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Hostess plant closings so far spare Indy, Columbus

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Hostess Brands Inc., the maker of Wonder bread and Twinkies, said Monday that it is permanently shutting plants in Cincinnati, Seattle and St. Louis because it couldn’t get enough members of its striking bakery workers’ union to cross the picket lines to keep them open.

The company has threatened additional closings but so far hasn’t said that it will shut down its plants in Indianapolis and Columbus, which have joined a nationwide strike against proposed labor contracts that would cut wages 8 percent in the first year of a five-year agreement.

Hostess employs about 875 workers in Indiana, 436 of them members in the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, Hostess spokesman Erik Halvorson said. The firm employs 288 workers in its Indianapolis bakery, 212 of them members of that union.

In a statement, Hostess CEO Gregory Rayburn said: “We will close the entire company if widespread strikes cripple our business,”

The strike affects 23 of Hostess’ 36 plants, the company said. Half the affected plants are operating, the company said.

The company can’t continue operating with so many affected plants, Rayburn said. Hostess is “days away” from having to shut down entirely, he said.

The bakery workers’ union went on strike at some locations, including Indianapolis and Columbus, in reaction to what the union called the “unilateral imposition of a horrendous contract” rejected by 92 percent of the membership.

Drivers represented by the Teamsters Union have ratified a new contract with 8 percent in wage concessions and 17 percent in benefit reductions. The Teamsters are honoring the bakery workers’ picket lines at some locations.

Texas-based Hostess said enough union members are crossing the picket lines to allow “full operations” at about half the struck plants.

“Some employees are apparently under the misimpression that if they force Hostess to liquidate, another company will buy our bakeries and offer them employment,"  Rayburn said in his statement.

The industry has “far too much capacity,” Rayburn said. “I believe the leadership of the bakers union knows this fact, but is willing to sacrifice its Hostess employees for the sake of preventing other bakery companies from asking for similar concessions.”

Hostess is making “false claims” in a “desperate attempt to break our members’ solidarity and scare our members into giving up their fight for their pensions, their health insurance, their wages and their families,” bakery union Secretary-Treasurer Dave Durkee said Monday in a statement.

The bakery workers’ union said it represents 5,000 Hostess workers.

Hostess previously said the bakery workers voted against the contract because they were erroneously told there was a white knight ready to buy the company and avoid wage cuts.

“There is no buyer waiting to purchase the entire company and there never has been,” a Hostess spokesman, Lance Ignon, said in an e-mailed statement.

Teamsters officials couldn’t be reached for comment on the strike.
Hostess filed a bankruptcy reorganization plan last month that can’t be implemented without selling some assets or obtaining new financing. Both the Teamsters and the bakery workers’ union made voluntary concessions in the first Chapter 11 reorganization, which began in 2004.

Hostess filed under Chapter 11 for a second time in January, listing assets of $982 million against liabilities totaling $1.43 billion.
 

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  • Unions Add Zero Value
    Just another example of how unions drive up costs and eventually lead businesses to no longer be competitive. This is proof, by far the best and most recognizable brand in the industry, and can no longer compete because the union was too stubborn to change. Its not 1925 anymore and competitors will eat you alive if you don't constantly improve. The UAW made concessions - they knew the same thing would have happened to domestic automakers had they not adjusted their beliefs of constant entitlements.
  • Sherman
    You must be a Republician. Always on the side of the company.Were you aware that the company bosses gave them self a big pay bonus and forced their employees to take a pay cut.How would you like to work for them?
    • umbuddah
      Why is it always the unions fault and never a mention of what management is willing to concede?
    • Hostess/Little Debbie
      I stopped buying Hostess because they cost twice as much as Little Debbie, until now I never knew why Hostess cost so much. The economy is in the dumper and unions and government still want more. Unlike the government, the union can't force me to pay more. I wonder why unions don't take over the companies they are determined to run into the ground. Much easier to sit back and collect the monthly dues then send the check to the DNC every two years. I must admit, the unions get a better return on their investment with the DNC then Hostess has gotten from the union. The membership shouldn't worry. Once their jobs are gone they still have the hammock of unemployment insurance and Obama Care, don't forget the food stamps and free Obama phone. How much of that 8% could be recouped by not paying union dues. Cross the line, go back to work. Save your jobs and your self respect.
      • Twinkies are saved!
        Yay! Viva la' Ding Dongs!
      • Stealing the Middle Class
        What is going on is a continuation of the stealing of the middle class in the name of economic competition--an 8% wage cut is just? Hedrick Smith, former New Times editor explains it in his book, "Who Stole the American Dream", for example, since 1978 American productivity has increased 80% but wages only 10%. Corporations took the 70% and are not sharing it--that didnt used to happen. Before '78 wages increased at the same rate. And to make it worse, this is ony happening in America. Not the rest of the world---and our middle class is dying, along with our country. Something has to change or we are finished as a nation.
        • Qu'ils mangent de la brioche
          Get it?

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        1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

        2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

        3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

        4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

        5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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