Hostess Brands, Inc. filed for bankruptcy in 2004 -- the first time around. This January they did it again, and on Nov. 16 announced plans to liquidate their assets, which include manufacturing facilities, brand names, and secret recipes. But on Nov. 19, Judge Robert Drain in White Plains, N.Y. prohibited the company from proceeding with liquidation until the unions and Hostess had attempted internal mediation.
But now, talks between the unions and the company have failed and on Nov. 21, Drain permitted liquidation plans to go forward.
The company cites the strike as the last straw that put the giant responsible for Ho Hos and Twinkies over the edge. The unions see it differently, citing what in this day and age have become common bywords: overspending and corporate greed.
"Whenever you take your profit to pay bonuses, it's an injustice," said Dennis Hall, president of the Northeast Oklahoma Central Labor Council. A working man, Hall takes a dim view of the future of Hostess workers and the company itself.
"There's no doubt in my mind there's going to be suffering all around for the working people," Hall said. With the nearly 18,000 workers on Hostess' payroll soon to be jobless, the issue of the company's liquidation is indeed far-reaching in its implications.
It is also extraordinarily inconvenient for the overall economy that the liquidation of the company's assets comes during a peak sales period for the majority of businesses -- the holidays. Many businesses see up to 60 percent of their total sales for the year happen in November and December, according to retailtraffic.com, an online publications concerned with retail and development.
Hostess employee pay runs the gamut from $48,000 a year for a district sales manager to $29,000 a year for a bakery outlet clerk, according to glassdoor.com, a website which specializes in insider looks at jobs and companies. If you take $30,000 as the median yearly pay and multiply it by the number of workers losing not only their jobs but their benefits and pensions, you've got $540 million not making it back into the national economy.
Then there is the staggering revenue that Hostess has averaged yearly, $2.798 billion since 2008. Meanwhile, the company has still failed to stay afloat.
Justin Evans, president of the local company's operating engineers union thinks he has an answer to the company's financial woes: mismanagement.
"Looking at the company's history with CEOs, you can tell they are more interested in padding their pockets than making Twinkies," Evans said. Since the company's initial filing for Chapter 11 bankruptcy in 2004, "there [have been] four new CEOs. That's approximately one every year and three months," Evans said. "They each got a $125,000 a month salary, and a $60,000 sign-in bonus."
Meanwhile, 18,000 Hostess workers -- most of whom are unionized even in the right-to-work state of Oklahoma -- have been taking pay cuts in an attempt to save the company and their livelihoods.
The Teamsters union reached a settlement with the company in September, the only union of Hostess workers to do so.
"There was an 8 percent wage cut," said Gary Ketchum, president of the Teamsters Local 523 in Tulsa. "It was something to get the company by. We didn't like it; none of our members liked it."
Teamster members voted by secret ballot, having agreed upon the proposal as the best way for the company to stay afloat. "It was a shared sacrifice, any concession on any article of pay the hourly workers got, the salaried workers also got their wages cut," Ketchum said.
This would have been a good start, but when the bakers and the operators failed to return to work on Nov. 16, the company took the first step on making good with their promised liquidation.
"I think they were uninformed by their leaders," Ketchum said. "The Teamsters have access to every aspect of the financial records of the company."
He could make no comment as to whether the bakers union and the operators union were privy to the same information.
Evans -- of the operating engineers union -- cites the vote of his union, which was counted by a show of hands. "It was 52 percent to 48 percent. It was close, and that's the way it went for them," he said.
Of attempts to meet in the middle with Hostess,
"We went back to the table several times," Evans said.
Speaking on the topic of information access on the part of the unions nationally, "All the unions had access to their economic status. We knew what their situation was," Evans said.
Although the president of the local bakers union could not be reached for comment, Ketchum emphasized the hakers union as having a far greater impact than either the Teamsters or the operators, as the bakers constitute a larger number of unionized employees. The bakers' "sheer numbers" made the difference, Ketchum said.
Hostess could not be reached directly for comment. The answering machine at the local Hostess branch -- 4380 91st E. Ave. -- said the following: "You've reached Wonder Bread and Hostess Cakes. We are out of business."
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