Since the Hostess bankruptcy filing earlier this year, there has been much debate as to the source of their repeated financial problems. Blaming union obligations for their overburdened debt load, company officials have been developing a proposal in hopes of resolving some of its multimillion dollars in debt.
This week Hostess will present their final contract offer to union members that are designed to reduce operating costs and attract much needed debt resolution financing. The proposal includes lowered initial wages and a 8% reduced commission for employees in the first year if a five-year contract. While the plan does propose a 3% increase in wages across the duration of employee contract years, it is still unclear as to whether medical and pension benefits will remain untouched. For now the cuts only apply to the Irving, Texas facility, but would be applied to management personnel also.
Having already sought Chapter 11 bankruptcy protection twice in 10 year, Hostess is under pressure to develop a plan to successfully maintain operations for the future. President and CEO Gregory Rayburn said, “As with all negotiations, none of the parties got everything they wanted. Some of the concessions are deep, but they are shared by everyone — union members, non-union members and all management.”