NEW YORK — Hostess, the maker of Twinkies and Ding Dongs, said late Tuesday that it failed to reach an agreement with its second-biggest union.
As a result, Hostess plans to continue with a hearing Wednesday in which a bankruptcy court judge in White Plains, N.Y., will decide if Hostess can shutter its operations.
Renewed talks between Hostess and The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union came after the company said last week it would move to wind down its business and start selling off its assets in bankruptcy court. The company cited a crippling strike that was started Nov. 9 by the union, which represents 30 percent of Hostess workers.
After hearing Hostess' case to liquidate Monday, the bankruptcy court judge said the two sides hadn't tried resolving their differences through private mediation. The judge said 18,000 jobs were on the line and urged the company and union to try to resolve their differences. They began mediation proceedings Tuesday.
In a statement late Tuesday, Hostess would say only that mediation “was unsuccessful.” The bakers union had no immediate comment.
Hostess shut down its three dozen plants late last week after it said the bakers union strike hurt its ability to maintain normal production. The union says the company's demise was the result of years of mismanagement and that workers have given steep concessions over the years.
Hostess, weighed down by management turmoil, rising labor costs and Americans' changing tastes, is making its second trip through Chapter 11 bankruptcy restructuring. The company, based in Irving, Texas, brought on CEO Gregory Rayburn as a restructuring expert in part to renegotiate its contract with labor unions.
The company reached an agreement with its biggest union, the International Brotherhood of Teamsters, on a contract that reduced pension contributions and slashed wages and health benefits.
The Teamsters urged the smaller union to hold a secret ballot on whether members wanted to keep striking. Many workers in the bakers union decided to cross picket lines last week, but Hostess said it wasn't enough to keep operations at normal levels.
Teamsters General Secretary Ken Hall said the mediation talks' failure and the likely closing of the company was a “tragic outcome” for workers.
Rayburn said Hostess was operating on razor thin margins and that the strike was the final blow. The bakers union said the company gave executives steep raises last year as the company spiraled toward bankruptcy.
The company's announcement last week that it would move to liquidate prompted a rush on Hostess treats.
Even if Hostess goes out of business, its popular brands likely will find a second life. The company says potential buyers have expressed interest in the brands. The company still does about $2.5 billion in business each year. Twinkies brought in $68 million so far this year.