Twinkie

Hostess, Unions agree to mediation

19 Nov, 2012

Hostess and its labor unions have agreed to a Tuesday, Nov 20, mediation session over a crippling labor strike the company cited as the final trigger for the emergency shutdown that began last week. The temporary reprieve in the labor-management standoff came in a White Plains, N.Y., hearing Monday in which U.S. Bankruptcy Court Judge Robert Drain questioned the rationale for the strike by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. Drain cited “serious questions” about the strike because the union rejected Hostess’ latest contract offer without filing an objection to it or discussing the possibility of going to mediation. The union represents about 5,000 of the company’s 18,500 workers.

In court papers, Hostess said it has struggled with an inflated cost structure due to union labor contracts that have never been meaningfully addressed or modified.

But the company’s 12 unions argue that Hostess’ problems are largely of its own making including years of underinvestment in products, facilities and equipment, long-term neglect of once-dominant brands, a hollowing-out of the distributions system, failure to develop newer, higher-growth products, an overly compliant corporate board and a “grossly overleveraged” debt structure with Wall Street lenders that was imposed during the company’s prior bankruptcy.

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