Hostess used to employ about 2,500 workers to produce snacks, but the new iteration will use just 1,800, according to a spokeswoman for its new private equity owners. The reduction in jobs is thanks to an increasing use of machinery instead of workers, dropping some of the former Hostess brands, a new model for delivering products, and closing nearly 600 outlet stores in which it used to sell products directly to consumers.
Those who do get their job back won’t see the same pay, however. Employees are now making far less than they were before the liquidation.
And the workers who are hired back will no longer be unionized. Where nearly 80 percent of the workers were part of a union before the liquidation, today none will be.
The company has struggled with workers’ issues since it filed. In December, the acting CEO imposed an 8 percent pay cut across the board for all Hostess employees, yet his own $1.5 million yearly salary was exempt. It also asked for approval from a bankruptcy judge shortly after it filed to allow it to pay $1.75 million in bonuses to 19 of its executives. And even though the company blamed unions for its downfall, it tripled its CEO’s pay before the bankruptcy filing and increased other executives’ compensation by as much as 80 percent.
Other companies have demanded concessions from unionized workers as executives have enjoyed raises: Construction giant Caterpillar gave its CEO a 60 percent pay raise to $17 million as it forced a pay and pension freeze on workers. Other companies have compensated executives in times of bankruptcy or financial instability. Failed financial firm MF Global awarded CEO Jon Corzine $8 million after filing, while Vikram Pandit got $6.7 million after he resigned as CEO of Citigroup even though he oversaw an 88 percent profit loss in his final quarter.