Twinkies, Ding Dongs Maker Hostess Liquidates Following Failure To
Resolve Labor Union Animosity
Hostess Brands, the company better known as the maker of Butternut, Ding
Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita,
Nature's Pride, and of course Wonder Bread and Twinkies, and which
previously survived one multi-year Chapter 11 bankruptcy process, when
it operated as Interstate Bakeries, has just made a splash at the NY
Southern Bankruptcy court, for the last time, with a liquidation filing.
The reason: insurmountable (and unfundable) difference in the firm's
collective bargaining agreements and pension obligations, which resulted
in a crippling strike that basically shut down the company.
In other words, Twinkies may well survive the nuclear apocalypse, but
there was one weakest link: the company making them, was unable to
survive empowered labor unions who thought they had all the negotiating
leverage... until the led their bankrupt employer right off liquidation
Hostess Brands is unprofitable under its current cost structure, much
of which is determined by union wages and pension costs, the company
said. Affected are 33 bakeries, more than 550 distribution operations
and 570 stores in the U.S.
"Hostess Brands will move promptly to lay off most of its 18,500-member
work force and focus on selling its assets to the highest bidders." It
added it has access to $75-million in debtor-in-possession financing as
it winds down its operations.
Will attention now turn to that another broke government entity, the
Pension Benefit Guarantee Corp (PBGC), which will have to step in to
resuscitate some 18,000 pension plans which suddenly vaporized after
labor unions took their "negotiating" freedom a step too far?
A separate Canadian company owns the rights to the Hostess brand here in
Canada, so we'll still have our twinkies and ding-dongs. You Americans,
however, will now suffer from twinkie withdrawl.