The Star Beacon; Ashtabula, Ohio

World, nation, state

November 16, 2012

Closure decision expected today from Hostess Brands

IRVING, Texa —  Hostess Brands Inc. said Thursday it is not likely to make an announcement until today on whether it will move to liquidate its business. The company had set a Thursday deadline for striking employees to return to work.

The maker of Twinkies, Ding Dongs, and Wonder Bread had warned employees that it would file a motion in U.S. Bankruptcy Court to sell off assets if plant operations didn’t return to normal levels by 5 p.m. Thursday. That would result in the loss of about 18,000 jobs.

A spokesman for Hostess said the company probably would make an announcement today after assessing plant operations Thursday evening.

Hostess has reached a contract agreement with its largest union, the International Brotherhood of Teamsters.

But thousands of members of its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union say the company stopped contributing to members’ pensions last year.

Hostess, a privately held company, filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.

The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess has argued that employees must make concessions for it to exit bankruptcy and improve its financial position.

On Thursday afternoon, striking workers continued picketing outside the company’s Northwood plant, which bakes white and wheat Wonder Bread, among other products.

“We don’'t want to just get by, we want to be comfortable,” said Toledoan Varian England, a 14-year employee of the plant. “Maybe not be rich, but just be comfortable. A lot of us, we have kids, and [the company] doesn’t make it easy. We gave back once before. We took one pay cut, a lot of us can’t afford to take another pay cut.”

The plant’s 110 production and maintenance employees represented by Local 19 of the bakery union have been striking since last Friday. Union officials said their members were striking at 26 of the company’s 33 production plants as of Wednesday. Workers at the Hostess bakery in Defiance were not striking.

Randy Moore, who has worked at the Northwood plant for 12 years, said he and others are fed up with multiple pay cuts, the company’s decision to stop contributing to pension plans, and policies such as an attendance requirement that doesn’t provide chances for appeal.

Although the company has threatened to go into liquidation if not enough bakery union employees returned to work, Mr. Moore said he felt it wouldn’t make a difference.

“We’re going to lose our jobs either way,” he said. “Go down swinging.”

Stan LaBuda, a business agent for Local 19 of the bakery union based in Cleveland, said he took the company’s threats seriously.

“The problem we have here is the hedge funds that are heavily invested in this company now, they’re not in the business of baking bread,” he said. “They want to make money. Their whole thought, I think, behind this was if they could get these guys to agree to a five-year concessionary agreement, this company probably would have been sold already. They probably have buyers waiting. They’re trying to walk away from a billion dollars of pension liabilities.”

Mr. LaBuda said the average employee at the Northwood plant makes $12 to $15 an hour.

“It’s not huge money,” he said. “It’s hot, it’s hard work, it’s crazy hours. When everybody’s at home on Christmas Day, Thanksgiving Day with their families, these guys are here baking bread and buns. You make a lot of sacrifice to work in a bakery.”

Although the company is calling for an 8 percent wage reduction, Mr. LaBuda said many employees are facing a 35 to 40 percent cut in wages and benefits from what they were making in 2007. “We’re not even keeping up with the times,” Mr. England said. “We’re supposed to go forward, not back.”

Blade business writer Tyrel Linkhorn contributed to this report.

 

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