BUSINESS
11/13/2012 06:25 am ET Updated Nov 13, 2012

Hostess Closes Three Bakeries, Blames Striking Union

Following a nationwide strike by its bakers union, Hostess Brands, Inc., said Monday it is permanently closing three of its bakeries.

The closures in Seattle, St. Louis, and Cincinnati will result in the permanent loss of 627 jobs, but are not expected to significantly slow production of the brand's iconic Twinkies, Wonder Bread, and Ding Dongs, the company said. Hostess executives have blamed an impasse in negotiations with the union for the closures.

"Our customers will not be affected because we will continue to serve them from other Hostess Brands bakeries," said Hostess Brands CEO Gregory F. Rayburn in a press release. "We deeply regret this decision, but ... we will close the entire company if widespread strikes cripple our business."

According to an earlier report by the Associated Press, Hostess sought to greatly reduce its contributions to employee pension plans, alter work rules, and outsource some of its deliveries, among other things.

Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union have (BCTGM) labeled the company's terms a "horrendous contract," taking specific issue with an immediate 8% cut in workers' wages and 27-32% decreases in overall benefits.

Hostess spokesperson Lance Ignon told The St. Louis Post-Dispatch that 23 of the company's 36 plants had picket lines on Monday.

"If we're not able to resolve this issue, the company will probably liquidate everything in a manner of days," Ignon added. "There's a misconception that there is a buyer set to buy Hostess. That is simply not the case. There is no white knight waiting to purchase Hostess and willing to provide better wage and compensation packages."

The company filed for Chapter 11 bankruptcy in January 2012, the second time it has done so since 2004.

At that time, the union says, workers' concessions were diverted from their intended purposes and instead "went to executive bonuses and payouts to the hedge funds that own Hostess Brands." Hostess' then-CEO received a 300% raise, according to union claims.

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