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Top story of 2012: Plant closure leads year's list

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The Republic’s readers voted the demise of the local Dolly Madison bakery as the year’s top local news story.

It was followed in reader voting by Columbus’ significant year of change under the leadership of new Mayor Kristen Brown’s (second) and election of Columbus native Mike Pence as governor (third).

It was a sad — and many former workers hope a preliminary — end to a facility that had been in operation since 1960.

In September, Hostess, the plant’s parent company and maker of such iconic brands as Twinkies and Wonder Bread, offered its 18,000 employees a “last, best, final” contract offer. The company was trying to emerge from bankruptcy for the second time in a decade.

The 17-page contract proposal cut compensation by 8 percent right away. It called for the cut to be reduced in subsequent years so that employees by 2017 would have earned about 4 percent less than they were making this year. The average Hostess employee was making about $15 per hour, or about $31,200 per year, before the cuts. In contrast, union workers pointed out that Chief Executive Officer Greg Rayburn was paid $125,000 per month.

The proposal also increased the employees’ health insurance costs and lowered the company’s pension plan contributions from about $100 million to about $25 million.

Some employees who had worked at the local bakery for decades said they were only weeks away from receiving full pension benefits when the company stopped paying into the plan.

Rayburn said the $100 million contribution into multi-employer pension plans was unsustainable, especially because it pays for pensions of people who never worked for Hostess. The pension plan includes companies that since have ceased to operate, meaning other companies in the plan had to make up for the shortfall.

Though the company’s largest union, the Teamsters, approved the contract, the Bakery, Confectionery, Tobacco Workers and Grain Millers International union, including Local 132, which represented the workers in Columbus, rejected the offer.

While Rayburn said the company was being dragged down by high costs, especially related to wages and pensions, union leaders blamed management mistakes, including failure to invest in aging plants.

In court documents, the company listed assets between $500 million and $1 billion and its liabilities at more than $1 billion. Hostess is privately held and does not generally disclose sales and profit figures. But according to documents provided to union workers in Columbus, the company lost $330 million last year.

After Hostess imposed, through a judge, the new contract on all employees, the Bakeries union, including workers in Columbus, began to strike on Nov. 9.

Three days later, as local Dolly Madison employees braved icy winds and rain on the picket line, Hostess permanently closed bakeries in Seattle, St. Louis and Cincinnati, eliminating 627 jobs, and warned that a prolonged strike would mean the end of company and the loss of all 18,000 jobs.

On Nov. 14, Hostess gave striking employees an ultimatum, saying that if they failed to return to work by 5 p.m. the following day, the company would shut down all production plants.

Employees continued to strike undeterred, saying the company refused to negotiate with them and they had made grave concessions already in the previous bankruptcy.

Meanwhile, many Columbus motorists who drove by the picket line honked their horns in support of the striking workers. Some local residents dropped off refreshments, sandwiches and firewood for employees to burn in a fire pit.

On Nov. 16, Hostess Brands said that baking operations at all plants, including the facility in Columbus, had been stopped.

Hostess, based in Irving, Texas, said it was liquidating the company because a nationwide strike by the Bakery, Confectionery, Tobacco Workers and Grain Millers International union “crippled the company’s ability to produce and deliver products.”

Many of the plant’s former employees are collecting unemployment. Some retain hope that a Hostess competitor will buy the local plant and reopen it as a bakery.

For many employees, especially those who had worked there for decades, the local bakery, which produced small doughnuts and snack cakes, had become a second family. A group of former employees still meets monthly at Sirloin Stockade.

Some employees said in the days before Christmas that, while they were collecting unemployment benefits, the loss of income had significantly curbed their spending.

The Columbus bakery, which was founded by Sap Essex in 1948, moved to its current location in 1960 and in 1972 merged with Beatrice Foods. Interstate Brands purchased the company in 1979 and changed the name from Sap’s Donuts to Dolly Madison. Interstate Brands was renamed Interstate Bakeries and then Hostess.

Companies including Wal-Mart Stores, Kroger and former Hostess competitors have expressed interest in purchasing some of Hostess’ assets, but the future of many production facilities, including the plant on National Road, remains uncertain.

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