Kroger supermarkets and Wal-Mart Stores are reportedly among the latest corporate suitors circling the remains of Hostess, the bankrupt maker of Wonder Bread and Twinkies with a mothballed 52-year-old factory on National Road.
The company closed all its U.S. plants in November — including the Dolly Madison facility in Columbus — when striking union workers wouldn’t accept wage and benefit cuts.
All of Hostess’ brand names, equipment and manufacturing plants are now for sale in a New York bankruptcy court. Hostess said the workers’ reluctance to accept cuts in pay and benefits crippled its operations and made continuing in business pointless.
Given a choice between Kroger and Wal-Mart as an eventual buyer, Columbus bakery union business agent Larry Duncan said he’d opt for Kroger out of the faint hope the Cincinnati-based supermarket chain would resurrect the local plant.
“I don’t know, but I’d bet Wal-Mart just wants the Wonder Bread label, and they’d get someone else to produce it for them,” said Duncan, business agent for Local 132 of the Bakery Confectionery Tobacco Workers and Grain Millers International Union.
The Dolly Madison plant here made Kroger’s private-label shortcakes and other products, shipping the merchandise to the food chain’s stores in Indiana and parts of Ohio, Duncan said. He hopes there’s a chance Kroger might buy Hostess out of bankruptcy then restart the production line in Columbus to make shortcake, jumbo doughnuts, fried pies or honey buns.
Duncan said he expects Hostess’ corporate owners to decide as early as next month who’d they prefer to acquire all or part of the defunct operations. Any sale of assets needs bankruptcy court approval.
Mark Foster, a financial analyst in Columbus with Kirr Marbach & Co., said he doubts any buyer would need or want the Dolly Madison plant.
“Any other company interested in Hostess ... may just want the equipment or brand names like Twinkies or Wonder Bread,” Foster said Friday after reports of interest by Kroger and Wal-Mart surfaced in national media reports.
“I wouldn’t hold out hope that the jobs at the Dolly Madison plant can be salvaged,” Foster said.
Meanwhile, Duncan said his fellow union members are drawing unemployment payments in the wake of their failed strike, and some of them are looking for new jobs.
State employment officials and the AFL-CIO, which runs training classes for welding and other trades, have visited the local union hall to discuss retraining and other options for people who lost their jobs when Hostess pulled the plug on its operations.
One thing working against Kroger or any other buyer reopening the Dolly Madison facility is that in a few weeks or months, most of the skilled bakery operators will have drifted off to other jobs, he said. Eight or nine people have applied for work at another baking company out of state, he said. Others are looking into getting training for careers in welding or heating, ventilation and air-conditioning work.
“There’s a wide array of stuff out there,” Duncan said Friday. “But there’s not a big demand for pie mixer or (doughnut) mixer.”
National media reports suggest there are about two dozen bidders interested in bits and pieces of Hostess. A few bids could be for all the assets, while others want just the cakes or breads businesses. Other early bidders include Grupo Bimbo SAB and Alpha Baking Co., one report said.
The 82-year-old maker of Hostess Cupcakes, Ding Dongs and Ho Hos said last month that it would liquidate and dismiss more than 18,000 workers after failing to reach agreement with its striking bakers union on concessions to help it emerge from its second bankruptcy.
Changes in American diets led to years of declining sales at Hostess, while ingredient costs and labor expenses climbed, analysts have said.