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%.
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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.
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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.
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By GlobalDataThe 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.”
