While Hostess Brands has placed the blame for its demise squarely on the shoulders of the Baker’s union, its boss says his members rejected the company’s final collective bargaining offer last year because they were convinced it had become "fatally compromised”.
In a call with reporters designed to "set the record straight", David B. Durkee, International President of The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), said his members had shown “incredible courage” to reject Hostess's final offer (which other unions including the Teamsters accepted).
Hostess filed for a full shut down and sale of its assets last November after nationwide strikes by BCTGM members, who were enraged by a pay-cutting deal enforced upon them as part of a plan to enable Hostess to emerge from bankruptcy.
The liquidation led to the closure of 33 bakeries, 565 distribution centers, around 5,500 delivery routes, 570 bakery outlet stores across the US and 18,500 job losses
This union saved this company in 2004
But BCTGM members were fully aware that their jobs were on the line when they voted by an overwhelming majority (92%) to reject Hostess’s final offer, said Durkee, adding that “no one in the union had promised them anything”.
Painting the BCTGM as unwilling to compromise was unfair, he added: “We have a long history of working with employers from General Mills to Kellogg… the difficult chain of events with Hostess management is the exception not the rule.
“After the first bankruptcy [Hostess filed for bankruptcy protection in 2004 as well as 2012], our members were fully willing to accept below market wages”, he added.
However, they had been assured that the $110m they and other unions had given in concessions would be pumped back into R&D, new products, new equipment, new technology, marketing and advertising. And this didn’t happen, he said.
“It’s easy for Hostess to blame the union, but this union saved this company in 2004.”
I’m absolutely confident we can get a much better agreement under new owners
By late 2012, they had lost all faith in the management, he said. “They just gave up on this employer. We’ve had six CEOs in eight years… enough was enough.”
Asked if he thought that his members could get a better deal from new owners than the final offer made by Hostess last year, he said: “I’m absolutely confident that we can get a much better agreement… I’m confident that the brands can find new life and return to profitability.”
Owing to a confidentiality agreement, he could not give details of discussions that had been taking place with the stalking horse bidders selected as lead bidders in the auction process for Hostess’s brands and assets.
However, he stressed that members were keen to put their specialized skills to work for the new owners to ensure the products got back onto shelves as quickly as possible.
If we are not part of the future we will continue to fight for our membership through other avenues
Asked what the union could do should the new owners decide not to hire back BCTGM workers, he said: “If we are not part of the future we will continue to fight for our membership through other avenues.”
Asked what this meant, he said that the broader BCTGM membership could boycott Hostess products, and encourage others to follow suit; whereas if the new owners worked with the union, his members would do everything in their power to promote the brands and ensure they were successful, he said.
Several hundred BCTGM members formerly employed by Hostess had found new jobs with firms such as Grupo Bimbo and Flowers Foods following the liquidation, but the vast majority of the 6,000 members affected were “waiting in the wings and ready to go back to work” under new owners, he said.
Stalking horse bidders
There has been a steady stream of announcements about Hostess assets since Christmas, with McKee Foods offering $27.5m for Drake's (Ring Dings, Yodels, Devil Dogs); United States Bakery, Inc (Franz Bakery) offering $28.85m for Sweetheart, Eddy's, Standish Farms, and Grandma Emilie's bread brands; Flowers Foods offering $390m offer for Beefsteak, Butternut, Home Pride, Merita, Nature's Pride and Wonderbread; and investment firms C. Dean Metropoulos & Co. and Apollo Global Management LLC offering $410m for Twinkies and other snack cake brands.
The offers - all subject to court approval - will serve as the opening bids in a series of auctions scheduled for later this month and early next month.
A stalking-horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company from a pool of bidders that sets the bar so other bidders can't low-ball the purchase price.
Once the stalking horse has made its bid, other potential buyers may submit competing bids during an auction process.
Click here to read about the bidders.