By Carey Gillam and Martinne Geller
KANSAS CITY, Mo./NEW YORK | Thu Nov 22, 2012 2:55am EST
(Reuters) - Enough is enough, say bakery workers at Hostess Brands Inc.
After several years of costly concessions, the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) authorized a walk-out earlier this month after Hostess received bankruptcy court approval to implement a wage cut that was not included in its contract.
With operations stalled, the company that makes Twinkies and other famous U.S. brands said last week that liquidating its business was the best way to preserve its dwindling cash. It won court approval on Wednesday to start winding down in a process expected to claim 15,000 jobs immediately and over 3,000 more after about four months.
Interviews with more than a dozen workers showed there was little sign of regret from employees who voted for the strike. They said they would rather lose their jobs than put up with lower wages and poorer benefits.
"They're just taking from us," said Kenneth Johnson, 46, of Missouri. He said he earned roughly $35,000 with overtime last year, down from about $45,000 five years ago.
"I really can't afford to not be working, but this is not worth it. I'd rather go work somewhere else or draw unemployment," said Johnson, a worker at Hostess for 23 years.
With 18,500 workers, Hostess has 12 different unions including the BCTGM, which has about 5,600 members on the bread and snack item production lines, and the International Brotherhood of Teamsters, which represents about 7,500 route sales representatives, drivers and other employees.
Unlike some non-unionized rivals, the maker of Wonder Bread and Drake's cakes had to navigate more than 300 labor contracts, with terms that often strained efficiency and competitiveness, Hostess officials have said. In some extreme cases, contract provisions required different products to be delivered on different trucks even when headed to the same place.
Aside from those so-called onerous labor contracts, Hostess has grappled for some time with rising ingredient costs and a growing health consciousness that has made its sugary cakes less popular. It filed for bankruptcy in January, only three years after emerging from a prior bankruptcy.
Lance Ignon, speaking on behalf of Hostess, said the company recognized how difficult the past few years had been for workers and wished it did not have to ask them for more givebacks.
"But the reality was that the company could not survive without those concessions," Ignon said.
Workers had a laundry list of frustrations, from rising healthcare costs to decreased wages and delayed pension benefits. They even cited a $10-per-week per worker charge they said Hostess claimed was needed to boost company capital.
"They have taken and taken and taken from us," said Debi White, who has worked at Hostess for 26 years, most recently as a bun handler at its bread and roll plant in Lenexa, Kansas.
"They have been walking around stomping their foot saying either you give in ... or else we're going to close you now. Well, go ahead, we're tired of their threats," she said. "That's how we feel."
Hostess workers are now scrambling to figure out when their health insurance runs out -- or if it already has -- and where and how to apply for job retraining and unemployment benefits.
Following a summer and autumn spent in labor negotiations trying to find a common path to reorganization, Hostess' management gained concessions from some unions, including the Teamsters.
The fear of thousands of job losses, for its own members and other unions, led the Teamsters to plead with the BCTGM to hold a secret ballot to determine if bakery workers really wanted to continue with the strike, even with the threat of closure.
Teamsters officials complained that bakery union leaders did "not substantively look for a solution or engage in the process," and complained that the BCTGM called for its strike on November 9 without first notifying the Teamsters.
They said that, unlike the bakery union, the Teamsters voted to "protect all jobs at Hostess." Teamsters General Secretary-Treasurer Ken Hall said Wednesday's court approval for liquidation marked "a sad day for thousands of families affected by the closing of this company."
Bakery union President Frank Hurt has said that any labor agreements would only be temporary as Hostess was doomed anyway. The union said new owners were needed to get Hostess back on track and the only way they would return to work was if Hostess rescinded its wage and benefit cuts.
"Our membership ... just had no confidence in this management group being able to run a business," said Conrad Boos, a BCTGM local business representative in Missouri.
Hurt was not immediately available to comment on Wednesday but the union said in a court filing its sole objective was to leave Hostess with "a real, rather than an illusory or theoretical, likelihood of establishing a stable business with secure jobs."
On Wednesday, Hostess' lawyer Heather Lennox said the company had received a "flood of inquiries" from potential buyers for several brands that could be sold at auction, and expects initial bidders within a few weeks.
(Additional reporting by Peter Rudegeair in NEW YORK; Editing by Paul Tait)