continued.
Source: Fox News