CNN Money reports that negotiations between Hostess and unions workers has broken down and the iconic maker of some of our favorite childhood snack foods such as Twinkies, Drake’s Devil Dogs, Ding Dongs and Wonder Bread will close its operations.
So who is to blame for the shut-down? Management of the company places the blame squarely on the shoulders of striking workers. According to news reports, the closing of Hostess will result in a loss of jobs for over 18,000 workers just in time for the holidays. The company will close 33 bakeries and 565 distribution centers across the United States as well as over 570 outlets stores.
Management released a statement today from CEO Gregory Rayburn, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.”. Rayburn added that all parties are to blame, and he was disappointed in their inability to come to an agreement. Rayburn called the lack of an agreement a “monumental failure.”
Frank Hurt, president of the baker’s union, disagreed. Hurt places the blame on the different management teams, which he said put their own interests above that of the company. Hostess has been controlled since 2009 by investment firms, including hedge funds Silver Point Capital and Monarch Alternative Capital.
According to Hurt, the investment firms were asking employees to take ridiculous wage and benefits cuts and give up their pensions. Hurt argued that workers had given up too much already and had taken abuse from management for years.
Will this be the end of the production of 500 million Twinkies each year? Maybe not, reports indicate that the assets of Hostess are likely to be purchased which may mean that other companies will begin selling the delicious culinary treats within their own current product lines. The estimate time for the sale or the purchase of the Hostess brand cannot be determined, but management concedes that interest has been high. The bad news is that even if the brand and assets are sold and production of the products begins at another company, the workers of Hostess will not retain their jobs.
How have consumers reacted to the news that their favorite snacks may face extinction? According to Supervalu store operator Mike Siemienas, “We’re definitely seeing a sharp increase in purchases of Hostess products today. We expect this will continue as more consumers become aware of the bad news.” As soon as the news was announced stores began to see Hostess products disappear from the shelves.
How long will the shut down take to complete? Bankruptcy will take months to complete, but the bakeries shut down officially on Friday, and stores will not deliver any more Hostess brand products after Thursday night. Hostess outlet stores will continue to sell products for another week. Time to get your last Twinkie.
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