Hostess under fire over cuts

Hostess under fire over cuts

US baker Hostess Brands has warned it could be forced into liquidation after one of the unions representing its workforce went on strike this weekend.

Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) went on strike on Friday (12 November), forming picket lines around a number of Hostess production facilities.

The strike comes in response to a new collective bargaining agreement that will change workers terms of employment, including an immediate drop in wages of 8%. The union said that the cut to wages and benefits would result in a total drop in its members income of 27-32%.

"The company unilaterally ceased making contributions, required by their union contracts, to the workers' pensions in July 2011. Hostess has also imposed draconian cuts in health benefits and eliminated the eight-hour workday," the BCTGM said.

In September, Hostess won approval from a US bankruptcy court to enforce the agreement despite its widespread rejection by unions.

Hostess has found itself in bankruptcy twice in the last eight years and the union accused the baker of squandering the opportunity presented by its first exit from bankruptcy in 2004 - when the workforce accepted a number of cuts and 21 production sites were closed.

"Hostess employees watched as money that was supposed to go towards capital investment, product development, plant improvement and new equipment went to executive bonuses and payouts to the hedge funds that own Hostess Brands....  The BCTGM learned that the then Hostess CEO was to be awarded a 300% raise, and at least nine other top executives were to receive raises ranging between 35% and 80%," the union claimed.

Hostess has warned a widespread strike would result in the liquidation of the company. Urging employees to "stay on the job" the company said a "widespread strike" would force the company to "promptly to lay off most of its 18,300-member workforce and focus on selling its assets to the highest bidders".

However, the BCTMG claimed liquidation was 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."

While the BCTMG is the only union currently backing industrial action, the union claimed its picket lines are being honoured and warned "more plants may strike or honour the strike" in the coming days.