Hostess, union to enter mediation - Boston News, Weather, Sports | FOX 25 | MyFoxBoston

Hostess, union to enter mediation

Posted: Updated:

By CANDICE CHOI | AP Food Industry Writer

WHITE PLAINS, N.Y. (AP) — Twinkies will live to see another day.

Hostess Brands Inc. and its second largest union agreed on Monday to go into mediation to try to resolve their differences after a bankruptcy court judge concluded that the parties hadn't gone through the critical step. That means the maker of the spongy cake with the mysterious cream in the middle won't go out of business yet.

The news comes after the maker of Ho Ho's, Ding Dongs and Wonder Bread last week moved to liquidate and sell off its assets in bankruptcy court. The company cited a crippling strike started on Nov. 9 by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that started, which represents about 30 percent of Hostess workers.

"Many people, myself included, have serious questions as to the logic behind this strike," said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y. "Not to have gone through that step leaves a huge question mark in this case."

The mediation talks are expected to begin Tuesday, with the liquidation hearing set to resume on Wednesday. After Monday's hearing, Jeff Freund, an attorney for the bakers union, said any guess as to how the talks will go would be "purely speculative."

In an interview following the hearing, CEO Gregory Rayburn said that there is enormous financial pressure to come to an agreement with the union by the end of the day Tuesday. He noted that it's costing Hostess about $1 million a day in payroll costs alone to keep the company alive.

"We didn't think we had a runway, but the judge just created a 24-hour runway," said Rayburn, who added that even if a contract agreement is reached, it's unclear whether all 33 Hostess plants operate again.

Hostess, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, the company, which is based in Irving, Texas, asked the court for permission to sell assets and go out of business.

Hostess, which is in its second bankruptcy in less than a decade, said that it was saddled with costs related to its unionized workforce. So the company brought on Rayburn as a restructuring expert to renegotiate its contract with labor unions.

Hostess, which had been contributing $100 million a year in pension costs for workers, offered them a new contract that would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits. But the bakery union decided to strike.

By that time, Hostess had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.

Rayburn said that Hostess was already operating on razor thin margins and that the strike was the final blow. The company's announcement on Friday that it would move to liquidate prompted people across the country to rush to stores and stock up on their favorite Hostess treats. Many businesses reported selling out of Twinkies within hours and the spongy yellow cakes turned up for sale online for hundreds of dollars.

Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers. The company says several potential buyers have expressed interest in the brands. Although Hostess' sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies along brought in $68 million so far this year.

  • Your MoneyMore>>

  • Startups flock to NY TechDay

    Startups flock to NY TechDay

    Thursday, April 24 2014 6:40 PM EDT2014-04-24 22:40:26 GMT
    NY TechDay is where the hottest new startups come every year. More than 400 of them from all different countries come to check out the NYC tech scene. Our first stop at Pier 92 was Rent Hackr, a website with renter generated data to help apartment hunters. Then we checked out Karma, a portable Wi-Fi device that lets you share hot spots with friends.
    NY TechDay is where the hottest new startups come every year. More than 400 of them from all different countries come to check out the NYC tech scene. Our first stop at Pier 92 was Rent Hackr, a website with renter generated data to help apartment hunters. Then we checked out Karma, a portable Wi-Fi device that lets you share hot spots with friends.
  • Studies: office layout can affect your mental and physical health

    Studies: office layout can affect your mental and physical health

    Thursday, April 24 2014 5:13 PM EDT2014-04-24 21:13:30 GMT
    Leaving the office, most of us feel pretty exhausted. Studies now suggest that we can blame much of what ails us physically and mentally on the layout of our workspace. American companies standardized the sprawling square room divided by cubicles or nothing to foster team atmosphere. But newer research suggests that the open-plan office actually raises stress while lowering motivation and focus and maybe even reducing life-expectancy.
    Leaving the office, most of us feel pretty exhausted. Studies now suggest that we can blame much of what ails us physically and mentally on the layout of our workspace. American companies standardized the sprawling square room divided by cubicles or nothing to foster team atmosphere. But newer research suggests that the open-plan office actually raises stress while lowering motivation and focus and maybe even reducing life-expectancy.
  • Cough syrup popular in celebrities' 'sizzurp' cocktails pulled from market

    Cough syrup popular in celebrities' 'sizzurp' cocktails pulled from market

    Thursday, April 24 2014 8:00 AM EDT2014-04-24 12:00:01 GMT
    A prescription cough syrup that some celebrities like to mix with soda and hard candy is being pulled from the market, pharmaceutical company Actavis confirmed. The cough syrup-soda concoction is often called "sizzurp."
    A prescription cough syrup that some celebrities like to mix with soda and hard candy is being pulled from the market, pharmaceutical company Actavis confirmed. The cough syrup-soda concoction is often called "sizzurp."
Powered by WorldNow

25 FOX Drive
Dedham, MA 02026

Phone (781) 467-2525

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices