Dive Brief:
- Hostess has made a massive turnaround from bankruptcy to its announced return to the stock market over the past few years, but employees haven't always fared as well.
- The company overhauled its production and distribution with automation and direct-to-warehouse delivery, which significantly cut its labor needs. Employees who lost their jobs in the interim often didn't have a job to return to when the company bounced back.
- For employees who were able to get their jobs back, the baker's union, which represents about 400 Hostess employees, has been able to negotiate workers' original pay, but not their pensions.
Dive Insight:
Manufacturing is a sector at risk for employees, whose jobs are threatened by technology that could potentially replace them—but save the company money on salary and benefits over time. Food and beverage manufacturing is no different. As the Internet of Things, automation and other modern technological advances make their way into these factories, employees may have the same concerns.
The impact of foreign trade and the relative affordability of sending certain jobs and operations overseas can also threaten workers' job stability. In January, Mondelez announced a plan to shut down a bakery in Chicago to cut down on inefficiencies, while sending new state-of-the-art processing lines to the Salinas, Mexico plant.
An influx of import activity can harm sales and profits for domestic manufacturers' sales, which can then lead to plant closures and job cuts. General Mills, which has had recent sales struggles, announced last week changes at several plants worldwide, which total a 10% reduction in the company's workforce since spring 2014.
Some experts argue that a tripling in imports of bread and baked goods contributed to Hostess' demise, from $1 billion in 2000 to $3 billion in 2012, according to Census Department data. Others say it was the hedge funds controlling Hostess, which may have been more focused on trying to squeeze what they could out of labor. Still others say union workers refused to take wage and benefit cuts that could have retained about 18,500 jobs and saved the company.