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Correction: Hostess Brands Inc. will reduce pension contributions to 25 percent of current levels under a revised contract with employees authorized in U.S. Bankruptcy Court, but it won’t scrap its pension benefits entirely. Due to a Republic error the pension changes were incorrect in a story Tuesday.
Tension between unionized bakery employees at the Columbus Dolly Madison plant and parent company Hostess Inc. increased Monday as workers weighed the possibility of a strike to overturn cuts in pay and benefits.
No walkout or picketing has been called for yet, but any strike by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union could trigger the liquidation of the entire company, which employs 18,500 people around the nation, including 237 at the Columbus plant, Hostess executives have warned.
Larry Duncan, business agent for Local 132 of the union and a shipping department worker at the bakery in Columbus, said Monday that many workers face losing $200 or more per week in pay and benefits if Hostess goes through with planned cuts.
Broken down on a weekly basis, Duncan estimated the impact on a typical union worker to be:
That computation is based on a revised collective-bargaining contract that Hostess won court approval to impose earlier this month as part of a Chapter 11 U.S. bankruptcy case filed in New York.
The company intends to cut pay by 8 percent in the first year of a new five-year contract with plant workers, and by lesser amounts in the four subsequent years. It also plans to raise employees’ health insurance costs and reduce pension benefits.
In early September, members of Local 132, which represents 170 of the roughly 250 employees at the local plant, voted against the company’s proposal, which many of them thought was a scare tactic.
In a conference call with local affiliates Monday afternoon, union officials said the pay reductions already have been put in place in Jacksonville, Fla., Seattle and Cincinnati, but not in Columbus or Indianapolis at this point.
“All I know is there are people in the (Columbus) plant who’ll have to find a second job or file bankruptcy, if this stands,” Duncan said Monday.
He said the harshest blow would be reducing the company’s pension, which he said has been a long-standing benefit kept in force during past contract talks by making other concessions, principally lower pay.
He added: “A strike would be no good for anybody, but what do you do? When do you say, ‘Enough is enough?’”
Erik Halvorson, a spokesman for Irving, Texas-based Hostess, said contract changes, including the pay cuts, will be implemented for all employees, both union and nonunion, within the next 40 days. That means implementation will come no later than the first work week in December.
He said management is sharing in the financial pain with rank-and-file workers, but there is no fallback position for Hostess, which makes Wonder Bread, Ding Dongs, Twinkies and other snacks at three-dozen plants around the U.S.
It also operates several hundred retail outlets and a number of shipping/distribution centers.
“In the case of a significant strike ... the company would be forced to liquidate,” Halvorson said.
Hostess filed for Chapter 11 bankruptcy protection in January, arguing that it had to slash costs or go out of business. This is the second bankruptcy for Hostess in the past three years.
The International Brotherhood of Teamsters approved changes in its contract with Hostess earlier this fall, but the bakery union overwhelmingly rejected taking cuts in pay or benefits, leading to Hostess asking a bankruptcy judge for permission to do so anyway.
U.S. Bankruptcy Judge Robert Drain ruled earlier this month that Hostess had no choice but to force concessions on the bakery and confectionery workers.
The judge said that while he realized his ruling could spark a strike at Hostess plants, he suggested that employees picking up picket signs might just kill the Twinkies maker.
“It’s clear to me that calling a strike by any of the other unions would be the equivalent of shooting oneself in a serious body part and result in the liquidation of the company,” the judge wrote in his ruling.
Hostess has more than 800 employees in Indiana with bakery plants in Columbus and Indianapolis combined.
About 70 percent of the 237 employees at the Columbus plant are members of union Local 132, Duncan said.
Hostess’ bankruptcy plan also allows the outsourcing of some of its snack brands to other manufacturers as part of a broad strategy to reduce debt and cut labor costs.
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