WATERLOO, Iowa --- Wonder Bread is toast.
That became apparent quickly Friday when Irving, Texas-based Hostess Brands Inc., which has been in Chapter 11 bankruptcy for the second time since 2004, announced that it was shutting down all of its operations and liquidating its assets in response to a nationwide strike called a week earlier by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union.
Hostess had threatened to shut down the company if the union didn't call off a nationwide strike by 4 p.m. Thursday.
Friday’s announcement put 18,500 Hostess employees out of work, including 59 at the Waterloo plant, at 325 Commercial St. and the company’s distribution center at 2366 Newell St.
By late morning, there were no more than 10 people left in the building, according to one departing worker’s account.
The Waterloo bakery produced Wonder, Home Pride and Nature’s Pride breads.
Also affected are about 30 truck drivers.
“There’s about 80 people affected, with salaries ranging between $36,000 to $60,000, and that’s all going to leave the Cedar Valley," said Dan Derifield, shop steward with Teamsters Local 238, who is representing the drivers.
At least five workers who were approached at the plant Friday said they were not allowed to talk about their situation. A truck driver getting set to pull his rig out of the loading dock was asked if he had a load in the trailer.
“There are no more loads,” he said, declining further comment.
Back to court Monday
Hostess filed a request for a hearing on its plan to “wind down” its operations Monday. It also requested that objections to its plan be filed the same day.
Derifield said the Teamsters, who approved Hostess’ proposal in September, have 21 drivers working out of the Newell Street distribution center and another nine who deliver to local stores out of a facility on Burton Avenue.
The Waterloo bakery was an important part of Hostess’ system, Derifield said.
“The bakery makes bread for Pittsburgh, Kansas City, St. Louis, Detroit. It reached out to quite a few places in the country,” he said.
Derifield, who said he has delivered Wonder Bread out of Waterloo for 27 years, said he’ll have to “wait and see” what happens.
“ I've gone through these bankruptcies at a couple of other places. It kind of leaves you in limbo until one day you show up at work and there’s a sheriff there who tells you that you can go in and get your property and then have to leave,” he said.
Production ceased Friday morning in Waterloo, according to Hostess spokesman Erik Halvorson.
“Today will be the last day of production,” Halvorson said Friday. “Local retail outlets will remain open for seven to 10 days. Today’s deliveries to customers will be the last.”
The Wonder Hostess Bakery Outlet Store, at 2320 University Ave., in Waterloo, had its remaining inventory of Twinkies cleaned out within about an hour Friday, according to store manager Sherry Yearling.
“It’s gone; there’s not much left,” Yearling said.
The store laid off two of its four employees Friday. Two remain to operate the store until the rest of the stock is gone, and then, the store will close, probably no later than Tuesday or Wednesday, Yearling said.
Hostess said its debtor-in-possession lenders had agreed to allow it to retain access to $75 million to fund the wind-down process.
But the company said Waterloo’s work was done.
James “Red” Wilson III, a 20-year employee and steward for BCTGM Local 36, said he had not heard from the union.
“I don’t know what they’re doing,” Wilson said when asked about a union response.
He had just finished his shift Friday morning and said he was planning to return to work for his next, which will be Saturday night.
“As far as I know, unless they tell me different,” he said. “I haven’t heard otherwise.”
A call to the union’s main office in Kensignton, Md., was not returned.
Union President Frank Hurt has placed blame for Hostess’ downfall on “nearly a decade of financial and operational mismanagement.”
Hostess has 565 distribution centers and 570 bakery outlet stores, as well as 33 bakeries.
Its brands include Wonder, Nature’s Pride, Dolly Madison, Drake’s, Butternut, Home Pride and Merita and Twinkies, among other products.
Winding it down
Hostess’ “wind-down plan” consists of six four-week periods for each bakery. The first four weeks will require about 28 workers at each plant to carry out.
By the end of the third four-week period, each plant will maintain one worker on-site.
The Waterloo plant remained active through the week, even though 24 plants had some sort of job action. The Waterloo workers’ moods remained upbeat throughout, Wilson added.
The national union had voted in September by a 92 percent majority to reject Hostess’ “last/best/final” offer for contract concessions. Wilson said those terms stated employees would have to take a pay cut of 8 percent and would be required to pay all of their medical insurance premiums.
Waterloo workers voted the proposal down nearly unanimously.
‘Rapid response’ set for Tuesday
A community rapid-response team has organized a meeting for displaced Hostess workers from 9 to 11 a.m. Tuesday in Tama Hall at Hawkeye Community College, 1501 E. Orange Road, Waterloo.
Invited organizations are Operation Threshold, Hawkeye Community College, Cedar Valley IowaWORKS, Consumer Credit Counseling, Iowa Department of Human Services, Iowa Vocational Rehabilitation Services, Iowa Workforce Development, Northeast Iowa Food Bank and the Educational Opportunities Center of the University of Northern Iowa.
Among the topics to be addressed will include unemployment insurance, job searches, maintaining a credit rating, food, utility assistance and area educational opportunities.
Anyone who can’t attend can call Jeanie Wright, Cedar Valley IowaWORKS director, at 291-2705, ext. 281.
Organizers likely will talk to area companies about holding a job fair for displaced workers, Wright said.
Fortunately, there likely are ample opportunities for workers to find other suitable positions locally, said Steve Dust, CEO of the Greater Cedar Valley Alliance & Chamber.
“Kind of the common theme through most of it (the period of recent closures) is a very strong local economy that is being impacted by external factors we couldn't affect,” he said. “If there’s a silver lining, it is our regional economy continues to be very strong and thriving. We still have very strong manufacturing and technology sectors that are hiring.”
Dust added that the bakery plant likely wouldn't be idle for long.
“This is valuable brand that somebody will want to buy and own,” he said. “We were very fortunate we still had an operating bakery that continued to add value, so we do have the opportunity to market to a new owner that this was an efficient operation to continue in some form.”
If not as a bakery, then some other use, he said.
“I think the plant site is a key site for our Waterloo’s redevelopment planning, so there may be some reuse opportunities there pretty quickly,” Dust said. “We don’t know what the process will be to reacquire that property. I don’t think we look for that property to sit idly very long.”