The company blamed a nationwide strike of workers represented by the Bakery Confectionary Tobacco and Grain Millers union for the decision after not enough employees returned to factories to continue production on Thursday.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in a statement. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”
Hostess operated a small distribution facility with 12 employees at 916 Strickler Road in Rapho Township.
The company said its retail operations will continue in order to sell off remaining inventory, but would also close in the near future. Bakery and distribution facilities closed immediately, and the company advised employees to stay home until notified.
Hostess operates 33 bakeries, 565 distribution centers, about 5,500 delivery routes and 570 bakery outlet stores throughout the United States.
Hostess has said it was unprofitable under the current cost structure due mainly to wages and pensions and sought to reorganize in Chapter 11 bankruptcy court. The court gave the company permission to force unions, including the bakers, to take its last contract offer, but the union went on strike.
The offer included wage and benefits cuts, but gave Hostess’s 12 unions a 25 percent stake in the reorganized company, representation on the board of directors and $100 million in the company’s reorganized debt, according to the company.
The bakers have countered that Hostess had high executive turnover in eight years, few with experience in the bakery industry, and that top executives took compensation increases as they were asking workers to take cuts, according to the union’s website.
“Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and their union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers,” bakers President Frank Hurt said in a statement.
View Larger Map