Hostess Brands Inc., the maker of Twinkies and Wonderbread, has received the go-ahead from a U.S. bankruptcy court judge to cut wages for thousands of bakery workers, affecting more than 400 employees in Indiana.
Hostess, based in Irving, Texas, on Wednesday won approval from the U.S. Bankruptcy Court Southern District of New York to impose changes to collective-bargaining agreements for members of the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union.
Changes to the agreements included an 8 percent decrease in wages for the first year of a five-year contract, according to the company. Wages would rise about 3 percent the following year. The agreements also would include revised health and welfare benefits, and/or employee cost share.
Hostess filed for Chapter 11 bankruptcy reorganization in January. It argued to the bankruptcy court that cutting wages for all workers—including the BCTGM members—was the only way to avoid going out of business.
Members of the International Brotherhood of Teamsters had ratified similar changes to their collective bargaining agreement with Hostess in September. BCTGM members voted to reject the company’s proposed concessions, leading to the court action.
Hostess employs 874 workers in Indiana, 436 of which are members in the BCTGM union, according to Hostess spokesman Erik Halvorson. The firm employs 288 workers in its Indianapolis bakery, of which 212 are BCTGM members.
In a letter to Hostess workers dated Aug. 20, Rayburn emphasized that all employees—including management—would be subject to the pay cuts absorbed by union members.
“With lower costs, we can attract the financing we need to exit Chapter 11, invest in our operations and create a company with a sustainable long-term future,” Rayburn said.
Hostess was founded in 1930 and has annual revenue of more than $2 billion. It employs about 18,500 workers, which operate 36 bakeries and 570 bakery retail outlets nationwide.