Thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike last week after rejecting in September a contract offer that cut wages and benefits. Hostess said Friday the company is unprofitable “under its current cost structure, much of which is determined by union wages and pension costs.”
Hostess has said that production at about a dozen of the company’s 33 plants has been seriously affected by the strike. Three plants were closed earlier this week.
Hostess had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters.
The company, founded in 1930, was fighting battles beyond labor costs. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake’s and, Nature’s Pride snacks.
The company had warned employees that it would file a motion in U.S. Bankruptcy Court to unwind its business and sell assets if plant operations didn’t return to normal levels by Thursday evening. The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade.
The company plans to go out of business, lay off its 18,500 workers, and sell its snack cake and bread brands.