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Customers are stocking up on their favorite Hostess snack foods after the maker of Twinkies, Wonder Bread and other bakery items announced Friday that it's going out of business.
Date published: 11/17/2012
Hostess Brands is blaming its decision to shut down on a labor strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, but Americans' appetite for junk food has been waning in recent years. The company has filed for bankruptcy twice this decade, the last time in January.
"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," Gregory F. Rayburn, Hostess' chief executive, said in a statement.
Many businesses have faced labor unrest in the recovery from the recession as they try to dial back benefits and wages and unions resist. In 2011, for example, there were 19 major strikes and lockouts involving more than 1,000 workers, according to the Bureau of Labor Statistics, up from 11 in 2010. The 2011 strikes accounted for 1.02 million lost workdays.
The union said Hostess made unreasonable demands, including wage and benefit cuts of about 30 percent for workers, while top executives received large pay increases.
"The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share," said union President Frank Hurt.
"The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company's most valuable asset--its workers," he added.
Currently, workers are on strike at 24 production facilities, the union said.
The Associated Press contributed to this report.