Hostess Brands turns out the light
■ Strike claims maker of Twinkies
The familiar, comforting aroma of baking bread is missing from Downtown Memphis. Owners of the 91-year-old Wonder Bread bakery have shut it down. Striking bakery workers gave them no alternative, they said.
On Friday, Hostess Brands filed a motion in bankruptcy court to liquidate the company, a move that means the loss of about 18,500 jobs nationwide, including more than 250 in Memphis.
Employees at 33 factories, including those in Memphis and Knoxville, were sent home Friday; about 500 bakery outlet stores will stay open only until shelves are empty.
Hostess Brands CEO Gregory Rayburn said he is confident the bankruptcy judge will approve the liquidation on Monday. That would clear the way for a sale of assets, including well-known brands like Twinkies and Ho Hos.
Leaders of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, which went on strike a week ago to protest hefty cuts in wages and benefits, are banking on new owners to emerge and restart production.
Letitia Malone, president and business agent of Local 149 in Memphis, said the union wasn’t privy to discussions the company has had with potential buyers of its bakeries. But she is confident there’s a future, particularly for the Memphis bakery, with its productivity and central location for distribution.
This week the Memphis plant operated with a patched-together workforce that included managers, members of other unions and bakery workers who crossed the picket line. By Friday morning, the bakery had ceased to blanket the neighborhood with the smell of Wonder Bread and Hostess Honey Buns.
A couple blocks west at a Wonder/Hostess outlet store, Twinkies, Wonder Bread, Ding Dongs and Ho Hos flew off the shelves as word spread early Friday of an imminent closing.
“I’m here to buy some of my favorites,” said customer Tavia Thomas of Cordova. “I can’t imagine not being able to have my Ding Dongs and Twinkies.”
Mark Talley, a parishioner at St. Mary’s Episcopal Church, was stocking up on a dozen boxes of Zingers for the church’s Pop Top ministry, which feeds the homeless on Saturdays. Talley wasn’t sure where the church would find a cheap, convenient supply of snack treats once the outlet store closes.
Hostess spokesman Erik Halvorson said, “We anticipate that the retail outlets will remain open for 7-10 days to sell our remaining stock.” But customers at the store at 341 Monroe suggested the inventory wouldn’t last through the weekend, and a clerk said she’d been informed the store’s future was uncertain after Saturday.
The work stoppage by the bakery workers union affected nearly two-thirds of Hostess’ factories across the country. The company first responded by permanently closing three factories, then gave union members until 5 p.m. (Eastern) on Thursday to return to work.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Rayburn told workers in a statement.
The bakery workers union went on strike last week after rejecting in September a contract offer that slashed wages and benefits.
The company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. On Thursday, the Teamsters urged the bakery workers union to hold a secret ballot on whether to continue striking. On Friday, Teamsters leadership bitterly complained that its members were collateral damage.
“There was no bluff,” Ken Hall, Teamsters secretary-treasurer told the Huffington Post. “Our financial advisers had looked at their books, they had total access.”
Hostess, whose roster of brands dates as far back as 1888, has struggled for years with debt and management changes. As larger competitors inundated supermarket shelves with an array of new snacks and variations on popular brands, Hostess cakes seemed caught in a bygone time.
Rayburn, who was hired as a restructuring expert, said Friday that sales volume was flat to slightly down in recent years. He said the company booked about $2.5 billion in revenue a year, with Twinkies alone generating $68 million so far this year.
At a dock behind the Monroe store on Friday, Willie Rucker of Millington loaded the bed of a Dodge Dakota full of bread and pastries that were past their expiration date.
Rucker said he’d been buying a truckload every couple weeks to supplement feed for 225 hogs and other farm animals.
“You can make them do more if you give them some sweetening,” Rucker said.