IBC Slashing 1,400 Jobs
Interstate Bakeries Corp., the bankrupt maker of Hostess Twinkies and Wonder Bread, will close a bakery in Massachusetts and consolidate routes and discount stores in the Northeast, cutting about 1,400 jobs to counter high costs and declining revenue.
Reducing operations in the region will cost about $21.5 million, the Kansas City, Mo., company said in a statement.
Interstate Bakeries, which has operations in Salt Lake City and Ogden, has announced plans to eliminate about 3,000 jobs, or 10% of its work force, as part of a plan to trim off underperforming units and pare costs. The company filed to restructure under Chapter 11 bankruptcy protection in September, citing rising health care, pension and other costs and reduced demand for its carbohydrate-rich breads and pastries.
"They want to run the same or nearly the same amount of revenue out of a much smaller bakery infrastructure," said Duncan Yin, an analyst at CRT Capital Group LLC in Stamford, Conn. He has a "buy" rating on Interstate Bakeries and does not own any of the company's shares.
Interstate Bakeries expects to close the New Bedford facility and make the other changes by mid-August, subject to bankruptcy court approval. Production at the bakery will move to factories in Jamaica, N.Y.; Philadelphia; and Biddeford, Maine, said Jason Booth of Sitrick & Co., which handles public relations for the company.
Interstate Bakeries said earlier this month it will close a bakery in Charlotte and eliminate 950 jobs. Last month, the company announced 600 job cuts in Florida and Georgia and the closure of a Miami bakery. The company had employed 32,000.
The company also said some of the more than 40 pension plans to which it contributes have filed claims in its bankruptcy case. They allege Interstate Bakeries made partial withdrawals, which the company disputes.