Even Twinkies Can't Survive this Economy
After four days of striking by employees at Hostess, the company has returned with an ultimatum: if enough workers do not resume their positions by 5:00pm EST today, CEO Gregory Rayburn will be forced to liquidate the entire company, leaving the nearly 18,000 employees jobless.
The strike began on Nov. 9, after the company won the right to impose an 8% pay cut on employees in bankruptcy court. Now, the company says, if the strike doesn't end by the end of the day, they will seek permission from U.S. Bankruptcy Judge Robert Drain to shut down all operations and sell assets.
“We simply do not have the financial resources to survive an ongoing national strike,” said Rayburn in a statement. If the strike continues, and the company wins permission to liquidate, Hostess said it plans to begin closing operations and firing employees as early as Nov. 20, just two days before Thanksgiving. The strike has already lead to the permanent closing of three of the company's 36 plants, and the loss of 627 jobs.
The strikers belong to The Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM), lead by President Frank Hurt. In a statement earlier this week, Hurt said, “Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years. Our members are not just striking for themselves, but for all unionized workers across North America who are covered by collective bargaining agreements.”
Hostess had already filed for bankruptcy twice in recent years and was on the verge of moving forward with a reorganization plan when the strike erupted. The labor deal proposed by the company imposed significant pay and benefits cuts to workers, and was rejected by 92% of Hostess BCTGM members, who make up about a third of the company's workforce.
In a message to strikers, Rayburn announced, “It is now up to Hostess' BCTGM represented employees and Frank Hurt, their international president, to decide if they want to call off the strike and save this company, or cause massive financial harm to thousands of employees and their families.”
“Hostess has 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.”
But this might not be the end for some of Hostess' best known brands like Twinkies and Wonder Bread, which will likely be picked up at auction by other companies.+8
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