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  • DATVF.LAXDAL
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  • DATVF.SEALAX
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American Shipper

Twinkie maker to unions: concessions or liquidation

Twinkie maker to unions: concessions or liquidation

Embattled snack maker Interstate Bakeries Corp., producer of Twinkies, Wonder Bread and Hostess snack cakes, has threatened to liquidate if it does not receive major concessions from its 20,000 union workers within the next two weeks.

   Kansas City, Mo.-based Interstate, under its third year of Chapter 11 bankruptcy protection, made the threat in a U.S. Bankruptcy Court filing late last week.

   The filing came within days of a second union representing Interstate workers, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, broke off negotiations with the baker on Wednesday over wage concessions. Less than a week earlier Interstate's largest union, the Teamsters, walked away from the negotiating table and threatened a Southern California strike. The two unions, which represent about 20,000 of the firm's 25,000-strong workforce, had agreed to some wage and benefit cuts to help Interstate pull out of its nearly three-year sojourn in Chapter 11 bankruptcy. However, both unions said that Interstate is going too far in its demands.

   In the filing, Interstate said that some of its lenders had given the firm until Sept. 30 to obtain major labor concessions from the unions. If it is unable to do so, the firm said it would be forced to liquidate.

   Industry experts said that although the possibility of an Interstate liquidation is real, the likelihood of Twinkies or other well-known Interstate-owned brands disappearing completely is remote.

   'The one thing that you can count on,' Kevin Starke, an analyst with Weeden & Co. told ABC News, 'is that you will still see Twinkies on the shelves of supermarkets and convenience stores near you.'

   The Wonder Bread label, a staple of children's lunch boxes for nearly 80 years, might be another story. Three weeks ago, Interstate said it would eliminate the brand from Southern California shelves, close four Southern California production facilities, and layoff nearly 1,300 local workers. According to Hoover's, the firm has 45 commercial bakeries, 650 distribution centers and 800 bakery outlets across the country which are expected to pull in about $2.9 billion in sales this year.

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