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Top 13 In 2013, #12: Hostess Goes Under

Mon, 12/09/2013 - 1:00pm
Joel Hans, Managing Editor, Manufacturing.net

Between December 9 and December 21, we'll be counting down the 13 biggest stories on Manufacturing.net throughout 2013. From pig problems (see below), to Tesla's on fire, and being held captive in China, we'll be looking into just why these stories resonated with readers here and elsewhere. For the full list, updated daily at 1:00pm EST until the 21st, visit the Top 13 In 2013 page.


One of the biggest stories on Manufacturing.net was one that took quite a while to bake, as it were, completely through: the bankruptcy, and subsequent sale, of Hostess Brands, Inc., maker of the Twinkie and Wonder Bread.

The initial news actually came out more than a year ago, when Hostess announced it was going out of business, laying off 18,500 employees and putting its brands up for sale. The company had filed for Chapter 11 bankruptcy protection earlier in the year, but finally filed a motion seeking permission to close its business and sell its assets. The company said a nationwide worker strike crippled its ability to make and deliver its products. A dozen of the company’s plants had been severely affected, and three had closed completely.

“Many people have worked incredibly long and hard to keep this from happening, but now Hostess Brands has no other alternative than to begin the process of winding down and preparing for the sale of our iconic brands,” CEO Gregory F. Rayburn said in a letter posted on the company’s website. Rayburn also said that every employee would lose their jobs eventually.

Thus began a months-long bidding process for the various Hostess brands. Flower Foods, Inc., of Thomasville, Ga., purchased six bread brands for $390 million, including the Wonder Bread brand and 20 bakeries. The maker of Little Debbie products, McKee Foods, purchased the Drake’s brand. United States Bakery Inc., won a $30.85 million auction for the Eddy’s brand and three others.

But the most followed story, for readers of Manufacturing.net, was that of the most visible Hostess product: Twinkies. Two investment firms, Apollo Global Management and C. Dean Metropoulos and Company, stepped forward with a $410 million bid to beat a number of others and steal away the Hostess and Dolly Madison brands, the former of which makes that famous Twinkie. After the deal, which was finalized on March 12, Dean Metropoulos himself said that he was looking forward to seeing “America's favorite snacks back on the shelf by this summer.”

By early June, the new company, Hostess Brands, LLC, as opposed to the then-defunct Hostess Brancs, Inc., began the process of restarting production of snack cakes. Crews were sent in to give the plants, which had been shuttered since November of last year, a makeover and to test idled equipment. Bakeries in Georgia, Kansas, Indiana and Illinois were all reopened. And not long after, by July 15, Twinkies returned to the shelves.

All in all, a good ending for the company. And while plants have been restarted, and old employees brought back to work for different companies, the labor situation at these bakeries is still shaky. A nationwide strike is what brought the original Hostess to its knees, and these various companies must be wondering if they’ll be in a similar situation in the near future. The new Hostness has said it respects union rights and would not discriminate against applicants with union memberships.

Perhaps everyone is getting along, for the sake of keeping plants open and paychecks filled? If not, we’ll likely be revisiting this story in 2014.

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