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Talks break down: Hostess, union await judge's order today


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By Staff and Wire Reports

The maker of Twinkies and Ding Dongs said late Tuesday that it failed to reach an agreement with its second biggest union.

As a result, Hostess Brands plans to continue with a hearing today in which a bankruptcy court judge in White Plains, N.Y., will decide if the company can shutter its operations.

The renewed talks between Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company declared Friday that it would move to wind down its business and start selling off its assets in bankruptcy court.

The company cited a crippling strike initiated Nov. 9 by the bakers union, which represents 30 percent of Hostess workers.

After making its case to liquidate on Monday, Hostess heard Judge Robert D. Drain ask both sides to try resolving their differences through private mediation, noting that 18,000 jobs were on the line.

The two sides met in mediation proceedings Tuesday.

But later that night, Hostess announced that mediation was unsuccessful.

Hostess shut down its 33 plants — including one on National Road in Columbus — on Friday after it said the strike by the bakers union hurt its ability to maintain normal production.

The bakers union countered that the company’s demise was the result of years of mismanagement, and that workers have already given steep concessions over the years.

Hostess, weighed down by management turmoil, rising labor costs and the changing tastes of Americans, is making its second trip through Chapter 11 bankruptcy

restructuring.

The company, based in Irving, Texas, had brought on CEO Gregory Rayburn as a restructuring expert in part to renegotiate its contract with labor unions.

The company reached an agreement this fall with its biggest union, the International Brotherhood of Teamsters, on a contract that dramatically reduced pension contributions, as well as slashing wages and health benefits. But the company said the bakers union stopped returning its calls about a month ago.

The Teamsters urged the smaller union to hold a secret ballot on whether members wanted to continue striking. Many workers in the bakers union decided to cross picket lines this week, but Hostess said it wasn’t enough to keep operations at normal levels.

Rayburn said Hostess was already operating on

razor-thin margins and the strike was the final blow. The bakers union, meanwhile, pointed to steep raises executives were given last year as the company was spiraling toward bankruptcy.

Even if Hostess goes out of business, its popular brands will likely find a second life after being snapped up by buyers.

The company said several potential buyers have expressed interest in the brands.

Although Hostess’ sales have been declining in recent years, the company still does about $2.5 billion in business each year. Twinkies alone has brought in $68 million so far this year.

As the future of the Columbus Dolly Madison factory hung in the balance on Tuesday, local union workers continued picketing into a 12th day. They expressed more worry than optimism that an 11th-hour solution would emerge.

Members of Local 132, which includes about 160 workers at the local Dolly Madison Plant, said they retained faint hope that their plant’s machines would some day soon produce doughnuts again.

About half a dozen local strikers still walked the picket line Tuesday afternoon in Columbus. Some huddled around a fire pit, others sat in folding chairs and held up signs that read “Local 132 on strike” and “Honk Please.”

Sherl Jones, who had worked at Dolly Madison for almost nine years, said she could have dealt with the proposed 8 percent pay cut. But after she lost her job at Como Plastics, which went out of business, and went back to school for two years, she joined the bakery primarily because of its pension.

“I thought I was going to have a good retirement,” said Jones, assigned to a third-shift sanitation crew, which prepares equipment for

production.

Instead, Jones filed for unemployment on Monday and likely will have to look for a new job at age 52.

“That’s a tough age to have to start over again,” she said.

She said it might be better to let another company come in and purchase Hostess assets, so long as the new buyer reopens the bakeries.

Josefina Martinez, 31, who has worked at Hostess for nearly 10 years, also worries primarily about her pension.

She considered moving out of Columbus last year but stayed to get in her 10 years and a guaranteed pension benefit.

Now, only a few months from hitting the mark, the pension rules have changed.

Martinez works in production, most recently feeding pies into wrappers.

She said she hopes another company buys Hostess and honors the previous pension agreement.

Martinez filed for unemployment on Saturday.

Media outlets have reported that potential buyers — including Sun Capital, Hurst Capital and Bimbo Group, which owns Sara Lee — have expressed interest in Hostess, but no deals have been disclosed.

Larry Duncan, business agent for Local 132, had little hope of a successful outcome during the mediation.

“They just wasted our time,” he said.

He also acknowledged that the damage from Hostess products leaving the shelves would become more difficult to repair the longer the uncertainty about the company’s future continues.

Duncan said he visited retailers in the past few days to see how Hostess products are displayed, and he found that many had been replaced with products of competitors, as though Hostess products had never existed.

“It’s sad,” he said. “How are you going to get that back?”

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