Hostess, the maker of such American icon food products as Twinkies and Ho Ho’s recently announced plans to cease operations amid attempts to cut workers’ pay and benefits in a last ditch effort to avert financial disaster. As word spread of the impending end of American’s Twinkie supply, consumers all over the country snapped up Twinkies as fast as they could, leaving many store shelves devoid of the iconic favorite sweet treat. There have even been reports of people trying to resell Twinkies and other Hostess products at huge markups online. But, the products many have come to know and love over the years may live on long after the Hostess company is gone.
Hostess, Inc. said it will close its bakeries, distribution centers and bakery outlets and let go of drivers of over 5,000 delivery routes as it winds down its operations. The company was hit hard by a strike initiated November 9th and has attempted to negotiate with its employees’ union, The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM). The BCTGM represents over 80,000 workers and said contract changes Hostess tried to implement cut workers’ pay by eight percent and slashed their benefits by over twenty five percent.
The president of BCTGM, was optimistic about the fate of Hostess workers, saying that there’s “more than a good chance,” hostess products would be, “produced somewhere, some time and by our members.” Since news of the potential Hostess bankruptcy broke a number of companies have already popped up and taken an interest in its iconic products and brands. Some of the companies rumored to be eyeing the hostess product lines include Flowers Foods, Con Agra and El Grupo Bimbo, a Mexican company run by Daniel Servitje Montull, a Mexican billionaire. Bimbo is already the world’s largest baker of bread and the products Hostess has become famous for would be a natural fit for their product offerings.
Some analysts think Groupo Bimbo is the most logical company to buy the Hostess product lines, as one of the problems that plagued Hostess was high sugar costs caused by tariffs, which would not be an issue for Grupo Bimbo. Hostess CEO Gregory Rayburn said that, “The problem has always been the cost structure, the union rules, the pension legacy, the pension cost and the cost structure,” and he said Hostess will be cutting the majority of its over 18,000 workers’ jobs almost immediately. But, Grupo Bimbo would be able to capitalize on Mexico’s lower sugar costs and they already own many brands that are well known to Americans including Arnold (breads), Boboli (pizza crusts), Thomas’ (English muffins), their own Bimbo brand of breads and the many products of Sara Lee.
There will be rough times ahead for Hostess employees regardless of who may end up buying some, or all, of the Hostess products. But, the good news for many is that over the long-term we may not have to say a permanent goodbye to many of the iconic baked treats we grew up with.
