Former Hostess Brands employees all across the country may be breathing a little easier today. The U.S. Department of Labor announced Tuesday, Feb. 19, that they may qualify for federal assistance to pursue training in other skills, as well as being eligible for relocation funding and other benefits through federally authorized aid known as Trade Adjustment Assistance (TAA).
The determination of eligibility came following an investigation which found that “increased imports of baked products contributed importantly to the company’s sales declines and worker separations,” according to the DOL. Acting Secretary of Labor Seth Harris said, “Trade Adjustment Assistance enables workers to pursue training in the skills that today’s employers need, contributing not just to a stronger middle class, but to a stronger American economy.”
Rising costs of production including both materials and labor, disputes with the unions continuing over a period of years, aging physical plants and equipment, and a change in buyer preferences toward more healthful products and away from the sweet snack cakes were frequently cited as contributing to the company's financial problems.
Workers in 48 states, at more than 864 locations formerly operated under the Hostess banner, are eligible, according to the Department of Labor (DOL). The announcement, made in Washington, D.C., noted that those workers will be contacted by their respective state’s workforce agencies. That news has been widely circulated in states which had bakeries and large distribution centers. Even though its headquarters was located in Irving, Texas, Hostess operated no bakeries in the state.
But in states like Maine, which had multiple distribution centers, outlet stores and bakeries, the news spread quickly among about 500 former workers. Approximately 350 employees were employed at a 100-year-old bakery in Biddeford which produced chocolate cupcakes and the popular Sno-balls, along with other products. At least some of those bakery workers reportedly still hope to return to their jobs when, and if, a successor company takes over the plant.
Those eligible for this assistance, however, now will receive instructions on how to apply for individual benefits and services. “Those who qualify may receive case management and re-employment services, training in new occupational skills and trade readjustment allowances that provide income support for workers enrolled in training,” according to a news report by the Bangor (Maine) Daily News. Some workers may also be allowed job search and relocation allowances, or a health coverage tax credit.
The DOL news release also states: “While TAA is open to eligible workers of all ages, workers 50 years of age and older may elect to receive Re-employment Trade Adjustment Assistance instead. If a worker obtains new employment at wages less than $50,000 and less than those earned in the trade-impacted employment, the RTAA program will pay 50 percent of the difference between the old wage and the new wage, up to $10,000 over a two-year period. RTAA participants may also be eligible for retraining and the HCTC.”
The DOL website offers additional information on TAA and the complete range of services available.
Three auction dates have been scheduled as part of the ongoing sell-off of Hostess products and assets authorized by a New York Bankruptcy Court. The first of these auctions, for most of the company’s former bread products is scheduled Feb. 28, with two additional auction dates following before the middle of March. Those sales are expected to bring more than $850 million, and allow new owners to once again produce some of the company’s iconic brands, including Wonder Bread and Twinkies.
Production was halted November 16, following what the company termed a “crippling strike” by its second-largest union, the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, refused to grant requested concessions. Approximately 6,000 of the company’s employees were members of that union. Agreements had, at that time, been reached with members of the 11 other unions which had contracts with Hostess.
The company had been operating under court supervision since it filed for Chapter 11 (Reorganization) Bankruptcy in January 2012.