Cathy Jett is the assistant business editor at The Free Lance-Star, and specializes in covering the area's retail scene.
Customers stock up as Hostess Brands winds down
Art and Joanne Williams were dismayed to learn Friday that Hostess Brands Inc. is going out of business after decades of turning out such iconic treats as Twinkies, Ding Dongs and Ho Hos.
So the Spotsylvania County couple decided to stock up that morning at the Bakery Thrift Shop next to the Wonder Bread/Hostess distribution center on Powhatan Street in Fredericksburg.
“It’s the food you grew up with as a kid. It’s what your mother threw in your lunchbox,” said Art Williams as he and his wife filled their shopping cart with Hostess CupCakes topped with those distinctive white squiggles, as well as Zingers and a number of other items.
“It’s pretty said,” added Joanne Williams, who’d shopped at the outlet for bread, rolls and cake for more than 20 years on her way home from work at Mary Washington Hospital. “I feel sorry for all the people losing their jobs.”
Hostess Brands Inc., which also makes Wonder Bread, announced Friday that it is winding down operations and has filed a motion with U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y. It seeks permission to close its business, lay off most of its 18,500 employees and sell its assets and iconic brands such as Drakes and Dolly Madison, which makes Twinkies.
The Irving, Texas-based company has 33 bakeries and 565 distribution centers. Locally, there are 14 employees at its Wonder Bread/Hostess distribution center and two at the thrift shop.
Several employees who were at the distribution center on Friday were unhappy about the prospect of having to find new jobs, but had been told not to discuss the company with the media. They and a salesclerk at the thrift shop, however, did say that they hadn’t been told when their operations would be shut down.
According to a statement on Hostess Brands’ website, it has suspended bakery operations at all of its plants, but will continue to deliver inventory and keep its Hostess Brands retail stores open for several days in order until all products are sold.
Hostess Brands is blaming its decision to shut down on a labor strike by members of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, but Americans’ appetite for junk food has been waning in recent years. The company has filed for bankruptcy twice this decade, the last time in January.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory F. Rayburn, Hostess’ chief executive, said in a statement.
Many businesses have faced labor unrest in the recovery from the recession as they try to dial back benefits and wages and unions resist. In 2011, for example, there were 19 major strikes and lockouts involving more than 1,000 workers, according to the Bureau of Labor Statistics, up from 11 in 2010. The 2011 strikes accounted for 1.02 million lost workdays.
The union said in a statement that Hostess made unreasonable demands, including wage and benefit cuts of around 30 percent for workers, while top executives of the company received large pay increases.
“The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,” said union President Frank Hurt.
“The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company’s most valuable asset—its workers,” he added.
Currently, workers are on strike at 24 production facilities, according to the union.