The Chicago Employment Law Blog

End of the Line for Hostess Means Holiday Layoffs for Local Workers

Lost in the din of mourning over Twinkies, HoHos, and Ding Dongs is the news that the end of Hostess means the end of 18,500 jobs. In Schiller Park, Hostess employs 300 workers. In Hodgkins, another 325 workers will lose their jobs. There's also a plant in Peoria that will face closure.

According to the Chicago Tribune, the Schiller Park and Hodgkins plants ran their last production runs this morning. The two plants are now closed, less than a week before Thanksgiving.

What caused Hostess' demise? According to the company, the final nail was the recent labor strike by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union. Employees had agreed to an eight percent pay cut, but the union nixed the plan and a related pension reduction.

The union blames the demise on the company's fiscal mismanagement and stated that employees had already given as many concessions as they could bear.

The company's products are still in demand. The company's revenue in the last fiscal year was $2.5 billion. Expenses, including wages and outstanding pension obligations, put the company constantly in the red.

One wonders how much this bankruptcy will resemble those of the American auto industry, which ditched outstanding pension obligations and labor contracts by filing bankruptcy and selling company assets to "new" companies that strongly resemble the old ones. Another possibility could be that the Hostess brand is sold off to another company.

Ask the local employees and their response will probably be a variant of "who cares?" Hundreds of local families just lost their breadwinners' income weeks before Christmas.

For many of these employees, they will be eligible to file for unemployment benefits. Workers who lose their job due to no fault of their own, and who have worked for an eligible employer for a long enough time, qualify for state assistance. This should provide enough money for food and rent. However, unless Santa squeezes down the chimney, Christmas is going to be a massive disappointment for the kids.

Related Resources: