Twinkies may not last forever after all.
Hostess Brands Inc., the maker of the spongy snack with a mysterious cream filling, said Friday it would shutter after years of struggling with man-agement turmoil, rising labor costs and the ever-changing tastes of Americans even as its pantry of sugary cakes seemed never-ending.
CEO Gregory Rayburn, who was hired as a restructuring expert, said Friday that sales volume was flat to slightly down in recent years. He said the company booked about $2.5 billion in revenue a year, with Twinkies alone generating $68 million so far this year.
Hostess, based in Irving, Texas, said it was saddled with costs related to its unionized workforce. The company had been con-tributing $100 million a year in pension costs for workers; the new contract offer would’ve slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling. Although some of those executives later agree to reduced salaries, others — including former CEO Brian Driscoll — had left the company by the time the pay hikes came to light.
Then, last week, thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company’s latest contract offer. The bakers union represents about 30 percent of the company’s workforce.
By that time, 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. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn’t enough to keep operations at normal levels.
The company filed a motion to liquidate Friday with U.S. Bankruptcy Court. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
In Southern Illinois
The signs of an impending Twinkie famine were less pronounced in Southern Illinois, but they were there if you looked closely Friday afternoon.
Twinkie and other Hostess snack cakes were largely snatched up from store shelves at Walmart Supercenters in Carbondale and Murphysboro. Meanwhile, Carbondale Schnucks manager Tom Eakins said things were fairly quiet in his aisles.
“I was quite surprised today,” Eakins said. “We had a delivery, our rows were filled up and I haven’t seen anything unusual at all.”
Whether that stays the same in the coming days, as the world adjusts to the idea of Twinkies and Ding Dongs as a finite resource, Eakins couldn’t say.
Jeff and Tracy Zircher of Peoria were in Carbondale for their son, Ian, a recent transfer student to SIU Carbondale. Ian hadn’t heard the news of Hostess’ demise, and Jeff said he hasn’t personally touched a Twinkie in more than 10 years.
For Tracy, however, her last Twinkie purchase came just recently for her other 18-year-old son.
“Gosh, I just bought a box two weeks ago and brought them home to my son,” she said. “He thought they were the best thing in the world. I guess I’ll have to break the bad news to him now.”
The elder Zirchers said they remember the days when Hostess had stores, selling a variety of products. Facing the prospect the cakes might not even be in grocery stores anymore, the family agreed it may be the end of a significant, if not particularly healthy, era.