Quantcast

Hostess to close, cites nationwide worker strike (+video)

By Tom Murphy

Associated Press

Published: Friday, Nov. 16 2012 2:56 p.m. MST

The Wonder Hostess Bakery Thriftshop is shown at the Utah Hostess plant in Ogden, Utah, Thursday, Nov. 15, 2012. Hostess Brands Inc. is warning striking employees that it will move to liquidate the company if plant operations don't return to normal levels by Thursday evening.

Rick Bowmer, AP

NEW YORK — Twinkies may not last forever after all.

Hostess Brands Inc., the maker of the spongy snack with a mysterious cream filling, said Friday it would shutter is operations after years of struggling with management turmoil, rising labor costs, intensifying competition and America's move toward eating healthier snacks even as its pantry of sugary dessert cakes seemed suspended in time.

Some of Hostess beloved brands such as Ding Dongs and Ho Ho's likely will be snapped up by buyers and find a second life, but for now the company says its snack cakes should be on shelves for another week or so. The news stoked an outpouring of nostalgia around kitchen tables, water coolers and online people relived childhood memories of their favorite Hostess goodies.

Customer streamed into the Wonder Hostess Bakery Outlet in a strip mall on the west side of Indianapolis Friday afternoon after they heard about the company's demise. Charles Selke, 42, pulled a pack of Zingers raspberry-flavored dessert cakes out of a plastic bag stuffed with treats as he left the store.

"How do these just disappear from your life?" he asked. "That's just not right, man. I'm loyal, I love these things, and I'm diabetic."

After hearing the news on the radio Friday morning, Samantha Caldwell of Chicago took a detour on her way to work to stop at a CVS store for a package of Twinkies to have with her morning tea and got one for her 4-year-old son as well.

"This way he can say, 'I had one of those,'" Caldwell, 41, said.

It's a sober end to a storied company. Hostess, whose roster of brands dates as far back as 1888, hadn't invested heavily in marketing or innovation in recent years as it struggled with debt and management changes.

As larger competitors inundated supermarket shelves with a dizzying array of new snacks and variations on popular brands, Hostess cakes seemed caught in time. The company took small stabs at keeping up with Americans' movement toward healthier foods, such as the introduction of its 100-calorie packs of cupcakes. But the efforts did little to change its image as a purveyor of empty calories with a seemingly unlimited shelf life.

Even taking into account changing tastes and competition, Hostess' problems were ultimately rooted in its own financials. The company, based in Irving, Texas, had been saddled with high pension, wage and medical costs related to its unionized workforce. It was making its second trip through bankruptcy court in less than three years.

Before the Chapter 11 filing in January, citing growing competition from rivals that expanded their reach over the years, the company had been contributing $100 million a year in pension costs. The new contract offer would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.

Tensions between management and workers were also an ongoing problem. Hostess came under fire this year after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent even as the company was struggling last year. Although some of those executives later agree to reduced salaries, others — including the former CEO Brain Driscoll — had left the company by the time the pay hikes came to light.

Hostess filed a motion to liquidate Friday with U.S. Bankruptcy Court after it said striking workers across the country crippled its ability to maintain production. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended Friday. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

Get The Deseret News Everywhere

Subscribe

Mobile

RSS