In an announcement posted on its Web site, the company said it was “sorry to announce that Hostess Brands, Inc. has been forced by a Bakers Union strike to shut down all operations and sell all company assets.” CEO Gregory F. Rayburn said in the statement that “we deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike.”
The striking Bakery, Confectionery, Tobacco Workers and Grain Millers Union had been cautioned: In a move the Wall Street Journal called “a sort of warning shot,” three plants had already been shut down, eliminating 627 jobs on Monday. On Wednesday, the company said it would be forced to liquidate if enough employees did not return to work by the end of the workday Thursday. This was also not the company’s first bankruptcy.
Maybe the gap in trust between management and the union had simply grown too wide. The last CEO, Brian Driscoll, had seen a big salary increase. He was abruptly replaced by Rayburn earlier this year, who was the sixth head of the company in the last decade. That kind of turnover is not typically a good environment for labor relations, in which a history of past successes between leaders and unions can be drawn upon for future goodwill.
Or more likely, the union workers kept at the strike because the last time the company had threatened liquidation, it didn’t follow through. During its last stint in Chapter 11, the company said “a vote against its last, best, final offer by either of its two largest unions would prompt an immediate liquidation,” the Journal reports. “But when the bakers union gave Hostess just that trigger, Hostess instead decided to take its case back to the court.” When leaders do that, it’s harder for the people who work for them to take the threats seriously the next time around.
Whatever were the reasons for the “exquisite game of chicken,” as a fascinating and in-depth Fortune story called the labor disputes, the end result is sad. Eighteen-thousand people are out of a job. The company’s private equity owner may not get anything back. And while some brands could find buyers, it looks like in this case the Gen Xers raised on Hostess snacks are losing an icon.
Jena McGregor is a columnist for the Washington Post’s On Leadership section.
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