Hostess mulling Indiana plant closures after walkout

Hostess Inc. could decide as early as today whether it will close plants the bakery-products company operates in Indiana, a spokesman said Monday morning.

Unionized workers at plants in Indianapolis and Columbus 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 which are members in the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, according to Hostess spokesman Erik Halvorson. The firm employs 288 workers in its Indianapolis bakery, of which 212 are BCTGM members.

Hostess said it would have to consider liquidating the company after the union announced Friday that it had gone on strike.

“No plants have been closed; however, disruption to our production and distribution will force those decisions to be made, probably as soon as today,” Hostess spokesman Halvorson said in an e-mail Monday morning to IBJ.

Representatives with BCTGM Local 372 in Indianapolis could not be immediately reached for comment.

Bakery worker locals at plants honored picket lines and also refused to work, the international union said on its website.

Union members are “crossing picket lines in sufficient numbers to allow normal operations at about half” of the 20 affected plants, Lance Ignon, a Hostess spokesman, said in an e-mailed statement. He said the “strike could lead to closure of some plants if they are not able to produce and deliver product.”

The union said the strike was in response to the “unilateral imposition of a horrendous contract” rejected by 92 percent of the membership. The bakery workers’ union says it represents 5,000 Hostess workers.

Workers from the Teamsters union voted to ratify a new contract with 8-percent wage concessions and 17-percent benefit reductions. The bankruptcy court imposed the same concessions on some members of the bakery workers’ union who voted down the proposed contract.

The bankruptcy court ruled that it had power to impose concessions on bakery workers’ locals where the contract hadn’t expired by its own terms. The union said that workers without a right to strike were nonetheless able to walk out by honoring picket lines from other locals that could strike.

Hostess filed a proposed reorganization plan last month that can’t be implemented without selling some assets or obtaining new financing.

The company previously said the bakery workers voted against the concessionary contract because they were erroneously told there was a white knight ready to buy the company and avoid wage cuts. Ignon said “there is no buyer waiting to purchase the entire company and there never has been.”

Hostess voluntarily received labor concessions in its first Chapter 11 reorganization from both the Teamsters and bakery workers’ unions.

Hostess, based in Irving, Texas, filed under Chapter 11 for a second time in January, listing assets of $982 million against liabilities totaling $1.4 billion. Hotess brand names included Wonder, Hostess, Merita, Dolly Madison, Drake’s and Butternut.

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