Archive for Sunday, February 18, 2001

Guys Foods halts production

Competition from Frito Lay chips away at profit potential

February 18, 2001

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— Production at Guy's Foods has stopped after the snack food company apparently ran out of raw materials and money to pay employees, who didn't know when or if they would return to work.

Guy's workers were told Friday to call after 2 p.m. Monday to find out if they should return on Tuesday. The plant apparently ran out of materials midweek and stopped production Thursday.

"They told us they weren't closing it down but were waiting for funding so they can bring people back," said Dan Offield, president of United Food and Commercial Workers Local 211, which represents the plant's hourly employees.

"Basically, they don't have any funding for payroll, so they're not bringing anyone in," Offield said.

The employees were not told by their supervisors whether or when the plant would reopen, Offield said.

Guy's officials said they could not comment on the situation.

"I can confirm the plant is not operating," said human resources director Gary Crutcher. "Anything beyond that would be pure speculation."

Guy's makes potato chips, pretzels, snack nuts, tortilla chips, ready-to-eat popcorn and corn chips. Like many regional manufacturers of salty snack foods, Guy's has faced overwhelming competition from industry giant Frito-Lay Inc.

Family Snacks Inc., which operates Guy's Foods, filed for Chapter 11 bankruptcy reorganization in February 2000, and was sold to General Products and Services of Fort Wayne, Ind.

Guy's at one time employed as many as 1,000 workers, making it one of Liberty's biggest employers. Since its bankruptcy filing, the company's work force of assembly line workers, route drivers and warehouse employees in several states has been reduced to an estimated 600.

When it filed for bankruptcy, Guy's said it had lost $5.75 million during the previous 16 months and was losing $600,000 a month.

Ron Hirasawa, president of General Products and Services, quickly moved to overhaul Guy's Foods' manufacturing and distribution operations by reducing payroll, upgrading the plant's machinery and reorganizing much of the plant's work flow.

But by late last year, Guy's had run into cash flow problems again and Hirasawa left the helm, supposedly to secure $3 million to $5 million in equity financing to keep the company afloat. Hirasawa was replaced by a management consultant, Gerald Bogner.

Bogner, who resigned last week, could not be reached for comment, and it was unclear who was in charge of the company.

Offield said workers were told Guy's was negotiating a sale of the company, "but they wouldn't disclose who they were negotiating with."

Guy's Foods was founded in 1937 by Guy Caldwell and his wife, Frances Caldwell, who began by roasting and selling peanuts in a makeshift cooker in a small storeroom in Kansas City. Borden Inc. acquired Guy's in 1979 and sold it in 1994 to Victor R. Sabatino, a veteran of the snack food industry, and several other executives.

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