The restructuring of the bankrupt Hostess Brands bakery business will hit a key point tomorrow as the union representing 15,000 drivers and bakery workers votes to authorize a strike.
The unions are upset that they are being asked to give up their pensions and to accept a five-year wage freeze. Hostess, maker of Wonder Bread, Twinkies, Ding Dongs and other snack food brands, is looking to cut labor costs it claims are higher than those of its rivals.
Representatives of the union hope the strike authorization, if approved by the rank and file, will move management to soften its stance on givebacks ahead of a court hearing in March that could lead to Hostess Brands winning court approval to void the current collective bargaining pact.
A strike could be devastating for the decades-old baker, the largest in the country. The union, in a letter to its members, acknowledged as much — saying that if they walk off the job over the draconian cuts that are being proposed, the company could shut down.
“The whole process is designed now to get a resolution,” said one person close to the talks.
In addition to pension and salary freeze, the current Hostess proposal includes an increase in health care contributions.
Hedge funds Monarch Alternative and Silver Point Capital own senior debt in Hostess and may be willing to invest in the money-losing business and convert some of their debt into equity, but only if it comes up with a viable operating plan — a plan that would cut labor costs.
Hostess and the Teamsters declined to comment.