Hostess closes striking facilities

Hostess closes striking facilities

US group Hostess Brands has said it will close three of its bakeries in response to strike action that has stopped production at the sites.

Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) moved to strike on Friday (9 November) in protest at an 8% cut in pay and loss of benefits that, the union said, would reduce workers incomes by 27-32%.

Hostess announced yesterday it will close facilities in Seattle, St Louis and Cincinnati where workers elected to strike. The closures will lead to 672 jobs being cut.

We deeply regret this decision, but we have repeatedly explained that we will close facilities that are no longer able to produce and deliver products because of a work stoppage - and that we will close the entire company if widespread strikes cripple our business," CEO Gregory Rayburn said.

"Our customers will not be affected because we will continue to serve them from other Hostess Brands bakeries," he added.

The BCTGM union and Hostess management have been at loggerheads since Hostess has been forcing through court-approved cuts to terms and conditions as it looks to exit bankruptcy.

The company claims that it will be forced to liquidate if employees do not accept the contractual changes. However, the union has argued that liquidation is on the cards regardless.

"The company's business plan, when reviewed by a highly-respected financial analyst retained by the company, was determined to have little or no chance of succeeding in saving Hostess. The current CEO, Greg Rayburn, was originally brought on as a consultant because of his expertise in corporate liquidations. He has absolutely no experience running a baking company and the Wall Street investors that own the company have absolutely no interest of rebuilding the baking business," the union said.

For its part, Hostess has insisted conditions in the US bakery category are such that - should it liquidate - its facilities are likely to be shuttered permanently.

"Some employees are apparently under the misimpression that if they force Hostess to liquidate, another company will buy our bakeries and offer them employment," Rayburn said. "The fact is, the bakery industry already has far too much capacity, and there is a strong risk that many of our facilities may never operate as bakeries again once they are closed. I believe the leadership of the bakers union knows this fact, but is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions."

Show the press release

Hostess to Close Selected Bakeries Due to Nationwide Strike Preventing Product Production and Delivery; Operations Continue Normally at Majority of Plants
IRVING, Texas, Nov. 12, 2012 /PRNewswire/ -- Hostess Brands Inc. announced today that it will permanently close three bakeries today as a result of a nationwide strike initiated on November 9 by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (Bakers Union) that has prevented the facilities from producing and delivering products.
"Our customers will not be affected because we will continue to serve them from other Hostess Brands bakeries, but sadly this action will result in the permanent closure of three facilities and the loss of 627 jobs," said Hostess Brands CEO Gregory F. Rayburn. "We deeply regret this decision, but we have repeatedly explained that we will close facilities that are no longer able to produce and deliver products because of a work stoppage - and that we will close the entire company if widespread strikes cripple our business."
The bakeries to be closed are located in Seattle, St. Louis and Cincinnati. The Seattle facility employs 110 people and produces Hostess cake products; the St. Louis facility employs 365 people and produces Hostess cakes, Nature's Pride and Wonder breads; the Cincinnati facility employs 152 people and produces Butternut, Beefsteak Wonder breads.
"Some employees are apparently under the misimpression that if they force Hostess to liquidate, another company will buy our bakeries and offer them employment," Rayburn said. "The fact is, the bakery industry already has far too much capacity, and there is a strong risk that many of our facilities may never operate as bakeries again once they are closed. I believe the leadership of the Bakers Union knows this fact, but is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions."
Rayburn continued: "That hardest part of the decision to close any facility is knowing that it will result in the loss of jobs for those Hostess Brands employees who did not support the strike and who wanted to help revive the Company," Mr. Rayburn said. "They didn't ask for these strikes, but they are paying a terrible price for them."
Additional information about the Company's labor issues can be found at www.hostessstrike.info.
About Hostess Brands
Founded in 1930 and based in Irving, Texas, the Company's products include iconic brands such as Hostess®, Wonder®, Nature's Pride®, Dolly Madison®, Drake's®, Butternut®, Home Pride® and Merita®. Hostess Brands has approximately 18,300 employees and operated 36 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.

Original source: Hostess Brands