Hostess Gives Teamsters, Bakers Unions Final Offer

DALLAS -- The company that makes Twinkies, Wonder bread and Ding Dongs says it's making a final offer to workers to accept cost-cutting before it asks a bankruptcy court to impose the cuts.

Hostess Brands Inc. wants the Teamsters and bakers' unions to accept reduced pension benefits and changes in work rules to lower costs. It wants to outsource some delivery work.

The company said Saturday that if the unions reject the offer, it will push ahead with efforts in bankruptcy court to throw out the unions' collective bargaining agreements. A union official warned that could lead to a strike.

Hostess Brands filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. A trial to decide the fate of the union contracts is scheduled to start Tuesday.

Hostess wants to withdraw from some multi-employer pension plans, although it opened the door Saturday to possibly rejoining a few of the financially strongest plans. New hires would be covered by the same 401(k)-type retirement accounts used by nonunion and management employees.

The company's new CEO, Gregory F. Rayburn, said Hostess wants to cut annual pension contributions from $103 million to $25 million. Hostess also wants to change work rules that sometimes require two trucks instead of one, and to outsource deliveries to small stores.

Ken Hall, general secretary-treasurer of the Teamsters, said the union would reject the company's proposal and make a counteroffer Sunday. He said Hostess had provided only the barest details of how the new pensions program would work, and that employees already accepted big concessions in 2008.

Workers represented by the Teamsters and the bakery and confectionary workers' unions voted in February to authorize a strike, and Hall vowed Saturday that workers would walk off the job if the bankruptcy judge agrees to the company's cuts.

Rayburn said that if workers strike, the company will be forced to shut down and liquidate.

Hostess makes sugary confections familiar to generations of Americans and it bakes Wonder bread, a leading white bread.

Consumers increasingly have been buying other snacks, such as yogurt, and more wheat bread. White bread's popularity has plunged – in 2000, it was eaten in 54 percent of all U.S. homes compared to 36 percent last year, according to consumer-marketing research firm NPD Group.

Rayburn blamed Hostess' problems on high pension and labor costs that led to insufficient investment in the company and new products. Rayburn said he doesn't buy the healthy-diet explanation.

"If that were the case and that was sort of the downfall, there wouldn't be any chocolate companies out there either," he said. "There's a market for Twinkies and Ho Hos and Ding Dongs."

As part of its turnaround plan, Hostess wants to raise at least $400 million from current lenders or new investors or by selling brands. Rayburn said he has talked with a potential buyer of one of its small, regional brands.

Before the company filed for bankruptcy protection, eight top executives got pay raises last year of up to 80 percent. This month, some agreed to take $1 a year until the company comes out of bankruptcy or Dec. 31, whichever comes first, while others gave up their pay raises.

Comments

[NancyY]

01:28 PM on 04/18/2012

What I find really odd is that, as I recall, Texas is a right-to-work state. So exactly what is going on here?

[tmm77625]

05:51 PM on 04/17/2012

Converting at-risk pay (bonuses and incentives) to salary during a bankruptcy is not as big a deal as people here are making it out to be, and has zero bearing on a company trying to adjust its cost structure to allow it to be competitive. The Teamsters are going to ensure that everyone - production, drivers, and executives - are all on the unemployment line together, and Hostess is nothing more than a brand name owned by General Mills or another giant food conglomerate.

[vh47]

08:56 PM on 04/16/2012

Its funny how these corporations are mirroring the Gops stance on entitlements.
Its okay if the top gets welfare or something they arent entitled to,but its a no go
for everybody else.The government gives subsidies to corporations that are making
record profits while the deficit is steadily rising,Hostess gives their top management
an 80% raise while headed towards bankruptcy.In the case of the government those
subsidies or corporate welfare payment should have been stopped four years ago,in the case of Hostess once they saw a problem they should froze pay rates across the board.
Why is it that both think that the top is not suppose to make sacrifices only the bottom?
We are entitled,but you arent needs to stop.

[raggtopp]

08:54 AM on 11/20/2012

Many in top management have agreed to $1.00 a year pay and others to accept less. The union rules kill companies. in this case 2 trucks are required when one will do, much like the union requiring a fireman for coal on a diesel train engine.etc. Also, the company is paying $72k per a worker per a year to the pension plan when most other companies are on 401K plan.. I was once a union worker for Chevy in 1953 and have seen over the years what union rules force companies to do and it cost everyone of us when we buy a union made product..

[sinnerG7]

07:39 PM on 04/16/2012

Ah yes let's all take raises and put the company into bankruptcy.How do bankrupt Hostess ?I don't know about anyone else but it seems to me twinkies ding dongs and fruitpies still sell pretty well.and I live in that state w/ all the health nuts.I'll never understand how or why execs are paid so damn much when it seems all they do is F-ck things up and float away on a golden parachute.I think what they really deserve is a golden SHOWER!

[pbr56]

05:52 PM on 04/16/2012

give themselves huge pay raises and then ask people who make 10% of what they make to take cuts.

[Labor Party]

10:48 PM on 09/08/2012

It is a meaningless gesture to say you will only take one dollar this year before coming out of bankruptcy (at the end of the year.......what is this? a less than one year delayed reaction?)

That company still plans to plunder for the eight CEO's to get their 80% increase.

[TWKT]

03:24 PM on 04/16/2012

The Hostess Twinkies contributed to the murder of Harvey Milk so they should go bankrupt for a faulty product.

[sinnerG7]

07:41 PM on 04/16/2012

The twinkie defense,I remember that it didn't work did it?...............Please tell it didn't

[Larry Sirhall]

03:20 PM on 04/16/2012

Did I read this correctly. Upper management gets huge pay increase while asking labor to take huge pay/benefits cuts. Sounds like a Romney economic recovery plan. Larry

[chrissysfella]

04:19 PM on 04/16/2012

An 80% increase. I don't know about you, but I can never remember getting an 80% pay raise.

[Value Investor]

04:43 PM on 04/16/2012

I guess you both forget to read the rest:

"This month, some agreed to take $1 a year until the company comes out of bankruptcy or Dec. 31, whichever comes first, while others gave up their pay raises.
"

I love selective reading

LOL

[Larry Sirhall]

04:33 PM on 04/16/2012

No not me. An 80% increase when you know the company is going to file for Bankruptcy protection. Ever since the Supreme Court allowed discharging pensions in bankruptcy, things have gotten out of hand. I know people don't like the unions. Yet, who will stand up to this type of management behavior on behalf of the average worker. Larry

[factorystock1]

03:13 PM on 04/16/2012

Confucius the wise one says, man who have Twinkie in hand holdin' Ding Dong.

[gerald4]

01:00 PM on 04/16/2012

If US citizens could not get "Twinkies" of "Ding Dings", then that would be a nationsl disaster.

Maybe Hostess could go bankrupt and someone else would buy that plant and continue production.

[Labor Party]

10:59 PM on 09/08/2012

It has had many owners over recent years.............its finally landed in the hands of pension raiders. (They change the color of the wrapper, mess with the formula for cheaper ingredients, raise prices, skim profits and sell it to the next group of investors looking to exploit.)

There are several National Wholesale Bakeries that are successful and employ unions.
This one keeps getting sued by its stockholders.

[Liberals Are Intolerant]

12:58 PM on 04/16/2012

What usually happens is the union members vote for no concessions, then many lose their jobs. I bet there will be hundreds of employees basically voting for their own layoff. If this company is on their 2nd bankruptcy in a decade then they need to make serious changes. It's amazing that we can make anything in this country anymore with this system of forced bargaining in place.

[TWKT]

03:26 PM on 04/16/2012

It is the lack of good management that drives them to bankruptcy and the managers will always be able to get good jobs driving another company under.

[thetruth2btold]

04:19 PM on 04/16/2012

Commonsense back with truth, F+F!

[Value Investor]

04:52 PM on 04/16/2012

when costs exceed expenses you go chp 11......mgt wages are only one of the many expenses.....

ever wonder where all the old airlines went to ? Pan Am, TWA, Braniff, etc

[pbr56]

09:43 AM on 04/17/2012

your screen name seems ironic after reading your posts. You think maybe you are projecting.

[richh0501]

12:55 PM on 04/16/2012

The Teamster union does not give a ding dong for the union workers, they really are concerned for the union members penion, this is what fuels the unions..........can you imagine how a company such as hostess could stand the weight of 103 million dollars a year for pension alone. Teamster union pension have brought dozens of Trucking companies to their knees, thousands of teamster jobs lost, who in Gods name would ever run a company with the Teamster union for workers?!??!!

[sinnerG7]

07:32 PM on 04/16/2012

How about UPS? to name but one look it up

[Labor Party]

11:04 PM on 09/08/2012

Hostess is not the only wholesale bakery in the nation to employ union workers or Teamsters.

Those companies have had better management and adopted........not this one.

[feelingdisposable]

12:45 PM on 04/16/2012

So we have another large corporation who is crying "poor us" while giving their top executives up to an 80% increase in salary, and at the same time, wanting the union workers to settle for much less. "We have to cut your pay & benefits. Otherwise how will we ever be able to afford the 80% salary increase for our guys in the corner offices?"

[Liberals Are Intolerant]

12:59 PM on 04/16/2012

I think you missed the fact that they are in bankruptcy, for the second time in 10 years.

[TWKT]

03:27 PM on 04/16/2012

Then management is not doing the job of running the company right.

[Gary Carroll]

11:40 AM on 04/16/2012

I haven't had a Twinkie since I was a teenager about 45 years ago.
So I went out and brought a case of em' TASTY
GREAT with coffee or milk. I almost forgot how good they were.

Just don't over do it.

[TWKT]

03:28 PM on 04/16/2012

Do not forget that Twinkies make you kill gay mayors.

[2garen]

11:10 AM on 04/16/2012

How come the courts don't mandate the same requirements for the top management?
Oh the arrogance.

[harleydavid105]

11:45 AM on 04/16/2012

Because the judges are white-collar crooks as well. Just like politicians and organized-crime (is there any difference?) they all stick together and look out for one another.

[SeaOtterBaby]

11:05 AM on 04/16/2012

Twinkies=Garbage

[TaxpayingVoter]

01:31 PM on 04/16/2012

Chocodiles are pretty tasty though. And Ding Dongs....mmm