Hostess outlet to close
November 17, 2012
Hostess Brands Inc., the maker of Twinkies, Ding Dongs and Wonder Bread, is winding down operations and closure will impact Northern Nevada Hostess workers.The bakery firm has struggled to keep up with rising labor costs and ever-changing tastes of Americans, who have grown accustomed to a dizzying array of new snacks flooding supermarket aisles every year.In Carson City, according to sources unwilling to be identified, perhaps 20 workers will lose employment if the company stops operations as expected. “I’m really not allowed to make announcements to the press,” said an employee unwilling to be identified at the Hostess-Wonder Bread outlet at 4630 Highway 50, which includes both wholesale sales and retail operations. However, local workers and others were being told the local outlet’s final day of operation was expected to be Monday. The Associated Press reported the operation will shut down at 5 p.m. Tuesday.The firm, 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. The company filed for Chapter 11 bankruptcy protection in January— the company’s second in less than a decade. Its predecessor company, Interstate Bakeries, filed for bankruptcy protection in 2004 and changed its name to Hostess after emerging in 2009. Hostess, based in Irving, Texas, had been saddled with high pension, wage and medical costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs; the new contract offer would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.Tensions between management and workers were also an ongoing problem. Hostess came under fire this year after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent in 2011 even as the company was struggling. Although some of those executives later agree to reduced salaries, others — including the former CEO Brain Driscoll — had left the company by the time the pay hikes came to light.The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended Friday.CEO Gregory Rayburn, who was hired as a restructuring expert, said Friday that the company booked about $2.5 billion in revenue a year, and that sales volume was flat to slightly down in recent years. So far this year, the company said Twinkies alone accounted for $68 million in sales. The move to liquidate comes after thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting the latest contract offer. The bakers union represents about 30 percent of the company’s workforce. A representative for the bakers union did not return a call seeking comment.
Nevada Appeal Staff ReportThe Hostess Brands Inc. outlet on Carson City’s east side was filled with customers buying a dwindling supply of bakery items there Friday afternoon.Shortly after the lunch hour, there were more than 15 people stocking up due to news the Hostess Brands firm was closing next week due to national labor strife and bankruptcy liquidation.“I’ve been coming here so long I can’t believe this,” said Robert Thompson, who with his wife, Sheri, left the store with almost $20 worth of baked items they had purchased. The Dayton couple said the deal was buy one, get one free.“I just feel so bad for people that are losing their jobs over this,” said Sheri Thompson. Thompson, who said he and a colleague run the painting part of cabinet work at Builders Wholesale cabinetry in Dayton, said he decided to take off work early so he and his spouse could stock up at the Hostess outlet. It appeared they arrived just in time. Shelves were emptying quickly and a hand-scrawled sign on an outside door announced the place had no Twinkies or some other products left in stock. At the Highway 395 South Walmart, Twinkies and other Hostess products were sold out by early evening Friday.