The bakers’ union rejected a deal by the court to reduce salaries by 8% in the first year of a five year agreement. Ultimately when not enough of them would cross the picket line Hostess decided it could no longer weather the strike and has decided to liquidate the company. This will cost 18,500 people their jobs. For those in the bakers’ union that can’t do math, that’s a 100% reduction in salaries for everyone.
Here’s the low down:
CNN MONEY – Hostess Brands — the maker of such iconic baked goods as Twinkies, Devil Dogs and Wonder Bread — announced Friday that it is asking a federal bankruptcy court for permission to close its operations, blaming a strike by bakers protesting a new contract imposed on them.
The closing will result in Hostess’ nearly 18,500 workers losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide, as well as 570 outlet stores. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union represents around 5,000.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said CEO Gregory Rayburn in a statement. …
Asked if the shutdown decision could be reversed if the Bakers’ union agreed to immediately return to work, he responded, “Too late.”
In September, one of its major unions, the International Brotherhood of Teamsters, voted narrowly to accept a new contract with reduced wages and benefits. The bakers’ union rejected the deal, however, prompting Hostess management to secure permission from a bankruptcy court to force a new concession contract on workers.
The Teamsters union, which represents 7,500 Hostess workers, has been sharply critical of the smaller Bakers’ decision to strike, saying it was forcing the company to the cusp of liquidation. The Teamsters said Thursday that the Bakers’ union should hold a secret ballot vote on the company’s offer, rather than the voice votes that were held in union halls around the country that authorized the decision to strike.
“It is difficult for Teamster members to believe that is what the [Bakers union] Hostess members ultimately wanted to accomplish when they went out on strike,” said the Teamsters’ statement.
The Bakers’ union has made several statements earlier in the week saying management is to blame for the condition of the company, not the strike.
The new contract cut salaries across the company by 8% in the first year of the five-year agreement. Salaries were then scheduled to bump up 3% in the next three years and 1% in the final year.
Hostess also reduced its pension obligations and its contribution to the employees’ health care plan. In exchange, the company offered concessions, including a 25% equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.