Leaders of the union that is generally acknowledged to have been the “final straw” in the downfall of Hostess Brands last November filed an objection to the pending sale of breads and bakeries scheduled for Thursday, Feb. 28. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) presented the document to the Southern District of New York Bankruptcy Court of Judge Robert Drain.
The objection alleges “that the asset purchase agreements struck between Hostess and Flowers violate provisions of the National Labor Relations Act and that the sale process for the bread assets violates the terms of the labor deal that was imposed on the BCTGM after it failed to reach a consensual deal with” Hostess. Last November, the bakers voted to strike rather than accede to the company’s demand for concessions, even though all other unions had signed deals with Hostess, giving hope that the company would emerge from the Chapter 11 (reorganization) proceeding filed in January of last year.
Fox News reported on Tuesday, “According to the union, Flowers ‘has affirmatively disclaimed any obligation even to consider employing a single worker’."
In addition, it was reported that none of the bidders for other Hostess brands have affirmed an intention to hire former Hostess workers, whether union members or not.
Flowers Foods of Thomasville, Ga., is the “stalking horse” or opening bidder in the liquidation process, with a first auction scheduled this week for the bulk of the bankrupt company’s breads, 20 bakeries and 38 depots. The initial bid by Flowers for Wonder Bread, Nature’s Pride, Merita, Home Pride and Butternut Breads was for $360 million, with competing bids due yesterday, prior to the scheduled auction later this week. There has been no confirmation that any other offers have been received. Flowers, in a separate bid, offered an additional $30 million for the Beefsteak brand. If there are no competing bids, the court could certify the sale as early as next week.
Several weeks ago, the union announced that it would be available to assist bidders “in any way possible” in order to assure the “best possible outcome” for its members in an acquisition and reopening of any of the former Hostess facilities. Union President David Durkee said, “Since the strike and the mass firings late last year, BCTGM has been evaluating – and courting prospective buyers of the old bakeries who might be willing to offer new jobs to the fired Hostess workers,” according to an article by Bruce Vail published in In These Times Feb. 25.
Flowers, which currently operates bakeries and distribution routes in the South and Mid-Atlantic states, has been open about its desires to expand and to have a nationwide presence by 2016. The company just this month completed an acquisition of certain SaraLee assets in California which it purchased from Mexican giant baker Grupo Bimbo.
Acquisition of the former Hostess brands would put Flowers about three years ahead on its expansion plans, according to the company’s own estimates. Its offer was the first to be announced in the sell-off of Hostess assets; Flowers currently operates 44 bakeries and is the second-largest producer of breads and baked goods in the country.
It operates “a mix of union and non-union plants, with BCTGM collective bargaining agreements already in place in several cities,” Durkee said.
The article continues, stating that “legal restrictions” have so far prevented “direct talks with potential buyers leading up to the auction process, . . . but a provisional sale in the coming weeks should allow the union to enter direct talks with Flowers and others.” Durkee reportedly said that “there are obvious benefits to a new owner” to hire from among the approximately 5,600 bakers union members who were laid off. In total, more than 18,000 workers lost their jobs when Hostess ceased operations. The largest union, the Teamsters, and 10 others had reached agreements with the company prior to the strike by the BCGTM, which ultimately led to the closure.
Just last week, it was announced that many former workers are eligible to receive job retraining and other benefits through a Trade Adjustment Assistance program administered by the U.S. Department of Labor. The ruling came because it was determined that, at least in part, foreign imports resulting in higher costs were a contributing factor in the company's downfall. See previous story.
The union has steadfastly maintained that it was not the strike, but rather poor management decisions which led to the Hostess downfall; and that its workers would benefit and ultimately be returned to work following a takeover by another company.
Durkee, however, now states that reaching an \agreement with new owners "is not going to be an easy thing.” But, writes Vail in his article, “such contracts may provide the best means of getting the old Hostess bakeries back into operation quickly. ‘Our people are skilled,’said Durkee. ‘They know the equipment and they know how to make a good product. They weren’t the ones who ran Hostess into the ground’.”
Additional auctions are scheduled March 13 and March 15, completing the sell-off of the best-known Hostess brands and assets, and paving the way for those products to reappear on retail shelves throughout the country. The complete wind-down of the Irving-based company could continue throughout the year.
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