Hostess Essay

889 Words Nov 5th, 2014 4 Pages
The Fate of the Hostess Twinkie
Hostess Brands, manufacturer of the iconic Twinkie, is in a bit of a predicament. The company filed for Chapter 11 bankruptcy in 2004, emerging in 2009, after rounds of restructuring and concessions taken by union and non-union employees (Flahardy, 2012). In the face of the recent recession and increasing commodities pricing, the company has yet again filed for bankruptcy protection (By & Spector, 2012). In addition, the company has been engaged in collective bargaining with its two major unions, the Teamsters Union and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), hoping for more concessions from employees to help it survive. Combined, these unions represent
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The company states that things must change. Also holding the company back are obligations with pension plans. The company currently owes the Bakery & Confectionary Union & Industry International Pension Fund some $944 million dollars (Flahardy, 2012). Add to this the $102 million annually that Hostess pays toward multi- employer pension plans and the company says it is tapped. These plans were designed to help employers in the industry share the costs, but as more and more companies are struggling, contributions have waned. This has put strain on those that are still making their payments (By & Spector, 2012).
The Union Perspective Union leaders say that the company has failed to innovate and has pursued business strategies that have failed again and again (By & Spector, 2012). They state the company neglected to invest in product development and upgrades to manufacturing equipment so they wonder what makes this time any different than the last bankruptcy (Flahardy, 2012). The union has already seen concessions of $110 million annually (Feintzeig, 2012). They have also seen retirement ages increased from 57 to 65 (By & Spector, 2012). From there perspective, millions of dollars have been given in bonuses to managers and supervisors while they are being asked to cut just to save their jobs. Conclusion Obviously the situation between the Hostess and its unions…