Baking&Snack - December 2012 - 14

newsfront
Strike prompts Hostess to suspend all operations
In one of the most dramatic developments in the history of the baking industry, Irving, TX-based Hostess Brands suspended operations at all of its bakeries in November, closing all of its plants and putting most of its 18,500 employees out of work. As of press time, however, the situation had not been totally resolved. At the urging of a judge for US Bankruptcy Court, Southern District of New York, company officials met with representatives of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) to explore any last-ditch efforts to avoid liquidating the company. The union began its strike earlier in the month, prompting a chain of events that lead to the closure of the bakeries. Less than 24 hours after Hostess set a deadline for workers to end their walkout, the company on Nov. 16 filed a motion with the US Bankruptcy Court seeking permission to close its business and sell its assets, including its brands and facilities. Those assets include 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the US, as well as numerous brands, including Hostess, Drakes, Dolly Madison, Twinkies, CupCakes, Ding Dongs, Ho Ho’s, Sno Balls, Donettes, Wonder, Nature’s Pride, Merita, Home Pride, Butternut and Beefsteak. Gregory F. Rayburn, CEO, noted Hostess made the decision because it did not have “Hostess’ problems go back almost a decade,” Mr. Hall said. “The company has clearly been mismanaged for quite some time. However, the workers should not suffer because of poor management, and therefore, the Teamsters Union tried everything in its power during the company’s most recent financial difficulties to shape an outcome that would put Hostess on strong footing to be viable and preserve jobs.” The Teamsters members in September approved contract modifications that Hostess Brands management and lenders required as a condition to bring the company out of bankruptcy again. However, BCTGM ended up going on strike. After a Nov. 15 deadline established by Hostess Brands for the workers to end their strike passed, the company decided to liquidate. See www.bakingbusiness.com for the latest developments concerning this ongoing story. — Joshua Sosland, editor, Milling & Baking News

the financial resources to weather an extended strike. The move prompted several retailers to scramble to find suppliers to produce private label bread and other products for the bread aisle. Earlier in November, Hostess Brands permanently closed three plants in Cincinnati, OH; St. Louis, MO; and Seattle, WA, as a result of the work stoppage. Hostess said its debtor-in-possession lenders have agreed to allow the company to continue to have access to the $75 million financing facility put in place at the start of the bankruptcy cases to fund the sale and wind-down process, subject to US Bankruptcy Court approval. In the wake of the announced closing, the International Brotherhood of Teamsters reported that it began concentrating on unemployment benefits for its members and look for buyers of assets that may want to employ Teamsters members, said Ken Hall, general secretary-treasurer of the Teamsters, in a Nov. 16 statement. The fate of the Hostess’ iconic products such as Twinkies remains up in the air as other bakeries are poised to buy up the company’s assets.
Hostess Brands

Voters defeat Prop 37 in California
Voters in November rejected a ballot measure in California known as “Proposition 37” that would have required labeling of food from bioengineered plants or animals. It also would have prohibited marketing of such food or other processed foods as “natural.” Certain organic foods “unintentionally produced with genetically engineered material” would have been exempted, as were animals fed or injected with bioengineered material but not bioengineered themselves and certain other items, including alcoholic beverages. According to a state government website, the measure, if passed, would have increased annual costs “from a few hundred thousand dollars to over $1 million to regulate the labeling of genetically engineered foods.” Opponents of the measure said it would have raised the food costs to consumers an average of $400 per year. Major food companies including Kellogg, PepsiCo, Kraft Foods, General Mills and ConAgra and many farm groups opposed the measure. — Ron Sterk, associate editor, Milling & Baking News

/ Baking & Snack / December 2012

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Baking&Snack - December 2012

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