Twinkie talks fail: Hostess Brands to shut down

NEW YORK — Hostess Brands Inc. lived to die another day.

The maker of Twinkies and Ding Dongs said late Tuesday that it failed to reach an agreement with its second-biggest union. As a result, Hostess plans to continue with a hearing on Wednesday in which a bankruptcy court judge in White Plains, N.Y., will decide if the company can shutter its operations.

The renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared last week that it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started on Nov. 9 by the union, which represents 30 percent of Hostess workers.

After making its case to liquidate on Monday, the bankruptcy court judge noted that the two sides hadn’t yet tried resolving their differences through private mediation. The judge noted that 18,000 jobs were on the line and urged the company and union to try to resolve their differences. Both sides agreed to hold mediation proceedings on Tuesday.

In a statement late Tuesday, Hostess said it would not comment on the breakdown in talks other than to say that mediation “was unsuccessful.” A lawyer for the bakers union said he had no comment, citing mediation ground rules.

Hostess shut down its three dozen plants late last week after it said the strike by the bakers union hurt its ability to maintain normal production. The union says the company’s demise was the result of years of mismanagement, however, and that workers have already given steep concessions over the years.

Hostess, weighed down by management turmoil, rising labor costs and Americans’ changing tastes, is making its second trip through Chapter 11 bankruptcy restructuring. The company, based in Irving, Texas, had brought on CEO Gregory Rayburn as a restructuring expert in part to renegotiate its contract with labor unions.

The company reached an agreement with its biggest union, the International Brotherhood of Teamsters, on a contract that dramatically reduced pension contributions, as well as slashing wages and health benefits. But the company said the bakers union stopped returning its calls about a month ago.

The Teamsters urged the smaller union to hold a secret ballot on whether members wanted to continue striking. Many workers in the bakers union decided to cross picket lines last week but Hostess said it wasn’t enough to keep operations at normal levels.

Teamsters General Secretary Ken Hall said the failure of the mediation talks Tuesday and the likely shuttering of the company was a “tragic outcome” for Hostess workers.

Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The bakers union meanwhile pointed to the steep raises executives were given last year as the company was spiraling down toward bankruptcy.

The company’s announcement last week that it would move to liquidate prompted a rush on Hostess treats across the country, with many businesses selling out of Twinkies within hours.

Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess’ sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies alone brought in $68 million so far this year.

More in Herald Business Journal

Boeing could help launch orbiting space station for the moon

“We should have a lunar base by now. What the hell has been going on?”

How the Airbus-Bombardier alliance could squeeze Boeing

“It makes Boeing look like they’ve been playing tic tac toe against a chess master,” says an analyst.

More self-awareness could help build a better medical system

Marcy Shimada of Edmonds Family Medicine writes the second in a series about fixing our health care system.

Scratch-and-sniff brochures aimed to prevent disaster

Puget Sound Energy has distributed more than a million scratch-and-sniff brochures to… Continue reading

Jewelry, accessories store Fuego opens second site in Snohomish County

Northwest-based jewelry, accessories and gifts store Fuego opened a new outlet store… Continue reading

Extreme cleaning company Steri-Clean opens in Mukilteo

The first Washington franchise of the Steri-Clean company will celebrate its grand… Continue reading

Justices to hear government’s email dispute with Microsoft

A lower court ruled emails in a drug case couldn’t be searched because they were in Ireland.

Nordstrom suspends buyout after struggling to get financing

A buyout was meant to help the company continue turnaround efforts outside the glare of market scrutiny.

Most Read