Demise of Hostess Creates Sad Thanksgiving for Workers
15,000 People Laid Off As Shutdown Begins
This Hostess location in Sacramento, Calif., was among those that began firing employees after the company won interim court approval to shut down and start selling assets that a financial adviser said may bring in $1 billion. Bloomberg News photo by David Paul Morris.
Washington — If you’re looking for a heartwarming holiday story, look somewhere else.
On Wednesday, the eve of Thanksgiving, Hostess Brands notified 15,000 workers that their jobs were being terminated as a bankruptcy judge approved the company’s plan to go out of business.
Although a flurry of recent activity had raised hopes that the 82-year-old maker of Twinkies and Ding Dongs could be salvaged, on Wednesday everyone involved pointed a finger at someone else. Texas-based Hostess criticized the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union for holding out in a labor dispute.
The union, in turn, blamed the company for “management failure.”
At AFL-CIO headquarters in Washington, President Richard Trumka blasted the “crony capitalism” of the company’s Wall Street owners and creditors.
But at bakery outlets and distribution centers around the Washington region, a simpler story played out between customers and workers.
At the Hostess Bakery thrift shop in Beltsville, Md. on Wednesday, the shelves were all but empty. A few dozen loaves of bread remained, along with a smattering of Cup Cakes, Donuts, Ho Hos and Suzy Q’s.
A handwritten sign on the door advertised everything inside at 50 percent off. A decorative banner hung on an inside wall. “Happy Thanksgiving,” it read.
“What happens to you now?” customer Sonja Norwood of Laurel, Md. asked the store’s lone employee as she paid her $4 tab for eight loaves of bread.
“If they fold, we all have to look for jobs,” said the upbeat 47-year-old woman behind the register, who, like other Hostess employees, said she had been asked by superiors not to speak publicly. “But don’t give up on us yet. . . . Anything’s possible.”
Customer after customer — many of them regulars, others newcomers driven by a sense of nostalgia — told the woman they were sorry about her predicament and that of thousands of other Hostess employees.
“I’ve been coming here for years,” said Wayne DeGroat, 54, who brought along his 7-year-old daughter. “Good luck to you.”
“Thank you, baby. I really appreciate it,” said the woman behind the register.
“Happy Thanksgiving,” said the 7-year-old girl.
“Happy Thanksgiving to you, sweetheart.”
At the Hostess bakery thrift shop in Rockville, Md., a steady stream of cars filled the parking lot and many shelves were nearly bare by lunchtime.
J. Patrick Enderson, 45, managed to spend $112 on a shopping cart full of sweets.
“Now’s the time to grab it,” he said as he filled the back seat of his car. “It’s the saddest thing.”
Al Haight, the business manager for the bakery workers union Local 118, said there are about half a dozen Hostess storefronts and distribution centers spread around the Washington area, from Bailey’s Crossroads in Virginia to Glen Burnie in Maryland.
Haight said the baker’s union represents fewer than two dozen Hostess employees locally but that many other company employees are represented by the Teamsters, which had reached a settlement with the company.
Haight acknowledged the anxiety and widespread uncertainty facing Hostess employees. But he said that many of them also felt that company officials had simply asked for far too many sacrifices and too many financial concessions.
“They have houses to pay for. . . . They have the same worries everybody has,” he said. “These people are trying to protect their contractual rights, their benefits, their livelihoods. . . . Keep us in your prayers.”
It was hard to find any winners as the drama played out Wednesday.
The company’s private-equity owner — New York-based Ripplewood Holdings — claims a reputation for working with organized labor. But in this case, that record proved little help, and the firm may not profit at all, according to an individual familiar with the Hostess transaction who asked not to be identified. Ripplewood invested $130 million in improvements in the company and took no dividends, the individual said.
And the distressed-debt companies that swooped in as Hostess was failing will have to see the result of any asset sales before knowing whether they’ll recover the millions they had loaned the struggling company in recent years.
In the end, the only potential winners could be a few hopeful souls on eBay looking to capitalize on the death of the iconic American brands, posting Twinkies for sale for $10, $20, even $10,000 a box.
“DISCONTINUED! LAST CHANCE! WOW!” read one tout. That box of 10 Twinkies sold Wednesday night for $22.50.