Some of the hundreds of workers who lost their jobs last fall when the Merita bread bakery in Rocky Mount closed may soon return to work now that the bakery is poised for new ownership.
Georgia-based Flowers Foods, a bread and packaged bakery foods company, received federal regulatory approval for its offer to acquire several former Hostess brands and bakeries July 8, including the Rocky Mount plant. Though no other obstacles stand in the way of Flowers owning five bread brands, 38 depots and 20 bakeries, “it is a significant transaction” that will take several weeks to complete, said Keith Hancock, spokesman for Flowers Foods.
When Hostess closed the Rocky Mount plant in late November, 286 employees lost their jobs. The plant, on North Church Street on the northern edge of town, has been vacant since then. The unemployment rate for Rocky Mount in April was 13.1 percent, 4.2 percentage points higher than the statewide rate of 8.9 percent, according to the Bureau of Labor Statistics.
John Gessaman, President of Carolians Gateway Partnership, an industrial recruitment agency for developing Nash and Edgecombe counties, hopes that once Flowers officially acquires the Merita plant it will not take long for the bakery to resume operations and put people to work.
“The building is in good condition, it has been recently used, and there is some demand for baked goods,” he said. “There are a number of long time employees from that facility still in the area who are well suited for baking.”
As the transaction is still being finalized, Hancock said Flowers would not comment on if it hopes to make changes or upgrades to the brands and bakeries or what workers the company intends to hire.
Johnny Thomas, who worked at the plant nine years and was a member of the local union, said he began taking classes in January to be a surgical technician. Thomas said he worries for those former co-workers who can’t go back to school and hopes that Flowers hires them.
“A lot of these people who had been working there 20, 30, 40 years don’t have the education to go somewhere and do something to make the same money they were making there,” he said. “We are the people with the experience who can get the bakery going quicker than the people they can bring in there.”
Rocky union relationship
Before it declared bankruptcy, Hostess attempted to sell the Merita brand and bakery to Flowers, but the company would not accept the offer because it included the unionized workers, said Thomas. Companies who acquire these brands and assets have more freedom post-bankruptcy.
Hostess Brands was once powered by 18,500 workers, nearly 15,000 of whom were represented by unions. The company’s largest union, the Teamsters, had agreed to a new labor contract following a contentious bankruptcy trial in November 2012. But the second-largest union, the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, launched a strike after the company imposed new labor terms on the union’s members. When the union’s national leadership called for a worker’s strike in November, around 100 of the 286 Rocky Mount employees participated, said David Hoffman, the former Business Officer of the local 503 union, which included the Rocky Mount Merita employees. Hostess closed its doors three days after the strike began.
“I recommended that we strike because the company had no future and they had no plans for us,” Hoffman said.
Hoffman’s local 503 union included 120 of the approximately 150 bakers working in the facility. Truck drivers and office workers had separate unions.
Many of the former Merita employees still need work, and it would be in the interest of Flowers to hire them, Hoffman said.
“They are going to need bread mixers and people with experience. Those people work hard. People don’t realize how hard they work in the baking business and a lot of them don’t know anything but the baking business,” he said.
Flowers Foods is set to acquire the Rocky Mount plant as part of a “stalking-horse bid” it made on a package of Hostess assets in January. Stalking-horse bids are initial bids on a bankrupt company’s assets from an interested buyer chosen by the bankrupt company; these bids are intended to set a floor price for auction. Flowers offered $360 million for the bread brands Merita, Wonder, Nature’s Pride, Home Pride and Butternut; 38 distribution depots; and 20 bakeries, including the former Merita bread plant in Rocky Mount.
Because no other companies submitted bids above Flowers’ $360 million package, the brands and plants did not go up for auction. “The bankruptcy court reviewed and approved our offer in March; that started the federal regulatory review,” Hancock said.
Some companies have completed the acquisition process and are already re-introducing popular Hostess brands. The original Hostess Brands sold the majority of its cake brands, including Ho Hos, Ding Dongs and Twinkies to Apollo Global Management and Metropoulos & Co. for combined offer of $410 million. The popular Twinkies brand is scheduled to return to grocery and convenience stores Monday after an eight-month hiatus.