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No contract, no Twinkies

posted 17 Nov 2012, 10:34 by Mpelembe   [ updated 17 Nov 2012, 10:34 ]

Stores shelves across the U.S. were wiped clean and iconic Twinkies popped up on eBay Friday as parent company, Hostess Brands, announced it plans to shut down for good.

Reuters Business Video Report - After battling unions for years and a crippling strike this week, the bankrupt, 82 year-old company said it was cutting nearly all of its 18,500 workers.

Employees, like Tom Snyder, a supervisor in Wayne, New Jersey said the move took him by surprise.


"Around eight o'clock this morning they just shut everything down, everybody out of the building. Just like that, they're liquidating."

The company, one of the largest bakery and snack cake makers and distributors in the U.S. is known for brands which include Wonder, Nature's Pride, Dolly Madison, Drake's and its beloved Hostess cupcakes like Twinkies. It canceled all orders with suppliers and plans to start selling assets right away.


"There are different opinions about what ultimately led to Hostess' demise: changing consumers' tastes, corporate mismanagement. But many, including even workers at the company, say it was the company's second largest union that went too far battling Hostess."

Ernie Soehl, representing the International Teamsters, the company's largest union, says the Bakery, Confectionary and Tobacco Workers' hard stance on concessions sealed their fate.


"We knew it wasn't a fake ploy by the company for negotiations. It was a true fact by the research that the International Brotherhood of Teamsters did which our president, Hoffa and Ken Hall, going into their records, going into their books, and we knew that this would happen with a 'no' vote."

Yet, facing rising commodity costs and a stagnant market for its products Michael Davis, Professor of Economics at Southern Methodist University says the union's vote may not have mattered.


"The union had a choice. They could have given in on the wage and pension concessions. The question the union had to ask though is would that have really helped or was Hostess just so far gone that there was not much at all that could be done."

The company is waiting for the green light from a bankruptcy judge to move forward with liquidation. In the meantime, analysts expect that the end of Hostess may not mean the end of brands like Twinkies that will likely have many interested buyers.