Blaming Striking Bakers Doesn’t Tell Whole Story Of Hostess Collapse

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Update: Hostess Brands agreed to enter mediation with a striking union at the urging of Bankruptcy Judge Robert Drain, according to Reuters. The move could save the jobs of some or all of approximately 18,000 workers who will be unemployed if the company shuts down. 

NEW YORK, N.Y. — Representatives of Hostess Brands are scheduled to appear in bankruptcy court Monday afternoon to begin the process of selling off its assets as it goes out of business.

The company, baker of popular snack cakes such as Twinkies, Ding Dongs and Ho Ho’s as well as Wonder Bread, announced that it was shutting down on Friday and blamed members of the striking Bakery, Confectionery, Tobacco Workers and Grain Millers International Union for its demise.

But blaming the union workers for the company’s bankruptcy doesn’t tell the whole story.

Hostess has seen its revenue fall for nine straight years, including a 30 percent decline from $3.53 billion in 2009 to $2.45 billion last year, according to published reports. Yet top executives received raises of up to 80 percent even though the company was struggling.

“Crony capitalism and poor management drove Hostess into the ground, not the workers who are now paying the price. In this struggling economy, the greedy corporate executives are willing to let 18,000 people lose their jobs—just so they can pad their pockets.” AFL-CIO President Richard Trumka wrote in an email asking people to sign an online petition in support of the workers.

Union workers had already accepted previous pay cuts. Hostess had been contributing about $100 million per year in pension costs, but sought to slash that figure by 75 percent in a new contract that would also have resulted in additional wage and health benefit cuts for workers.

Approximately 18,500 workers are losing their jobs because of the Hostess bankruptcy. The company’s brands could fetch as much as $1 billion in an asset sale, according to some estimates.

That money, along with the proceeds from the sale of Hostess’ physical assets, will go to creditors and investors with a stake in the company.


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