KENSINGTON, Md. - Faced with a threat by Hostess' CEO to close the bankrupt company and liquidate it, the Bakery Workers - who represent almost ahalf of the firm's unionized workers - are denouncing his "lies" and hanging tough.
The statement, by Bakery, Confectionery, Tobacco and Grain Millers (BCTGM) President Frank Hurt came after the firm closed bakeries in Seattle, St. Louis and Cincinnati and said it might have to shut down completely, idling 18,000 union workers.
Hostess filed for bankruptcy protection in January and had stopped paying into the workers' pension plans before that. It reached a concessionary contract with its second-largest union, the Teamsters, whose members approved it, 53%-47%. The BCTGM members rejected it by a 92%-8% margin.
The battle also forced the BCTGM Hostess workers to strike, several months ago, and the firm's CEO now claims the strike may lead to Hostess' closure for good.
"Our members rejected the company's outrageous proposal in September," Hurt said. "They were being asked to vote on a proposal with massive concessions, knowing their plant could very well be one of those to be closed." Bankruptcy court records say Hostess owes its BCTGM workers $944 million, more than any other creditor. But BCTGM workers are "unsecured creditors," putting wages behind other debts.
"Our members are on strike because they have had enough. They are not willing to take draconian wage and benefit cuts on top of the significant concessions they made in 2004 and give up their pension so that the Wall Street vulture capitalists in control of this company can walk away with millions of dollars," Hurt added. Investment bankers bought majority control of Hostess eight years ago. BCTGM says their appointed executives have vastly mismanaged the iconic maker of Wonder Bread and Twinkies.
"In a desperate attempt to break the solidarity and resolve of striking BCTGM members across the country, Hostess is falsely claiming that its decision to close three of its bakeries -- St. Louis, Cincinnati and Seattle -- is the result of the nationwide strike against the company by BCTGM members," the union added.
"In fact, according to the company's filing with the bankruptcy court earlier this year as well as its last/best/final and non-negotiable proposal to its BCTGM-represented workers, the company was planning to close at least nine bakeries, although the company refused to disclose which bakeries." It also noted that Hostess managers told St. Louis Mayor Francis Slay about the pending bakery closure there months ago.
"The recent claim by Hostess CEO Greg Rayburn that our strike is the reason for the closure of the three bakeries is simply not true," Hurt added. "That statement is a continuation of a disturbing pattern by the company of issuing public statements that are erroneous at best and disingenuous at worst."
The Teamsters, in a Nov. 12 newsletter to their Hostess workers, warned them to "be prepared for the likely outcome" should the BCTGM strike continue, namely that the company would be liquidated.
"We recognize this is a tough position for all Hostess workers- Hostess management over the years has done nothing to build confidence that it can manage the business successfully," the union said. "But a majority of Teamster members, based on reviewing the final offer and listening to our restructuring experts and Teamsters leaders, believe the management changes and increased oversight and governance controls contained in the ratified final offer provide the only chance to preserve jobs at Hostess."
The National Consumers League sided with the Bakery Workers.
"Hostess has unfortunately failed to make contributions to employee pension plans as agreed upon in collective bargaining agreements and has drastically cut health benefits and imposed an 8% wage decrease, NCL said.
"We are proud to support the Hostess Brand workers who are only fighting for their rightful wages and benefits as negotiated through the collective bargaining agreement," added Executive Director Sally Greenberg.
When Hostess went broke in 2004, "Hostess workers, in the spirit of sharing reduced revenues and profits, took dramatic cuts in wages and benefits," NCL noted. And 21 Hostess factories closed, leaving thousands jobless. "Hostess employees were shocked to learn of the second bankruptcy and watched helplessly as money that was supposed to go towards rebuilding production facilities, plant development, and new equipment flowed instead to support executive bonuses and payouts to hedge funds.
"Hostess Brand workers, many of whom have spent decades as loyal employees of the company, deserve better than the current situation, in which thousands of workers are unemployed, communities left vulnerable, and families decimated. Sadly, it appears that Hostess has put the interests of Wall Street investors before their loyal employees.
"The National Consumers League stands with the striking BCTGM members and Hostess workers, and urges Hostess Brand to put the interests of their employees before those of fat-cat executives and Wall Street investors," it concluded.