New Twinkie Maker Cold-Shoulders Union Labor

New Twinkie Maker Cold-Shoulders Union Labor

(Written by author By RACHEL FEINTZEIG for the Wall Street Journial. Original article can be located here.)

The company that bought the Twinkie, HoHo and Ding Dong brands out of bankruptcy is gearing up to reopen plants and hire workers, but it won't be using union labor.

 

Hostess Brands LLC—Metropoulos & Co. and Apollo Global Management LLC's new incarnation of the baking company that liquidated in Chapter 11—is reopening four bakeries in the next eight to 10 weeks, aiming to get Twinkie-deprived consumers the classic snack cake starting in July.

 

Chief Executive C. Dean Metropoulos said the company will pump $60 million in capital investments into the plants between now and September and aims to hire at least 1,500 workers. But they won't be represented by unions, including the one whose nationwide strike sparked the 86-year-old company's decision to shut down in November.

"We do not expect to be involved in the union going forward," Mr. Metropoulos said in an interview Wednesday.

Hostess Brands Inc., the company that filed for bankruptcy protection in January 2012 and eventually sold off its brands and plants to several buyers, was once powered by 19,000 workers, 15,000 of whom were represented by unions. The company's largest union, the Teamsters, had agreed to a new labor contract following a contentious bankruptcy trial. But the second-largest union, the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, launched a work stoppage after the company imposed new labor terms on the union's members. Hostess said the strike crippled its operations, forcing it to shut down.
A Teamsters spokeswoman declined to comment. A spokeswoman for the bakers union couldn't be reached for comment Wednesday.

In February, before the $410 million sale to Metropoulos and Apollo was finalized, the president of the bakers union expressed confidence that his thousands of out-of-work members would find opportunity at the Hostess facilities once they were reopened by their new owners. President David Durkee said the strike had left the union in "a position of strength," and he expressed confidence its workers would get a better deal from the new owners than Hostess offered during the bankruptcy case, its second in recent years.
He added that the only way for the brands to have a "seamless restart" would be to hire back unionized bakers. "Only our members know how to get that equipment running," Mr. Durkee said. "A work force off the street will not be able to accomplish that."

But Mr. Metropoulos and his son, Daren, the co-CEO of Pabst Brewing Co. who is also heading up the reborn Hostess's marketing strategy, expressed confidence they would be able to find skilled, nonunion workers near the four plants, which are in areas with high unemployment.

"We're trying to find the most qualified people in these local markets to come work for the company," Daren Metropoulos said.

The new Hostess is firing up plants in Columbus, Ga.; Emporia, Kan.; Schiller Park, Ill.; and Indianapolis, Ind. It's also considering whether to reopen a fifth plant it purchased, in Los Angeles. Previously, the Hostess products that Metropoulos and Apollo bought were made at 11 plants, but the elder Mr. Metropoulos said those plants were running at less than 50% capacity under the old model. The new Hostess plants will run at 85% to 90% capacity, making the business "as efficient as possible," he said. The new company expects total capacity to be back to where it was before Hostess's shutdown by September.
The elder Mr. Metropoulos said he wasn't sure how many employees it used to take to produce the classic Hostess snack cakes now under the control of Metropoulos and Apollo. The new Hostess plans to use third-party drivers and an outside sales organization. It will also switch distribution models, delivering Hostess Twinkies and Cup Cakes directly to supermarket warehouses instead of individual locations.
"Ultimately, the consumer will be getting fresher products sooner through this model," Daren Metropoulos said.

The company also aims to increase distribution to locations that Hostess couldn't reach before, including smaller convenience stores and dollar stores.

The snack-cake company will begin considering new products, including healthier options like 100-calorie packs and whole-wheat or organic varieties, in the fall. But for now, it is focusing on getting the classic treats back on the market. In some cases, that may require the company to compete with similar products that rivals Grupo Bimbo SAB and Flowers Foods Inc. launched to fill the void during Hostess's hiatus, according to the Metropouloses.

A Bimbo spokesman declined to comment and a Flowers spokesman wasn't immediately available for comment Wednesday.

"We feel very, very confident that the originality of this brand is going to win out and the copycats will fade out," the elder Mr. Metropoulos said.

Write to Rachel Feintzeig at rachel.feintzeig@dowjones.com

A version of this article appeared April 25, 2013, on page B3 in the U.S. edition of The Wall Street Journal, with the headline: Twinkie's New Owners Will Shun Union Labor.

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