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Hostess Brands latest: We’ll liquidate if striking employees aren’t back at work by 5.00pm EST today

By Elaine WATSON , 15-Nov-2012

Twinkies and Ding Dongs maker Hostess Brands says that if employees on strike are not back at work by 5pm EST today, it will move to liquidate the company.

It also reassured staff that a $140 daily fine that it claims the baker’s union has threatened to impose on employees who cross picket lines will not be taken out of paychecks.

It added: “We want to be clear: Hostess Brands does not provide a payroll deduction for any fine a union may decide to impose on our employees.”

If we move to liquidate firm, Hostess Brands will begin to close all of its operations as early as November 20

Speaking to FoodNavigator-USA this morning, Hostess confirmed that it would file a motion with the U.S. Bankruptcy Court on Friday to liquidate the business “if enough striking employees do not return to work by 5pm to enable us to resume normal operations”.

In a statement issued early this afternoon, the company launched a searing attack on the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), which called a national strike at Hostess plants on November 9.

It added: "BCTGM leadership appears willing to sacrifice Hostess Brands employees for the sake of preventing other bakery companies from asking for similar concessions... BCTGM initiated nationwide strikes on November 9 – knowing full well that strikes would force Hostess Brands to begin permanently closing bakeries – and perhaps the entire company."

If sufficient employees do not return to work by the 5pm deadline, the liquidation process will unfold as follows, said chief executive Gregory Rayburn in a statement issued yesterday afternoon:

“Hostess has requested a hearing on the motion for Monday, November 19, 2012. If the motion is granted, Hostess Brands will begin to close all of its operations as early as Tuesday, November 20, 2012.”

The closures will include the “termination of all employees except small, temporary crews to clean, secure and prepare facilities and other assets for sale”, he said.

It’s up to the union if it wants to continue with this strike action or eliminate 18,000 jobs

His comments came as industrial action by members of the BCTGM persisted at 24 of the firm’s 33 plants.

According to Hostess, half of the plants affected by the strikes were still producing some product yesterday.

A spokesman said: “It’s up to the leadership at the baker’s union if it wants to continue with this strike action or eliminate 18,000 jobs.”

He also rejected claims by the BCTGM that Hostess’ decision to close three plants in Seattle, St Louis and Cincinnati earlier this week was not the result of strike action but was in fact something that had been planned weeks earlier as part of a bankruptcy-exit re-organization plan.

He added: “We closed those plants because strike activity prevented them from producing and delivering products. If we had planned to close these plants all along, we would have done it in an orderly fashion, not like this.”

Union: Hostess was planning to close at least nine bakeries as part of its reorganization plan

However, the baker’s union said the closures amounted to a “desperate attempt to break the solidarity and resolve of striking BCTGM members across the country”.

In a statement issued this morning, president Frank Hurt said: “I am sure that our members would be agreeable to return to work as soon as the company rescinds the implementation of the horrendous wage and benefit reductions, including pension, and the restoration of the cuts that have already taken place.”

Outrageously unfair offer

Hostess filed for Chapter 11 bankruptcy protection in mid-January, citing pension and medical benefit obligations, restrictive work rules and tough trading conditions, and has been pursuing new collective bargaining agreements with union employees ever since.

While the Teamsters union, which represents several thousand Hostess’ employees, accepted the company’s latest collective bargaining offer, the BCTGM rejected it by a 92% margin, dismissing it as “outrageously unfair”.

The five-year collective bargaining agreement is being phased in on a rolling basis.

While the company’s contribution to health plans and pension schemes will drop significantly under the deal, and wages will immediately drop 8% for everyone in year one, pay will rise again gradually over the next four years.

Texas-based Hostess Brands employs about 18,500 employees and operates 33 bakeries in the US.

The BCTGM represents 6,600 Hostess employees and is Hostess's second largest union behind the Teamsters.

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