Thursday 30th October 2014,
The Transcript

Hostess goes under, 15,000 left unemployed

Staff December 7, 2012 News No Comments

By Samantha Simon
Transcript Reporter

On November 30, a bankruptcy judge approved bonuses for the management team at Hostess, while allowing the company to liquidate.

The move calls for 15,000 people to immediately lose their job, with an additional 3,000 expected to work for one more year before the company shuts down entirely.

The shutdown and closure of the company gained national attention as a result of the Teamsters, a union representing the drivers, choosing to accept the terms Hostess put forth to remain in business.

The other union, The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), has more workers and chose unemployment over reduced wages and benefits.

The company’s shutdown was also noteworthy because of its nostalgic and well-known brands of Wonderbread and Twinkies.

The bankruptcy judge’s decision will force the eventual end to 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the U.S.

In Ohio, it is estimated that between 800 and 1,000 workers will lose their jobs. The company will shut down three bakeries in Cincinnati, Defiance and Northwood.

Drivers throughout the state will also lose their jobs, as well as those individuals who worked at the five Hostess bakery outlet stores.

The company had already shut its Columbus Wonderbread plant in 2009, citing diminished demand for its products.

Some students are upset about Hostess closing, realizing that many of their favorite treats may be unattainable in the future.

Junior, Rebecca Overbeeke said she will forever miss many of the treats especially HoHo’s.

Senior Andrew Sloan said it is unfortunate the company had to close, but realizes it is a profitable brand name and someone will probably buy it and redistribute it.

If the products are not redistributed, students can turn to hundreds of fans who are “pinning” recipes for Twinkies, Snowballs and more on pinterest. Junior Meg Greff said “if we can’t count on Hostess, what can we count on?”

Eating habits have changed as the focus on diet increases, and Hostess has battled the growing acceptance of lower carbohydrates in one’s diet leading to a drop in demand for its bread and snack items by between four and nine percent per year, over the past three years.

Increased competition from grocery store brand items that are similar in nature to Hostess’ well know dessert and snack products also weakened the company’s fiscal health.

While blame has been pointed in many directions, unions have been targeted as being unrealistic, with respect to their wage demands, when working for a company that was struggling financially.

Conservative groups have criticized the unions for opting to collect unemployment checks, rather than reduced paychecks.

The management of the company has also been criticized for voting for their own reasonable raises and bonuses, and liberals have faulted the investors and company management from trying to profit at the expense of laborers.

The primary investors, Ripplewood Management, a private equity hedge fund, have also been critiqued for their approach to handling labor negotiations.

Ripplewood enlisted the services of former Senator Richard Gephardt, in the hopes that he would convince the unions to give in to the demands of the company.

There was instant distrust on the part of the unions when Gephardt’s son was appointed to the board of directors with a $100,000 salary and Gephardt had an equity stake through his consulting group.

“I voted no to the proposal. I need a job, but it became pretty clear that one way or another we were going to go out of business. No one could trust anyone. Management didn’t know what they were doing, and we could take a pay cut, but we all knew that a few months from now, they would be asking for more concessions,” said David Kellogg, a 47-year-old worker from the Northwood bakery and a member of BCTGM.

Steven Rogers, a member of the Teamsters union from the Toledo area and a delivery man for Hostess products, said he was not happy with the “bakers” whose vote effectively left him without a job.

“I have to be honest,” Rogers said. “If I would see a baker right now, I’d have to be restrained. Sure things are not great. And they have a point that management wasn’t changing any of our marketing or approach to selling Twinkies, but I need to work, and I was hopeful, that once we got things going in right direction, we could eventually be making good money again.”

Rogers said he would have preferred to have a job during the holidays, as his kids are going to be disappointed this year.

While blame goes around, and conservative and liberal pundits offer their views on who is at fault, the end result has been an investment company that will lose most if not all of their 125 million dollar investment.

Union workers who voted to save their jobs and union workers who voted to end their jobs are out of work leading to 18,500 jobs lost on a food product that may have passed its shelf life, even if it was a multi-year expiration date.

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