Is This the End of the Road for Twinkies and Ding Dongs?

Nov 16, 2012  •  Post A Comment

For better or worse, you may have eaten your last “Golden Sponge Cake with Creamy Filling,” as Hostess Brands describes its iconic snack cake, the Twinkie.

Hostess filed a motion today to shut down the business — closing the plants that make Twinkies, Ding Dongs, Hostess Cup Cakes, Wonder Bread and other products and clearing the way to lay off about 18,000 workers, USA Today reports.

The move follows an impasse in a weeklong strike by employees of the company. “Hostess workers remained on picket lines across the country Thursday night, refusing a company ultimatum to return to work or face the liquidation of the national baker,” the story reports.

The company suspended operations at its bakeries but said deliveries would continue and Hostess retail stores would remain open to sell the merchandise that’s already in the works.

Not everyone is convinced the latest moves by Hostess really mean the end of the road for the company. In a Wall Street Journal report on the case, the paper takes a wait-and-see stance.

“Hostess has threatened liquidation before in the case — and during its last stint in Chapter 11 — and not followed through,” the paper reports. “Earlier this year, it said a vote against its last, best, final offer by either of its two largest unions would prompt an immediate liquidation. But when the bakers union gave Hostess just that trigger, Hostess instead decided to take its case back to the court.”

The fate of the Twinkie and other products also remains uncertain, the piece notes, with a bankruptcy court auction possible if the liquidation goes through. A competitor could take over manufacture of the products.

In a letter to employees posted on the Hostess website, CEO Gregory Rayburn said: "Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands."

The USA Today report adds: “Privately held Hostess filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess contends workers must make concessions for it to exit bankruptcy and improve its financial position.”

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3 Comments

  1. Now I understand why the Little Debbie snacks at my convenience store are much less expensive than Hostess: Little Debbie is a non-union shop. Way to go, Teamsters.

  2. Of course, unions aren’t the only problem behind 15 years of missteps by Hostess/Interbrand Bakeries. The company went on a huge buying spree in the 1990s and earlier this century, buying out lots of other regional bakeries — all largely financed by debt and investment banks. Hostess has never recovered.
    It’s easy to blame the unions these days. But the company — like so many others — killed itself through greed and incompetence. Moreover, I’m certain all the execs and the investment bankers who pushed through these big deals made out great. It’s the workers who got hosed.
    Somewhere, Mitt Romney is smiling.

  3. It is easy to blame the unions because, while you may try to spin it every way but truthfully, IT IS THEIR FAULT. It was a simple Quid Pro Quo. If the unions would take an 8% reduction this year, with a 4% increase next year, the company would stay open. If they would not do it, the company would close. The union said no. The company will close.
    The union workers preferred a 100% pay cut to an 8% pay cut. I don’t understand the logic in that.

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