TERRE HAUTE —
Failed negotiations seem to have soured the future of an iconic brand of sweets.
Hostess Brands Inc. filed a motion to liquidate Friday in the U.S. Bankruptcy Court, just months after filing for Chapter 11 bankruptcy protection in January. The organization’s predecessor company, Interstate Bakeries, filed for bankruptcy protection in 2004, changing its name to Hostess after emerging in 2009.
But for generations of consumers, the corporate name was an afterthought compared to products such as Twinkies, Ho-Ho’s, Ding Dongs and Wonder Bread.
Christina Cash, of Paris, Ill., exited the Hostess bakery and outlet store on U.S. 41 South that afternoon, disappointed and without her kids’ Twinkies.
“I’ve got a 5-year-old that’s going to be awfully disappointed about her Twinkies,” she said. “It’s awful. It’s the stuff we grew up on.”
Cash said her family learned of the news on Facebook earlier that morning, and as she had to come to Terre Haute anyway, she thought she’d stop by the outlet store and buy some of the yellow, cream-filled sponge cakes one last time. But, as she learned upon entry, the store was already out of that product.
Staff inside the Hostess store on Fort Harrison and N. 14th Street said they’d been instructed to offer no comment on the announcement or future plans for the location.
But outside, shopper Larry Poole said the news was disappointing.
“It’s a shame that another union takes down another business, but it’s happening all over the country,” he said, adding he and his wife frequently shopped at the northside store.
“Another American institution...,” he said, gesturing his thumb downward and snorting.
According to an Associated Press report, the filing will result in the loss of about 18,500 jobs. Employees at 33 factories were sent home and operations suspended Friday. The company’s 500 bakery outlet stores will remain open for a few days to sell off remaining product, the report states.
Rich Smith, a contributing analyst for The Motley Fool, said the brands themselves could eventually come back to store shelves, even if the corporation itself does not.
“Clearly, there's a market for this product, calories and fat content notwithstanding. What's more, I wouldn't think that even liquidation is the end of the world. Even if Hostess ends up selling off its property, plant, and equipment, it stands to reason that someone will be buying same,” he stated in an e-mail. “And if there's a market for the product, chances are that whoever buys the assets will go right back into the Twinkie-baking business.”
According to the Associated Press report, analysts are blaming the company’s failure on a number of factors, ranging from America’s movement toward healthier foods to the high pension, wage and medical costs associated with a unionized workforce.
Hostess, based in Irving, Texas, was reportedly contributing $100 million a year in pension costs. A new, proposed contract offer would have slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Tensions between management and workers were also ongoing. Hostess came under fire this year after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent in 2011 even as the company was struggling. Although some of those executives later agree to reduced salaries, others — including the former CEO Brain Driscoll — had left the company by the time the pay hikes came to light.
The move to liquidate comes after thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting the latest contract offer. The bakers union represents about 30 percent of the company’s workforce.
Although many workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels; three plants were closed earlier this week. Hostess CEO Gregory Rayburn said Hostess was already operating on thin margins and that the strike was a final blow.
“The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products,” he said.
The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking.
Ken Hall, general secretary-treasurer for the Teamsters, said his union members decided to make concessions after hiring consultants who found the company’s financials were in a dire situation.
“We believed there was a pathway for this company to return to profitability,” Hall said
Although Hall agreed that it was unlikely anyone would buy the entire company, he said “people are going to look for some fire sale prices” for some of the brands.
In a statement on the company website, CEO Rayburn said there would be “severe limits” on the assistance the company could offer workers because of the bankruptcy. The liquidation hearing will go before a bankruptcy judge Monday afternoon; Rayburn said he’s confident the judge will approve the motion.
“There’s no other alternative,” Rayburn said.
Locally, Bob Baesler, owner of Baesler’s Market on Poplar Street, said the Hostess decision won’t affect his business much. The company, he said, had great delivery drivers and those employees will be the ones who ultimately lose the most.
"The product line was such a great line, someone will buy that up," he said, predicting the individual items will return to shelves some day.
Brian Boyce can be reached at 812-231-4253 or email@example.com. The Associated Press contributed to this report.
TERRE HAUTE —
Failed negotiations seem to have soured the future of an iconic brand of sweets.
- Local & Bistate
Voices from Auschwitz: Ties that bind
A message that has spread like wildfire across Europe can easily translate to America.
Minimum wage frozen after 5 years
Thursday marked the fifth anniversary since the federal minimum wage was increased, a wage U.S. Secretary of Labor Thomas E. Perez contends should again be raised.
ISU, CANDLES join to ‘illuminate the world’
Indiana State University and CANDLES Holocaust Museum are joining forces to educate current and future generations about the Holocaust, genocide and related issues.
50 years later, still business as usual
Junior Achievement of the Wabash Valley marked its 50th anniversary hosting a luau Thursday at the Ohio Building in Terre Haute.
Two semis collide; one driver injured
A semi-trailer driver from North Carolina was airlifted to Methodist Hospital Thursday after his vehicle collided with another tractor-trailer on Interstate 70 in far western Vigo County.
Valley talent returns for show tonight
Local musical collective Lunes Domingo is scheduled to be back at The Verve tonight to perform the last installment of its 2014 series.
Police find 2 meth labs in 1 house
The Clay County Sheriff’s Department on Thursday arrested a Staunton man and a Terre Haute woman on felony charges of manufacturing and possessing methamphetamine.
Police say man broke into prison building
A man living at a Carlisle motel has been arrested for trespassing and criminal mischief after he allegedly kicked in a prison building door.
Driver airlifted to Methodist after I-70 crash
A semi-trailer driver from North Carolina was airlifted to Methodist Hospital today after his vehicle collided with another tractor-trailer on Interstate 70 in far western Vigo County.
Lunes Domingo, Bear Foote Jackson at The Verve July 25
Local musical collective Lunes Domingo will be back at The Verve on Friday, July 25, to perform the last installment of their 2014 series. Cost is $3.
West T Water Works issues boil order
The West Terre Haute Water Works announced this morning that a boil order is in effect until further notice for the community of West Terre Haute and Sugar Creek Township.
Grease fire closes Terre Haute restaurant for short time
A grease fire closed the Golden Corral for about three hours on Wednesday.
Vigo County Jail Log: July 24, 2014
The following individuals were booked into the Vigo County Jail by area law enforcement on Thursday and Friday, based on jail records.
Bloomington helping with beer brewery’s project
BLOOMINGTON, Ind. (AP) — The city of Bloomington is helping a beer brewery with an expansion of its downtown restaurant and bar.
Family: Teen pilot who crashed in ocean knew risks
PLAINFIELD, Ind. (AP) — Haris Suleman knew that flying around the world carried risks. But like adventurers before him, the 17-year-old pilot from Indiana also believed dreams aren’t achieved without taking chances.
A trade, a home up for sale
The first house constructed in “The Trades” subdivision now has a “for sale” sign in the front yard.
Health care provider details 150 job cuts
The reduction of 150 employees in Union Health System by the end of this year will come from support staff, employees who do not have direct patient-care duties, hospital administrators said Wednesday.
MARK BENNETT: Giving new voice to Ehrmann’s words
Max Ehrmann’s bronze face may break into a grin soon.
SCHOOL BOARD: Incumbents each seek next term
As expected, four Vigo County School Board incumbents filed for re-election Wednesday.
Making his case to the people
Indiana state treasurer hopeful Mike Boland says that if elected, he intends to be a “small-city, small-town state treasurer.”
Union Hospital cuts to come from support staff
The reduction of 150 employees in Union Health System by the end of this year will come from support staff, employees who do not have direct patient care duties, hospital administrators said today.
Ex-employee says prison workers had sex on desk
INDIANAPOLIS (AP) — A federal appeals court has ruled that Indiana’s prison agency mistreated a female employee when it shrugged off her complaints about workers having sex on her desk and later fired her for having an affair with an official.
Vigo County Jail Log: July 23, 2014
The following individuals were booked into the Vigo County Jail by area law enforcement on Tuesday and Wednesday, based on jail records.
Police say 2 killed in SW Indiana murder-suicide
BICKNELL, Ind. (AP) — Police say a man was fatally shot during an argument in a southwestern Indiana town and that the suspected gunman later killed himself while officers were pursuing him.
10-year-old bicyclist dies after truck hits him
WINONA LAKE, Ind. (AP) — Police in northern Indiana say a 10-year-old boy died after being hit by a pickup truck while riding a bicycle.
Photo Essay: Flowers & Nature
Ella Boyles, 3, watches as her grandmother Verdeana Boyles starts a flower arrangement during the JMG! Jammin! Muddin! & Growin! Jr. Master Gardener Program on Tuesday at the west branch of the Vigo County Public Library in West Terre Haute.
Study finds school scores rising — poverty too
While Vigo County’s educational scores outperform the state average, schools are seeing the impact of an increase in the number of children living in poverty, according to the national Annie E. Casey Foundation’s 2014 “Kids Count.”
No more teacher-led prayer in Vigo schools
As the result of a complaint from the Freedom from Religion Foundation, Vigo County School Corp. teachers and other staff will no longer be able to lead prayers during school-sponsored events.
Vigo school board candidate filing period begins today
Four of seven Vigo County School Board seats are up for election this year.
Six hurt in pickup crash on I-70
An accident on Interstate 70 that injured six people Tuesday afternoon is being attributed to mechanical failure.
- More Local & Bistate Headlines
- Voices from Auschwitz: Ties that bind