Hostess Bankruptcy: Company Asks Employees To Take An Eight Percent Pay Cut
Hostess — the company responsible for expanding waistlines across the globe with Twinkies, Ding Dongs, and Sno Balls — will attempt to pull itself out of a second bankruptcy in four years by asking employees to take an eight percent pay cut. According to CNBC, Hostess has extended its final offer to the unions representing half of the individuals employed by the company.
“We have a path to emerge, but it’s a difficult one and it’s a painful one,” CEO Greg Rayburn explained. “It’s painful for the employee because it requires wage concessions and pension concessions. They have been through this wringer once already.”
Although revenue continues to stream into the company thanks to the many brands under its control, Rayburn revealed that the company’s cost structure is derailing their operations. In addition to the pay cuts, which includes those in upper management, the company will also slash health plans and cut contributions to employee pension plans. Overall, Hostess’ plan would help save them $200 million in costs, which could ultimately help them escape the clutches of bankruptcy.
In addition to the internal cost cuts, Hostess intends to sell off its Merita bread brand, which has already generated interest from potential bidders. Should the company need to free up even more money, internal documents suggest that additional asset sales and layoffs could be a possibility.
Now that the pay cut proposal has been finished, it’s up to the International Brotherhood of Teamsters to agree to the conditions. The IBT is set to vote on the matter this September. When asked if the unions contributed to the company’s many woes, Rayburn was quick to shoot down these allegations.
“I don’t think unions bring down companies,” the CEO explained. “In Hostess’ case, there is plenty of blame for everyone.”
According to The Washington Post, Hostess filed for Chapter 11 bankruptcy in January of this year. At the time of the filing, the company was reportedly carrying a debt load of $900 million.