Hostess Co., union battle in bankruptcy

Photo by Christina Santucci
By Rich Bockmann

Nearly two years after the last loaf of Wonder Bread rose up out of a bakery in Jamaica, the Hostess Co. and its second-largest union were in a battle over the company’s future.

More than 150 employees lost their jobs in January 2011 when the company shuttered the doors at the Hostess factory, at 168-23 Douglas Ave., which had been baking bread since the latter half of the 19th century.

The move to close the bakery followed the company’s first trip through bankruptcy beginning in 2004, and despite efforts to get back on its feet, Hostess filed under Chapter 11 again earlier this year.

In court documents, one of the company’s largest unions — the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union — claimed it and the International Brotherhood of Teamsters made significant concessions with the promise the savings would be used to invest in modernizing the business.

Earlier this year, however, the Irving, Texas-based company claimed its pension plans, health and welfare costs and collective bargaining agreements were making it impossible to modernize its production and distribution operations and restructure its debt when it filed for bankruptcy for the second time.

Believing management had put the company in what it called “a death spiral,” the union began a strike Nov. 9.

“Since the first bankruptcy in 2004, BCTGM members across the country have taken dramatic wage and benefit concessions and watched as 21 Hostess plants were shut down and thousands of jobs lost,” the union’s attorney wrote in a bankruptcy filing. “At the time of the first bankruptcy, Hostess workers were assured by management that money saved via concessions or plant closings would help make the company stronger, more vibrant and more competitive.”

“Instead, helpless Hostess employees watched as money that was supposed to go towards capital investment, product development, plant improvement and new equipment went to executive bonuses and payouts to the hedge funds that own Hostess Brands,” the attorney wrote.

Three days later, the company closed down three plants, and on Nov. 16 Hostess announced the shutdown of all baking operations as it sought permission from the court to close the business and sell all its assets.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” said Chief Executive Officer Gregory Rayburn Friday. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

On Monday, Hostess announced that following a request from the court, the company would enter into a confidential mediation session with the Union Tuesday, though if no agreement could be struck both sides would be back in court Wednesday morning.

Reach reporter Rich Bockmann by e-mail at rbockmann@cnglocal.com or by phone at 718-260-4574.

More from Around New York