Twinkie is Back in Business ... Unions and Their Members Aren't

Hostess went broke and entered bankruptcy after being unable to persuade the bakers union to accept new work rules and make financial concessions needed to maintain the company's viability as a going concern.

So now the bankruptcy process has been completed, and new ownership has taken over. Twinkie will be back in business. But not the unions that represented Hostess employees previously.

New Twinkie Maker Shuns Union Labor has the story:

"The company that bought the Twinkie, HoHo and Ding Dong brands out of bankruptcy is gearing up to reopen plants and hire workers, but it won't be using union labor.

Hostess Brands LLC—Metropoulos & Co. and Apollo Global Management LLC's   new incarnation of the baking company that liquidated in Chapter 11—is reopening four bakeries in the next eight to 10 weeks, aiming to get Twinkie-deprived consumers the classic snack cake starting in July.

A worker entered Hostess's Schiller Park, Ill., bakery in November.

Chief Executive C. Dean Metropoulos said the company will pump $60 million in capital investments into the plants between now and September and aims to hire at least 1,500 workers. But they won't be represented by unions, including the one whose nationwide strike sparked the 86-year-old company's decision to shut down in November.

"We do not expect to be involved in the union going forward," Mr. Metropoulos said in an interview Wednesday.

Hostess Brands Inc., the company that filed for bankruptcy protection in January 2012 and eventually sold off its brands and plants to several buyers, was once powered by 19,000 workers, 15,000 of whom were represented by unions. The company's largest union, the Teamsters, had agreed to a new labor contract following a contentious bankruptcy trial. But the second-largest union, the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, launched a work stoppage after the company imposed new labor terms on the union's members. Hostess said the strike crippled its operations, forcing it to shut down.

A Teamsters spokeswoman declined to comment. A spokeswoman for the bakers union couldn't be reached for comment Wednesday.

In February, before the $410 million sale to Metropoulos and Apollo was finalized, the president of the bakers union expressed confidence that his thousands of out-of-work members would find opportunity at the Hostess facilities once they were reopened by their new owners. President David Durkee said the strike had left the union in "a position of strength," and he expressed confidence its workers would get a better deal from the new owners than Hostess offered during the bankruptcy case, its second in recent years.

He added that the only way for the brands to have a "seamless restart" would be to hire back unionized bakers. "Only our members know how to get that equipment running," Mr. Durkee said. "A work force off the street will not be able to accomplish that."

But Mr. Metropoulos and his son, Daren, the co-CEO of Pabst Brewing Co. who is also heading up the reborn Hostess's marketing strategy, expressed confidence they would be able to find skilled, nonunion workers near the four plants, which are in areas with high unemployment.

"We're trying to find the most qualified people in these local markets to come work for the company," Daren Metropoulos said.

The new Hostess is firing up plants in Columbus, Ga.; Emporia, Kan.; Schiller Park, Ill.; and Indianapolis, Ind. It's also considering whether to reopen a fifth plant it purchased, in Los Angeles.

Previously, the Hostess products that Metropoulos and Apollo bought were made at 11 plants, but the elder Mr. Metropoulos said those plants were running at less than 50% capacity under the old model. . . .

The new Hostess plans to use third-party drivers and an outside sales organization. It will also switch distribution models, delivering Hostess Twinkies and Cup Cakes directly to supermarket warehouses instead of individual locations. . . .

The company also aims to increase distribution to locations that Hostess couldn't reach before, including smaller convenience stores and dollar stores."

Summing Up

Twinkie is back in business under new ownership and thousands of former Hostess employees have lost their jobs.

These former employees are seeing first hand the predictions of the president of the bakers union for better jobs, or even any jobs at all, go unfulfilled.

While the union members have lost their jobs, the union's leadership will go right on 'leading' its other members and collecting dues.

For unions, at least in the private sector things are changing. MOM's involved.

Soon unions will have to change their ways in the OPM centric public sector, too.

That's my take.

Thanks. Bob.