Food Policy

Ding Dongs Ditched

Hostess bakery bankruptcy

|

Hostess, the Texas-based manufacturer of snack cakes, went out of business in late November after filing for Chapter 11 bankruptcy protection twice within the last decade. When attempts to end a strike by bakery workers failed, Hostess received permission from a judge to liquidate its assets and sell its holdings.

The company, famous for its Wonder Bread and cream-filled delights such as Twinkies, was once the largest baker in the world. Times changed, however, and Hostess was slow to adapt. Facing a heavily unionized work force and about $1 billion in pension fund debt, the company's executives sought to slash costs in the face of plunging sales.

The company's bakery workers struck in early November, rejecting the terms of a contract endorsed by the larger International Brotherhood of Teamsters. Even after Hostess and the Teamsters warned that the strike could kill the company for good, the bakers refused to return.

Many media accounts portrayed the bakers as stubborn holdouts. In a Forbes op-ed headlined "Shame On The Gluttonous Bakery Union Members, Blasted Twinkie Killers," writer Mark Hendrickson offered one of the more scathing attacks: "I can't respect a union that would kill off the Twinkie and their own jobs due to a false sense of pride."

But their union noted in court filings that Hostess heavily favored the Teamsters in the final deal. The company did little to eliminate distribution policies that protected Teamster jobs, such as forbidding drivers to help load trucks and requiring separate trucks for different Hostess products. The bakers union estimated that distribution costs at Hostess exceeded industry averages by $80 million to $130 million a year.

The disappearance of Twinkies, Devil Dogs, and Ho-Hos from supermarket and convenience store shelves probably is temporary. Hostess reported more than 100 potential buyers were interested in getting their hands on the bakery's sweet, sweet assets.