LITTLE ROCK — Hostess Brands Inc., the bankrupt baker of Twinkies, Wonder Bread and Ding Dongs, asked for permission Friday to shut down all of its 33 factories and fire more than 18,000 workers.
The company, whose roster of brands dates as far back as 1888, filed a motion to liquidate with U.S. Bankruptcy Court after striking workers across the country crippled its ability to maintain production. It requested a Monday hearing.
Hostess has endured wars, diet fads and even an earlier Chapter 11 filing. But the liquidation may not mean the end of its signature product, the Twinkie. The confection — originally featuring banana cream, rather than the vanilla flavor of today — could find new life under a different owner, if the company auctions off its brands and assets.
In the short term, though, Twinkies may be in short supply. The last batches rolled off Hostess production lines Friday morning, according to Tom Becker, a company spokesman, and no new products will be made for the time being.
Customers at the Hostess outlet Friday in North Little Rock were stocking up on their favorite treats and bread. Many went to the MacArthur Drive store after hearing that the company was cooling its ovens.
“I don’t know what we will do without Wonder Bread,” said Regina Paff, 51. “I think it’s tragic.”
Paff, who bought four loaves of Wonder Bread and some Ding Dongs, went to the store at her daughter’s request.
By 2 p.m., customers were told the boxes of Twinkies were sold out, leaving only the individually wrapped snack cakes.
Roy Bishop, 71, who was buying Ding Dongs and cupcakes said he regularly shops at the outlet.
“I hope the bakers union enjoys their unemployment,” he said.
Robert Williams, 61, said he has shopped at the store for years.
“I was very sad to hear that [the store is closing],” he said. “This has been a landmark for us in North Little Rock.”
Kelli Nelson, 45, who bought almost a dozen orange cupcakes, echoed Williams. “This is like a family store to us,” she said.
Hostess Brands has evolved through a series of acquisitions. Formerly known as Interstate Bakeries, the company picked up ownership of Twinkies, Wonder Bread and other fixtures of Americana through its 1995 deal for Continental Baking.
As a national appetite for junk food waned, the company, based in Irving, Texas, fell on hard times. In 2004, it was forced to file for bankruptcy, in the face of high labor and commodity expenses.
The company emerged in 2009 as Hostess Brands, named after its most prominent division. With America’s new health-conscious attitude, the company sought to reshape itself introducing new products such as 100-calorie Twinkie Bites.
In January, the company filed again for Chapter 11, just three years after emerging from the previous restructuring. The company hoped to reorganize its finances, principally by cutting labor costs. It won the agreement of some of its unions, including the Teamsters.
But those plans were stymied by the recent labor dispute. The work stoppage by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, who rejected a contract offer that lowered wages and benefits, affected nearly two-thirds of Hostess’ factories.
The company first responded by closing three factories, then gave union members until 5 p.m. Thursday to return to work.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Gregory Rayburn, Hostess’ chief executive, said in a statement.
Hostess will soon begin to shut down the company’s bakeries and 565 distribution centers. Most of its 18,500 employees will be laid off, according to the company.
Hostess had been saddled with high pension, wage and medical costs related to its unionized work force. The company also faced intensifying competition from larger companies such as Mondelez International, the former snack unit of Kraft Foods that makes Oreos, Chips Ahoy and Nabisco.
Although many workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels. Rayburn said Hostess was already operating on thin margins and that the strike was a final blow.
“The strike impacted us in terms of cash flow. The plants were operating well below 50 percent capacity and customers were not getting products,” Rayburn said.
The company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking.
Ken Hall, general secretarytreasurer for the Teamsters, said his union members decided to make concessions after hiring consultants who found the company’s finances were in a dire situation.
“We believed there was a pathway for this company to return to profitability,” Hall said, noting that the liquidation could have been prevented if the bakery union had agreed to some concessions as well.
Although Hall agreed that it was unlikely anyone would buy the entire company, he said “people are going to look for some fire-sale prices” for some of the brands. For now, he expects Hostess products will be on shelves for another week or so.
“Frankly it’s tragic, particularly at this time of year with the holidays around the corner,” Hall said, noting that his 6,700 members at Hostess were now out of a job.
Information for this article was contributed by Jessica Seaman of the Arkansas Democrat-Gazette; by Michael J. De La Merced, of The New York Times; and by Candice Choi and Tom Murphy of The Associated Press.
Business, Pages 31 on 11/17/2012