News Updates

(WASHINGTON) – The Teamsters Union today criticized assertions by Hostess Brands Inc. management that the company’s current bankruptcy is the direct result of the costs associated with labor agreements. The Teamsters represent more than 7,500 delivery drivers and merchandisers at Hostess.

Over the course of the nearly five years from 2004-2009 that then Interstate Bakeries Co. was in bankruptcy, the union workforce negotiated two rounds of concessions to do their part to help return the company to profitability. It was these concessions that led to the company’s exit from bankruptcy in 2009 and laid the groundwork for substantial new investment from the company’s current lenders and shareholders.

“Our members made real sacrifices to help pull this company out of bankruptcy,” said Dennis Raymond, Director of the Teamsters Bakery and Laundry Conference. “It was not a failure of Hostess’ workers that led to this bankruptcy, it was the inability of management to execute their business plan.”

Hostess negotiated the current labor contract and incorporated that cost structure into its business plan before exiting bankruptcy. The company moved forward on this basis, fully knowing its cost structure and incorporating that cost structure into its subsequent projections – projections the company consistently failed to meet on the revenue side. All of the capital raised at the company’s exit from bankruptcy - over $500 million - was based on this cost structure and labor terms, all of which remain in place today.

However, as shown in the company’s own public filings, the company’s failure to achieve its projected revenue and business plan triggered its current financial problems. In fiscal year 2008, the company generated over $2.8 billion in revenues. At the time, the company forecast achieving over $3.1 billion in revenues in the most recently completed fiscal year, 2011.

Instead, Hostess achieved less than $2.5 billion in revenues – a huge decline that accounts for all of the company’s cash flow shortfall. In fact, one of the few areas in which Hostess achieved its forecast was in its labor costs, which remain entirely consistent with the original projections.

There are many other examples of management missteps since the company emerged from bankruptcy, including failed product promotions, limited product innovation, limited marketing and inadequate local management support. Evidently the board agreed with these failures and terminated the previous CEO, Craig Jung, but not before a great deal of damage was done to the company and, by extension, the union workforce. While the current CEO, Brian Driscoll, has taken a number of positive steps, it proved to be too little, too late to overcome the mismanagement prior to his hiring.

“We have given so much to help this company but it seems that whatever we give is never enough,” said Lawrence Snitkoff, a Teamsters Local 550 member who has worked for the company for 34 years in New York, NY. “I am three months away from retiring and now I don’t know if I will be able to.”

“Hostess management is trying to cast the workers as the scapegoats when the facts are clear – they failed to adjust their business plan to a changing and more competitive marketplace. As further evidence that labor costs were not the defining factor in Hostess’ slide into bankruptcy, they still had to file bankruptcy despite unilaterally stopping pension payments in August 2011,” said Ken Hall, Teamsters International Vice President.  “Our members are dedicated to this company and plan to work to save it, if possible, but they should be thanked for their sacrifices, not blamed for the failure of the Hostess management team.

“As we have previously stated, it will take all parties – management, lenders, shareholders and employees - working together and sacrificing in order to fix this company. We remain committed to doing our part, but we are not going to do it alone,” Hall said.

Founded in 1903, the Teamsters Union represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit www.teamster.org for more information. Follow us on Twitter @TeamsterPower.

(WASHINGTON) – Today’s bankruptcy filing by Hostess Brands Inc. marks another sad development in the company’s difficult history since its initial bankruptcy filing in late 2004, the Teamsters Union said. 

The company emerged from that bankruptcy in 2009, largely due to the sacrifices made by Teamster members and other unionized employees, including members of the Bakery, Confectionery and Tobacco Workers Union. More than 7,500 of the company’s nationwide fleet of delivery drivers and merchandisers are Teamsters.

The Teamsters National Bargaining Committee has been working with Hostess management for months to identify a consensual resolution that would address the company's many problems.

“While no agreement has been reached to date, the Teamsters Union remains committed to working with all stakeholders during the bankruptcy to find a mutually agreeable solution, if possible,” said Dennis Raymond, Director of the Teamsters Bakery and Laundry Conference.

“Our members have already given at the well, and this time it will take sacrifices among all parties – management, lenders, equity holders and employees – to restructure Hostess into a viable enterprise that is well-positioned for future growth,” Raymond said. “We were hoping that could have been done prior to a bankruptcy filing, but unfortunately that did not occur. We remain committed to finding a solution, if possible, over the next few months during the bankruptcy process.”

The company filed for Chapter 11 bankruptcy protection in the Southern District of New York. In a Chapter 11 filing, the debtor seeks to restructure so it can eventually exit bankruptcy with an approved plan of reorganization. The time that a company has to develop its plan of reorganization varies and is dependent on financing the company arranges to fund its stay in bankruptcy.

Founded in 1903, the Teamsters Union represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit www.teamster.org for more information. Follow us on Twitter @TeamsterPower.

Fifteen CDL drivers at Sara Lee have won a one million-dollar arbitration settlement after being unjustly laid off by the company for nearly a year. The settlement resolves a contract dispute concerning the company’s unjust subcontracting out of bargaining unit work and subsequent layoff of 15 drivers. The drivers work for a division of the global corporation that hauls refrigerated dough.

“It feels great to win this settlement. It shows that by having a Teamsters contract, we can force companies like ours to do what’s right,” said Danny Presley, a Sara Lee shop steward. 

In early 2010, Sara Lee unilaterally subcontracted out the drivers’ jobs to a nonunion carrier. This move was in direct violation of the drivers’ Teamster contract. Teamsters Local 728 immediately filed a grievance on behalf of the drivers that ultimately resulted in the massive arbitration settlement. The arbitration ruling requires Sara Lee to pay the 15 drivers $774,000 in back pay, $107,000 in pension payments and $122,000 in health benefits.

“Our shop steward and local union stayed in touch with us for a year during the whole process. At first, the guys were devastated by the layoff. But now with this arbitration, we feel justice was served,” said Gerald Duhart, a formerly laid off Sara Lee driver and 26-year Teamster.

‘The Sara Lee drivers are proud members of Local 728 and this makes us all proud to get this big victory,” said Teamsters Local 728 President Randy Brown. “In today’s tough times, being a Teamster means we can win together and beat back corporate attacks on our rights.”

A statewide agreement between 10 Ohio Teamster local unions and Nickles Bakery was overwhelmingly ratified by the Teamster membership by a vote of 237-17. The four-year agreement covers 325 route sales drivers, transport drivers and hourly employees and includes:

• Increases of $30 over the term of the four-year agreement for route sales drivers (which includes increases of $5, $5, $10 and $10 in each respective year of the contract to the drivers’ weekly base pay rate);  $0.35 per hour across-the-board increases for hourly employees; and $0.45 per hour across-the-board increases for the transport drivers;

• Breakdown pay for the first time ever for all route sales drivers and transport drivers;

• Increases in transport drivers’ weekly guarantee to 45 hours per week, with time-and-a-half after 40 hours, along with eight hours straight time pay for any dock pick up, which will rotate through the seniority list as it happens;

• Improvements in health care to nearly 100 percent coverage for all workers; and

• Maintenance of pensions.

The locals involved in the negotiations were Teamster locals 20, 40, 52, 92, 114, 284, 377, 637, 908 and 957. The negotiations were chaired by the Teamsters National Bakery and Laundry Conference Chairman Dave Dudas.

“In these hard economic times, the 10 Teamster locals in Ohio did an outstanding job in negotiating the Nickles Bakery agreement. Chairman Dudas kept me posted through the whole process of negotiations with Nickles and did an outstanding job for all the Nickles members in Ohio,” said Dennis Raymond, Director of the Teamsters Bakery and Laundry Conference.

“The committee stuck together and we stood our ground,” Dudas said. “We’re very happy with this contract.”

“This was the best contract we ever negotiated. We received many gains, like holiday pay increases, life insurance benefits and more,” said Randy Jacobs, a 14-year route sales driver in Lorain and shop steward with Brook Park-based Local 52. “Overall, it’s a great deal for all.”