GloucesterTimes.com, Gloucester, MA

November 16, 2012

Strike-threatened Hostess shuts down

Strike-threatened Hostess shuts down

From Staff and
Wire reports

---- — Hostess Brands abruptly announced Friday morning it is closing down plants that make Twinkies and Wonder Bread and laying off all of its 18,500 workers, leading shoppers across Cape Ann, the North Shore and across the country to try to stock up on some of the nation’s most iconic treats.

While Hostess CEO Greg Rayburn said in an interview that there was no buyer waiting in the wings to rescue the company, he added — without giving details — that there has been interest expressed in some of the company’s 30 brands, which include Dolly Madison and Nature’s Pride snacks. And experts agreed that the biggest brands would likely survive or return under new ownership and distributorship.

But the Irving, Texas-based company, whose roster of brands date as far back as 1888, filed a motion to liquidate Friday with U.S. Bankruptcy Court after striking workers across the country crippled its ability to maintain production.

Unlike many of its competitors, Hostess had been saddled with high pension, wage and medical costs related to its unionized workforce. The company also faced intensifying competition from larger companies such as Mondelez International, the former snack unit of Kraft Foods that makes Oreos, Chips Ahoy and Nabisco.

Hostess said employees at its 33 factories were sent home and operations suspended Friday — including 23 employees at a company facility in Methuen. Hostess has also run an outlet store in Lawrence.

The move to liquidate comes after a long battle with its unions.

Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting a contract offer that slashed wages and benefits. The bakers union represents about 30 percent of the company’s workforce.

A representative for the bakers union did not immediately return a call seeking comment.

Although many workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels; three plants were closed earlier this week. Rayburn said Hostess was already operating on thin margins and that the strike was a final blow.

Hostess had warned employees that it would file a motion in U.S. Bankruptcy Court to unwind its business and sell assets if plant operations didn’t return to normal levels by Thursday evening.

Workers at the Lawrence facility, located at 647 Andover St., said they were told Friday morning by their manager that the facility would be closed and everyone laid off. The front of building has been an outlet store selling all of the company’s products, including Twinkies and Wonder bread, among other baked goods. The back part of the facility is a warehouse where product is shipped by delivery trucks to supermarkets and grocery stores throughout the region.

Joe Medeiros, 52, of Peabody, who has worked at the plant as a driver for nearly 18 years said he was told Friday morning about the closure.

“My boss called me a little while ago and said they are closing us down,” Medeiros said.

Out front, shoppers were pouring into the store after hearing on the radio or reading online that Hostess would be going out of business and discontinuing its popular brands of baked goods.

In addition to Hostess, Twinkie and Wonder bread brands, the company also owns the Nissen and Drakes brands of cupcakes and other products.

“I’m going to miss them,” said Christina Turcotte, 40, of Methuen, as she left the outlet shop with bags full of Hostess products. “It’s all going into the freezer.”

She bought three boxes of Twinkies along with cupcakes, coffee cakes and Devil Dogs.

“I grew up with these,” she said. “So I’m stocking up.”