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Hostess: Firm to liquidate unless workers return Thursday

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Hostess Brands Inc. says it will file for liquidation unless its unionized employees in Indiana and across the nation return to work by 5 p.m. Thursday.

The maker of Wonder bread and Twinkies said in a statement Wednesday afternoon that it did not have the financial resources to survive the ongoing strike by the Bakery, Confectionery, Tobacco Workers and Grain Millers union.

“It is now up to Hostess’ BCTGM-represented employees and Frank Hurt, their international president, to decide if they want to call off the strike and save this company, or cause massive financial harm to thousands of employees and their families,” Hostess CEO Gregory Rayburn said in a prepared statement.

BCTGM’s 436 members working at Hostess’ Indianapolis and Columbus plants have joined in nationwide pickets that began Nov. 9.

The company employs 288 in Indianapolis, 212 of them BCTGM members.

Irving, Texas-based Hostess this week closed plants in Cincinnati, St. Louis and Seattle and threatened additional shutdowns.

As part of its bankruptcy proceedings, the company proposed labor contracts with pay cuts.

The union has called the proposed pact the “unilateral imposition of a horrendous contract,” and 92 percent of the membership rejected the offer.

Hostess intends to file a motion Nov. 16 with the U.S. Bankruptcy Court requesting a hearing for Nov. 19. At the hearing, the company intends to ask permission to sell its assets and lay of 18,000 employees, including the 856 in Indiana.

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  • Not enough Mr. Executive
    The problem is the percentage of the cuts. To the executive 5 percent doesn't change his tax bracket or class status. Meanwhile 5 percent takes a middle class person and moves him to lower. We can't continue to make class changes to the bottom two while not affecting the top.
  • Wake up America.
    People always want the lower class to give in and work for less. Why would anyone work and still not be abled to afford the cost of living. This whole system is out of whack because of the pay scale of white collars over blue collar workers. Anything top heavy will eventually crumble. If you look at the history of the company you will see that financial problems did not arise until the gap of pay scale increased ,based on the rate of inflation to cost of living. You can't run a company by taking what was once considered a good middle class job ,turning it into a lower class job, while maintaining the executives jobs at an upper class pay rate. If your going to decrease the level of pay on the bottom to a different class rate you must do the same up top. That's common business sense. I don't know why it gets lost by big corporations. People always make the argument,you won't be abled to attract the best CEOs if you don't offer a high pay scale, yet some of those so called best CEOs have given us front row tickets to the demise of some of our long standing companies. This is not a Republican or Democrat issue nor is it union vs right to work, it's a simple get your head out of the dream world, look at history and start to acknowledge the pay rate problem in America.
  • Live to Fight
    Whether you believe the points detailed by Jose Noway are valid (they where levied by creditors who were trying to get paid by a company in bankruptcy) or the the points detailed in "view from the top", the bottom line right now is the company will be shut down if the concessions are not accepted. If you are the workers, accept the concessions, then prove the excesses, and let the shareholders/creditors vote out the board that let it happen. And in the meantime, you will still have a job!
  • view from the top
    An Executive earning a large salary is NOT going to cause a company to go BK. The revenue vs expense ratio as well as stock prices are always way off thereby causing the problem. Adding a million dollars to the CEO salary (1 person) will not cause the company to go under! A Board grants extra pay in these type situations so that the CEO will stay on until the final outcome is determined rather than leave in the middle of the upheaval. The Board has a better understanding of the internal metrics as to whether the company is salvagable or not. Payroll is always the largest expense therefore workers are asked to take cuts and ultimately weak stock prices/ weak sales bring the entire organization down as they provide the infusion of $ to sustain the business in a positive way. Often times, the Executive staff has already taken cuts in their compensation before the workers are asked to. It is not something that normally gets publicized. No Executive wants to see their company fail or close as their job and salary go away as well.
    • Save the Twinkies
      Many, many companies have had substantial pay cuts and the employees took their lumps rather than have no job at all. Some of these cuts last for years, but they do come back. When I was unemployed, the vast majority of others in my boat at networking meetings were from manufacturing concerns and just COULD NOT get new jobs. More unemployment, food stamps, failed mortgages, etc. follow suit. That is followed by the government making even more citizens dependent up it. Hostess employees, don't win the battle and lose the war. (By the way, why doesn't Right to Work apply here or Hostess firing all the union workers and hire some of the unemployed masses out there? They'd be glad to accept a salary of any kind! Unions have lost their original purpose.
    • Always look to the top
      Check the facts before pointing fingers at the little guy. Most likely there are things out of line at the top. Workers on the line are not the ones walking away from this with piles of cash. However, a CEO making over $2 million and he still runs the company into Chapter 11? Had the cuts been fair across the board, I bet there wouldn't have been a strike.
    • Twinkies and Ding Dongs
      From WSJ in April 2012: "Creditors of Hostess Brands Inc. said in court papers the company may have "manipulated" its executives' salaries higher in the months leading up to its Chapter 11 filing, in what the creditors called a possible effort by Hostess to "sidestep" Bankruptcy Code compensation provisions." Also the previous March 2011 the CEO's pay increase was approved from their board from $750,000 to $2.25million, and then checked into Chapter 11 filings Jan 2012. But no.... you folks think it is greedy union workers.
      • Wonder who's worse here
        With a little research, I think the union should accept this contract. A 5% cut is hard to swallow, but as it stands, Hostess is planning on going into liquidation. In today's labor market, I think they will have a tough time finding an equivalent job. Keeping the company going is their best option, too. There are actually pay increases in the contract for coming years, although they are effectively pay cuts, as the raises are below the normal rate of inflation. Still, it is definitely better than the extended unemployment many will likely face if the company liquidates. Many companies today don't hire unemployed people, and I don't see that changing much until employment gets back to the actual 6-7% unemployment range. Just too many potential employees out there for the number of jobs.
      • Obama voters
        I suspect these union workers are all strong Obama voters.
      • Better think about your actions
        I do have mixed feelings about asking people to take deep pay cuts. However, this would be easier to accept if the management would reduce their large salaries and bonus and accept the same percentage of cuts they are asking the guys who have to live week to week trying to get by. Of course, once the plants are closed, most likely, the workers who take a hard line stance will take employment(if they can find any) doing a job for far less than they would be making by just being willing to try and work through the stalemate. It most often is the nutcakes who really do not want to work that causes all the problems. These types of employees need to be weeded out. I bet they would be the first to start whining and crying like a blubbering baby about needing a job when they are out on the street. Good employees should not allow a few bad apples to ruin their lives by allowing a plant to close.
      • Uh, Wait a Minute!
        You mean you were serious?.........uh, wait a minute......Too late now?......but I have kids to clothe and feed......what do you mean I should have thought of that?......No, really, we weren't serious........hey, come back here! I'm sure gonna miss Twinkies. I'll bet Little Debbie has something in the works though.
      • We'll Show Em!
        We'll show those management people, we'll put them out of business and all lose our jobs during the worst economic times since the Great Depression. That will show them who's really the boss!
      • 100% pay cut
        Hold out and take a 100% pay cut.....Sounds like a solid plan.
      • Hostess
        I hope hostess shuts down in Indiana too.I'm sick of the union thugs screwing things up. Especially thegovernment union crowd. They only care about themselves.

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