Hostess Brands Out Of Business; Twinkies Maker Calls It Quits
The maker of Twinkies is going out of business.
Hostess Brands, famous for the classic snack and Wonder Bread, is shutting down operations after a union dispute. The company announced Friday that they're seeking permission from a federal bankruptcy court to close the business.
Around 18,500 Hostess employees will be out of a job with the closing of 33 bakeries, 565 distribution centers and 570 outlet stores.
Gregory Rayburn, CEO of Hostess Brands, released a statement saying, "We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike."
The company will be sold to the highest bidder and may mean a fresh update of their products. However, even if the company is bought, it still means the current workers are out of a job.
"The industry has overcapacity. We're overcapacity. Our rivals are overcapacity," Rayburn said in a CNBC interview.
Hostess gave the bakers until 5 p.m. ET Thursday to go back to work or the company would cease operations. The CEO said that even if they return to work now, "It's too late."
Hostess blamed a new contract with the Bakery Union for the strike, according to a statement on the company's website.
In September, the Teamsters Union agreed to the new contract that cut wages and benefits that the Bakery Union went on strike against. The Bakery Union would not agree to the deal which meant an 8 percent salary cut in the first year of the five-year agreement. Salaries were then scheduled to bump up 3 percent in the next three years and 1 percent in the final year.
The union blamed the company's management for its downfall and not the strike. Hostess previously filed for bankruptcy twice. The first instance was in 2004 and the last in January 2012.
