Today, Hostess Brands Inc., maker of Wonder Bread, and Hostess Twinkies, filed for Chapter 11 bankruptcy. Recently, it incurred an annual loss of over $300 million, but, that may not be the entire story.
Hostess began in 1930 as Interstate Baking Company in Kansas City, Missouri. Over the years, it acquired numerous other baking companies, and in doing so, finds itself today with 372 different union contracts. And, none of those unions are willing to give up their hold on Hostess.
Hostess has a trove of complex labor rules that the company deems inefficient, the people said. In some instances, work rules mandate that separate trucks must deliver bread and cake products, these people said. Sometimes separate workers must load the trucks and additional workers must make final deliveries once a truck arrives at a supermarket, they said.
And, these “efficiencies” continue.
Hostess, for instance, pays about $100 million annually to some 40 multiemployer pension plans that cover workers at a wide array of companies other than its own, said people familiar with the matter. Hostess wants to switch to a so-called single employer plan that covers only its own workers.
But, as you might imagine, none of the 40 current pension plans are willing to lose their grip on Hostess money.
In bankruptcy, Hostess will have the opportunity to “reject” any current contract, union or otherwise, and try to restructure itself into a far more efficient company. Among other things, it plans to,
…ask workers to make dramatic changes to everything from work rules to health benefits and how the company pays pension obligations…
So, Twinkies could still win this battle, but, it is a sad commentary that the battle has to happen in the first place.