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Hostess says talks to stave off shutdown fail

By Associated Press

LAST UPDATED: 12:54 a.m. HST, Nov 21, 2012

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 today 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 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.” There was no immediate comment from the bakers union.

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.

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saywhatyouthink wrote:
Dumb unions.... Costly economics lesson they're learning the hard way!
on November 20,2012 | 04:46PM
false wrote:
Where is Obama when we need him. Praise small victories.
on November 20,2012 | 05:21PM
ya_think wrote:
He's busy in Burma or as he calls it Myanmar, what does he care he'll be living good for the rest of his life.
on November 20,2012 | 07:16PM
Papakolea wrote:
It's insane for the baker's union leadership to not allow its members an opportunity to vote on the new contract. The union leaders are in it only for their pride since they already took a hard stand with Hostess. They don't want to back down and appear weak. But they are willing to put their members out of work to save face.
on November 20,2012 | 07:30PM
EducatedLocalBoy wrote:
The Republican party appointed U.S. Supreme Court ruled in the First National Maintenance case over 25 yrs. ago that a company like Hostess has the absolute right to decide to go out of business without letting the union vote on a new contract. Papakolea if you read the article carefully, there is no mention of whether there is a final contract that the company offered to the union and the workers. What the company is doing is a standard union busting tactic -- close the company down without negotiating with the union, sell off the assets, such as the name Twinkies and the recipe for Twinkies to a straw man non-union company who will continue to make Twinkies but in a non-union shop, perhaps in China. This is vulture capitalism at its best, a Bain Capital Mitt Romney move to China deal.
on November 20,2012 | 09:29PM
tiki886 wrote:
Every time a union member loses their job, an angel gets their wings!
on November 20,2012 | 10:11PM
EducatedLocalBoy wrote:
It's a shame that tiki886 appears to derive some sort of pleasure from people losing their means of supporting themselves and their families. Admittedly what Hostess is doing is legal but it doesn't make it right. Perhaps he or she will feel differently if misfortune befalls upon him or her like he or she becoming crippled in a regular car accident where the other driver was wrong but merely negligent so that what the other driver did is legal but not right.
on November 20,2012 | 11:26PM
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