Twinkie maker Hostess Brands says that if strike action at its bakeries does not end soon, it will move to “liquidate the company in a matter of days, not weeks”.
The company was speaking to FoodNavigator-USA this morning as industrial action by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) continued at 24 of the firm’s 33 plants.
According to Hostess, half of the plants affected by the strikes are still producing some product, although it has warned customers of possible out-of-stocks and service interruptions.
A spokesman said: “It’s up to the leadership at the baker’s union if it wants to continue with this strike action or eliminate 18,000 jobs.”
He rejected claims by the BCTGM that Hostess’ decision to close three plants in Seattle, St Louis and Cincinnati earlier this week was not the result of strike action but had instead been planned weeks earlier as part of a re-organization plan.
He added: “We closed those plants because strike activity prevented them from producing and delivering products. If we had planned to close these plants all along, we would have done it in an orderly fashion, not like this.”
He would not comment on why these three plants and not all of the plants affected by industrial action had been closed, but added: "If the strikes do not end soon, we will move to liquidate the company. And we're talking about a matter of days, not weeks."
Union: Plant closures are a desperate attempt to break the solidarity and resolve of striking BCTGM members
However, the baker’s union said the closures amounted to a “desperate attempt to break the solidarity and resolve of striking BCTGM members across the country”.
In a statement issued this morning, president Frank Hurt said: "The claim by Hostess CEO Greg Rayburn that our strike is the reason for the closure of the three bakeries is simply not true.”
The union added: “In fact, according to the company's 1113 filing with the bankruptcy court earlier this year as well as its last/best/final and non-negotiable proposal to its BCTGM-represented workers, the company was planning to close at least nine bakeries as part of its reorganization plan, although it refused to disclose which bakeries it intended to close.
"Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars."
Meanwhile, company claims that union members are crossing picket lines and maintaining production at striking plants are “vastly untrue”, it said.
Hostess: Some service interruptions and out-of-stock items are possible
In an update to customers issued yesterday, Hostess warned that “some service interruptions and out-of-stock items are possible”.
It added: “Half of our bakeries that are experiencing labor actions are still producing and delivering products thanks in part to employees from various unions, including the Bakers, crossing picket lines. That means 24 of our bakeries are still in operation and ready to serve your needs.
“To ensure that we meet your demand for our products, we are: Focusing on producing our highest volume SKUs; shifting production to bakeries to make up for any shortfall in production from facilities that are not operating due to the strike; and consolidating production lines as needed to maintain production.”
Hostess CEO: We will close the entire company if widespread strikes cripple our business
Commenting on the move to close three bakeries, CEO Gregory F. Rayburn said: "We deeply regret this decision, but we have repeatedly explained that we will close facilities that are no longer able to produce and deliver products because of a work stoppage – and that we will close the entire company if widespread strikes cripple our business."
Hostess - which recently got approval from the bankruptcy court to force members of the BCTGM to accept a collective bargaining agreement they had overwhelmingly rejected - said last month that the likelihood of making it out of Chapter 11 would “evaporate” if the BCTGM-represented employees went on strike.
Hostess filed for Chapter 11 bankruptcy protection in mid-January, citing pension and medical benefit obligations, restrictive work rules and tough trading conditions, and has been pursuing new collective bargaining agreements with union employees ever since.
While the Teamsters union, which represents several thousand Hostess’ employees, accepted the company’s latest collective bargaining offer, the BCTGM rejected it by a 92% margin, dismissing it as “outrageously unfair”.
The offer on the table
While the company’s contribution to health plans and pension schemes will drop significantly under the five-year collective bargaining agreement, and wages will immediately drop 8% for everyone in year one, pay will rise again gradually over the next four years.
Texas-based Hostess Brands employs about 18,500 employees and operates 33 bakeries in the US.
The BCTGM represents 6,600 Hostess employees and is Hostess's second largest union behind the Teamsters.