Hostess May Liquidate Business Should Bakers’ Union Not Accept New Contract
Hostess Brands said if bakers don’t accept the new contract by end of the day Thursday, the company will have to go into liquidation.
According to Greg Rayburn, Hostess CEO, the company does not have the financial resources to endure the national strike. If liquidation takes place, approximately 18,000 workers will be out of a job. About 5,000 folks are represented by the bakers’ union. The union claimed the concessions laid out in the new contract were outrageous.
Frank Hurt said its members are striking because they’re had it. They don’t want to take cuts in their benefits along with the other concessions that were made in 2004 and surrender the pensions so Wall Street vulture capitalists controlling the company can make millions of dollars.
In January, Hostess filed for bankruptcy, its second time since 2004. Currently, Silver Point Capital and Monarch Alterative Capital control Hostess.
In September, the International Brotherhood of Teamsters narrowly voted in favor of a new contract that included a decrease in benefits and wages. However, the bakes’ union rejected that deal. This deal rejection led the management to get permission from the bankruptcy court to demand the workers work by the terms laid out in the new contract.
On Monday, Hostess announced it was closing bakeries in Cincinnati, Seattle and St. Louis – a loss of 627 jobs. The strike affects 24 of the company’s 33 plants. According to the union, Hostess was already planning on shuttering the three bakeries and accused the company of making erroneous public statements.
Hostess said it had first planned to close or sell nine plants per the previous reorganization plan. However, those plans were put on hold.
The new contract decreases salaries for workers by eight percent during the first year of the five-year agreement. They then increase three percent in the following three years and one percent in the last year. Hostess would decrease its obligations for pensions and employee health care plan. The company would offer various concessions like a 25 percent equity stake for its workers and include two union representatives on its board of directors.
Should Hostess go into liquidation, highly popular brands – Ding Dongs, Twinkies and Wonder Bread – are likely to get picked up at auction and produced by other companies.
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