After 82 years of baking history that produced Wonder Bread and sweet snack legends like Twinkies and Sno Balls, Sweetheart Bakeries across America are closing, leaving 18,500 employees and about 350 Montanans without jobs.
On Friday, Hostess Brands chief executive Greg Rayburn and his team filed liquidation papers in the U.S. Bankruptcy Court of Southern New York, carrying out a threat that the company would be shut down if the striking bakers did not return to work on Thursday.
Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, representing about 30 percent of Sweetheart’s work force, went on strike beginning Nov. 9 after Hostess imposed a contract the bakers had voted down by a 94 percent margin.
Meanwhile, Franz Bakery based in Portland, Ore., is at least eyeing the Billings market.
Franz, a family-owned, 100-year-old chain of seven bakeries, moved into the western Montana market and then into the Billings area several years ago.
Franz is not building a bakery in Billings, said marketing manager Jessica Larson in Portland.
Franz president Marc Albers said Friday that no details have been decided yet about an auction, the sale of Sweetheart brands or other assets. But he left a door open to another acquisition, possibly the Billings bakery.
“As we continue to grow in the future, we will always explore any opportunity that fits our core business model,” Albers said.
In Billings, bakers walking a cold picket line on Friday said they walked off the job on Nov. 10 and wouldn’t return to work mostly because they didn’t trust management.
Hostess spent five years in a reorganization bankruptcy that ended in 2008 and filed for a second bankruptcy 10 months ago. The company is now owned by a private equity firm and two hedge funds.
In September, the bakers rejected a contract calling for wage and benefit cuts of 27 to 32 percent, including an immediate 8 percent pay cut, plus a 20 percent shift of health care costs onto employees.
The company cut off health care benefits when the strike began, said Eusebio Diaz, Billings business agent for BCTGM Local 466.
“We probably shouldn’t have taken the company plan because then you have too many eggs in one basket,” Diaz said.
The bakers union, the second largest at Sweetheart, also refused to give up a guaranteed eight-hour work day and 40-hour work week in the contract.
Some strikers feared they would be turned into temporary workers.
The picket lines will continue until union attorneys review the liquidation filing that runs more than 100 pages.
“The way the papers were filed in bankruptcy court, there’s some leeway in there for him (Rayburn) to do something else,” Diaz said.
Rayburn said the company will be “selling its assets to the highest buyer,” according to the Wall Street Journal. While Hostess didn’t have a buyer for the entire company, it had received some interest in certain assets, the Journal said. The company also could sell its well-known brands.
In addition to asking the bankruptcy judge to grant permission to close the company, Hostess also asked for approval of bonuses for 19 managers, ranging from 25 percent to 75 percent of their base yearly compensation, according to the Journal.
Sid Mauch, a five-year employee at the Billings bakery, said he doesn’t regret striking, even if it leads to the end of Sweetheart.
“I’m not going to work that hard and put in those many hours and get paid less,” Mauch said. “I’m going to start pounding the pavement, start looking for another job.”
Billings bakery workers have been applying for unemployment insurance since the strike began.
“Hostess said they sent a letter out to all those not cleaning up to stay home, so they are unemployed now,” said John Harper, superintendent of Job Service in Billings.