Nearly 300 Hostess Brands workers in the Sacramento region have been warned that they may be laid off as early as next month as the maker of Twinkies struggles to emerge from its second round in bankruptcy court.
Notices have gone out to all 18,500 Hostess employees nationwide, company spokesman Eric Halvorson said Tuesday in an email. The total includes 1,850 jobs in California or 10 percent of the company's workforce.
In Sacramento, Hostess employs 226 workers at a bakery and a total of 39 at two distribution centers and a retail store. The company also has 20 workers in Rancho Cordova, 12 in Woodland and eight in Auburn.
The notices were issued in May to comply with the federal Worker Adjustment and Retraining Notification Act, which requires companies to give workers two months' notice of a major layoff. The earliest that layoffs could happen at Hostess is July 3, although Halvorson said that date merely reflects the notice requirement and is not tied to any particular deadline.
The action reflects the dire economic troubles facing Hostess, maker of Wonder bread and Twinkies, Ding Dongs, Ho Hos and other popular snack cakes. Founded in 1927, the privately held company is based in Irving, Texas.
Following a history of growth, rising labor and operational costs forced Hostess to seek bankruptcy protection in 2004. The company emerged with a restructuring plan in 2009 but was forced to seek Chapter 11 protection again last January.
Hostess is fighting in bankruptcy court in New York to terminate its labor contracts with unions in an effort to cut costs. According to court documents, the company is saddled with $860 million in debt. Officials want to cut pension benefits and relax "inflexible" work rules in its collective bargaining agreements.
Eighty-three percent of Hostess workers are represented by unions. Nearly 92 percent of those workers belong to the Teamsters or the Bakery, Confectionary, Tobacco Workers & Grain Millers International Union.
Last month, a bankruptcy judge said Hostess could reject its agreements with the bakers' union but ordered the company to abide by its contract with the Teamsters. Officials with both unions could not be reached for comment Tuesday. Meanwhile, the company has gone back to court for permission to drop contracts with 10 smaller unions.
Hostess is running low on options to save the company. Its creditors have turned down recent proposals by investors to buy the business, saying the bids were too low in light of the company's debt. As a result, the company is trying to negotiate cost savings with the Teamsters.
Halvorson said the July 3 effective date for the WARN notices is not tied to any timeline for bankruptcy proceedings.
"The notices were sent to alert employees that a sale or wind down of the company is possible in the future," he said in an email. "However, our goal is still to emerge from bankruptcy as a growing company with a strong future."