Twinkies and Wonder Bread may soon be in short supply.
Thousands of bakery workers nationwide have walked off the job or refused to cross picket lines to protest an 8% pay cut by their employer, bankrupt Hostess Brands. The strike, which began at a plant in Kansas on Friday, has since spread to at least 20 of the company’s 36 bakeries from Maine to Seattle.
Members of The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) are protesting pay and other benefit cuts, including a 17% cut in health benefits. “Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years,” said BCTGM International President Frank Hurt in a press release. Hurt says his members struck in response to the company’s unilateral imposition of a “horrendous contract” that was rejected by 92% of the union’s Hostess members in September. In October Hostess won the right in bankruptcy court to impose the contact on all its workers. (Hostess filed for Chapter 11 bankruptcy in January citing legacy pension and medical benefit obligations and restrictive work rules.)
In an attempt to restart production, Hostess is said to be moving managers to the stricken plants while it attempts to line up replacement workers. However, CEO Gregory Rayburn warned in a statement last week that a widespread strike would prompt the company “to liquidate if we are unable to produce or deliver products.” In that event, he said, Hostess would lay off most of its 18,300-member workforce and focus on selling its assets to the highest bidder.
The strikers are in a vulnerable spot. The advantage appears to lie with management, which will either extract steep concessions from workers or shut down the company and sell off its iconic brands, including Twinkies, Yodels, Ding Dongs, and Dolly Madison.
Potential beneficiaries of the company’s demise include rivals Entenmann’s (owned by Mexico’s Grupo Bimbo) and Flowers Foods, which acquired Tastykake in 2011. They could claim valuable shelf space left empty during the walkout or potentially cherry-pick assets if Hostess Brands liquidates.
UPDATE: A week after the walkout by the bakers, Hostess Brands announced it will liquidate. The 82-year-old company has shuttered its bakeries and is selling the last of its iconic snack cakes and breads. Most of the company’s 18,500 workers will lose their jobs. Hostess plans to auction off its assets and brands. So consumers can expect to find their favorite treats on store shelves, but under different ownership. — 11/16/2012.
UPDATE #2: Not so fast says the bankruptcy court judge! Hostess and the striking baker’s union have agreed to a mediation session today at the judge’s urging. Will Hostess Brands and 18,500 jobs be saved? Stay tuned… 11/20/2012.