Hostess, which had already filed for bankruptcy twice- including this past January- was asking the following from its workers:
The new contract cut salaries across the company by 8% in the first year of the five-year agreement. Salaries were then scheduled to bump up 3% in the next three years and 1% in the final year.
Hostess also reduced its pension obligations and its contribution to the employees' health care plan. In exchange, the company offered concessions, including a 25% equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.
Not so bad when the unemployment numbers are so high. Now, instead of an 8% decrease in salary, they received 100% decrease, along with no prospects for work and a loss of their pension and healthcare. Way to go. Did they really think that a company already in its death throes was bluffing? Ironically, the Teamsters union had accepted a new contract (though by a slim margin) in September and was urging the Bakery union to take a secret vote to determine if the workers wanted to save their jobs. Didn't happen, and I'm sure they're all now wishing they had.
With people choosing to eat in a more health conscious way, Hostess might have eventually folded, but at least those 18,500 people would still have a job for a while longer.
The sequence of events is posted on the Hostess website.
On Nov. 12, Hostess Brands permanently closed three plants as a result of the work stoppage. On Nov. 14, the Company announced it would be forced to liquidate if sufficient employees did not return to work to restore normal operations by 5 p.m., EST p.m., Nov. 15. The Company determined on the night of Nov. 15 that an insufficient number of employees had returned to work to enable the restoration of normal operations.
The BCTGM in September rejected a last, best and final offer from Hostess Brands designed to lower costs so that the Company could attract new financing and emerge from Chapter 11. Hostess Brands then received Court authority on Oct. 3 to unilaterally impose changes to the BCTGM’s collective bargaining agreements.
Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands’ 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands’ debt.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Gregory F. Rayburn, chief executive officer. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”
Hostess will be attempting to sell its brands, but in case they don't, all you junk food addicts might want to stock up before they're all gone.
Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Ho’s®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Nature’s Pride ®, Merita®, Home Pride®, Butternut®, and Beefsteak®, among others.
Other sources: The Republic