Yesterday, Hostess announced that it would be forced to liquidate if it could not get striking employees to return to full production as of today. Among many pro-labor types, this was dismissed as yet another negotiating ploy by management. It wasn’t. Hostess is laying off 18,500 workers and liquidating its assets. Here’s how Hostess explained the situation:
The BCTGM [Bakery, Confectionary, Tobacco Workers and Grain Millers International Union] in September rejected a last, best and final offer from Hostess Brands designed to lower costs so that the Company could attract new financing and emerge from Chapter 11. Hostess Brands then received Court authority on Oct. 3 to unilaterally impose changes to the BCTGM’s collective bargaining agreements.
Hostess Brands is unprofitable under its current cost structure, much of which is determined by union wages and pension costs. The offer to the BCTGM included wage, benefit and work rule concessions but also gave Hostess Brands’ 12 unions a 25 percent ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands’ debt.
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