Judge orders Hostess, union to mediation
BY Staff and Wire Reports
Tuesday, November 20, 2012
11/20/12 at 3:52 AM
Twinkies disappeared from local store shelves and flooded eBay Monday as Hostess Brands Inc. prepared to enter mediation with its second-largest union.
Hostess initially tried to liquidate and sell off its assets in bankruptcy court, complaining that a recent strike and labor demands made its business unprofitable.
Last week, the company shut 33 plants, including a facility at 1111 S. Sheridan Road, which had 180 workers and produced bread and buns under the Wonder Bread name. The action overall affects 18,500 employees nationwide, 565 distribution centers, 5,500 delivery routes and 570 bakery outlets.
The bankruptcy judge hearing the case said Monday that the parties haven't gone through the critical step of mediation and asked the lawyer for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which has been on strike since Nov. 9, to ask his client, who wasn't present, if the union would agree to participate.
The judge noted that the bakery union, which represents about 30 percent of Hostess workers, went on strike after rejecting the company's latest contract offer, even though it never filed an objection to it.
"Many people, myself included, have serious questions as to the logic behind this strike," said Judge Robert Drain, who heard the case in the U.S. Bankruptcy Court in the Southern District of New York in White Plains, N.Y.
Hostess and the union agreed to mediation talks, which are expected to begin on Tuesday.
Meanwhile, the last boxes of Hostess products such as Twinkies, Ho Hos and Ding Dongs were snatched up by fans or those hoping the cakes would become collectibles.
In Tulsa, the Reasor's grocery store chain and QuikTrip convenience stores said many Hostess products, which also include donuts, cupcakes and bread, had sold out.
Reasor's inventory showed 400 recent sales for boxes of Twinkies across its 17 area stories. They were being replaced with similar products, a spokesman said.
"Little Debbie's and Bluebird, for example, make Twinkie-style snack cakes," said Les Weese, director of center store for Reasor's. "And, everybody makes a chocolate cupcake."
Bread products from Hostess never have been a big percentage of the grocery chain's sales, he said.
QuikTrip also reported being out of many Hostess items. The strike, however, forced the Tulsa-based business to move quickly to replace Hostess as a major supplier of buns.
"We had a contingency plan ready," said spokesman Mike Thornbrugh. "Actually, this bankruptcy by Hostess may turn out to be an opportunity for us."
While local shelves didn't hold many boxes of Twinkies, cyberspace was packed with the cakes.
"I heard someone was asking $1,000 a box, which is completely crazy," Reasor's Weese said. "There might be some value in having one of the last boxes produced by Hostess, even if someone else buys the company and the product comes back, but you probably wouldn't see that kind of price in your lifetime."
A quick check of eBay listings Monday evening showed $10 to $25 to be a common asking price for a box of 10 cakes. One seller was asking $9,800, but pledged to donate the money to charity.
As to whether Hostess can reach an agreement with the union and survive, company CEO Gregory Rayburn said that the two parties will have to agree to contract terms within 24 hours of the Tuesday talks since it is costing $1 million a day in overhead costs to wind down operations.
Original Print Headline: Hostess, union to meet for mediation
Tulsa World Business Editor John Stancavage contributed to this story by The Associated Press.
