Hostess Brands Inc. of Irving, Texas, filed for bankruptcy in January and had around $860 million in debt, reports Reuters. Hostess had won the ability to force pay cuts on its bakery workers in bankruptcy court. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union rejected these pay cuts and began the strike Friday. The union represents nearly 6,000 of Hostess' employees.
Hostess Wednesday gave its striking workers an ultimatum to return to work by 5 p.m. Thursday. If the striking workers do not return, Hostess says it will be forced to close its operations and liquidate the business. According to Reuters, Hostess has 36 bakeries, 565 distribution centers, 570 stores and 18,000 employees.
Because of the strike, Hostess has been forced to close bakeries in Seattle, St. Louis and Cincinnati, leading to the loss of 627 jobs, notes Bloomberg. One of the reasons behind the strike, according to Bloomberg, was the union's belief that there was a potential buyer for Hostess although that is not the case, Lance Ignon, a Hostess spokesman told Bloomberg.
Hostess' familiar products include Twinkies, Ding Dongs and Wonder Bread.
The Bakers Union represents the second largest group of Hostess employees. The largest union, the Teamsters, had agreed to a new contract, accepting an 8 percent pay cut and a 17 percent cut to benefits. Enough workers have crossed the picket line to allow half of the bakeries owned by Hostess to operate.
Unfortunately, that will not be enough to keep Hostess in business. Chairman and Chief Executive Officer Gregory Rayburn said Wednesday, "We simply do not have the financial resources to survive an ongoing national strike. Therefore, if sufficient employees do not return to work by 5 p.m. EST on Thursday to restore normal operations, we will be forced to immediately move to liquidate the entire company, which will result in the loss of nearly 18,000 jobs,” reports The Dallas Morning News.
Hostess will file the request to permit liquidation on Friday if the bakery workers do not return, reports Reuters. If Hostess is allowed to liquidate, it could begin to cease operations by Tuesday, firing all employees and only keeping a few on as part of the process to sell the company.
Union President Frank Hurt believes that accepting the pay cuts would set back workplace conditions by more than 60 years, and in a statement said, “"Hostess Brands is making a mockery of the labor relations system that has been in place for nearly 100 years," reports ABC News.