Labatt Breweries left in limbo by sale

Company’s U.S. operations purchased by private equity firm

Tuesday, April 7th, 2009

The current economic climate may be to blame for an uncertain future for workers at Labatt breweries across Canada.

On Monday, Labatt’s parent company, Anheuser-Busch InBev, announced it had sold its U.S. operations.

Labatt " along with the Rochester-based beer High Falls " will form North American Breweries, under the private equity firm KPS Capital Partners.

As part of the deal, subject to approval by the U.S. Department of Justice, North American Breweries will have exclusive rights to produce and sell Labatt-brand beers in the U.S.

This means in three years Labatt’s breweries in Canada, including the historic plant in London, will not be able to export these products to the U.S.

“This loss in volume will have an impact on all brewery operations across Canada,” said Jeff Ryan, a spokesperson for Labatt Breweries of Canada.

Dave Bridger, plant chairman for the Service Employees International Union " which represents full-time workers at the London plant " said job cuts are a possibility nationwide.

“How [production] gets allocated will be [Labatt’s] call, so it may or may not mean some job loss, but everything will be on the table,” he said.

Bridger believes the current economic and trade climate in the U.S. will be partly responsible if the transaction is approved.

“There’s some protectionism going on there,” Bridger said.

However, Bridger is not highly concerned about the future of the London plant, which employs 383 people.

“I fully expect that although there might be a short-term dip in [production] here, I don’t see a significant hit in London,” Bridger said.

Bridger added he was not aware of any plans for production cuts this year.

Workers at the London plant signed a new seven and a half year contract last year, which Bridger said has a cost structure Labatt is happy with.

“There’s no indication there would be any concessionary talks. I expect they will honour the collective agreement we’ve got,” he said.

Labatt has closed several Canadian plants in the past five years, including plants in Toronto and New Westminster, B.C.

Ryan said the company hopes to replace lost volume with growth of their various existing brands, although he declined to comment further on future strategies.

In addition to Labatt brands such as Labatt Blue and Labatt 50 " which according to Ryan are popular in the U.S. " Labatt produces other brands such as Kokanee, Lakeport and Alexander Keith’s.

Labatt has six other plants across Canada, including breweries in Edmonton, Halifax, Hamilton, Montreal, St. John’s and Creston, B.C.

Lakeport, which Labatt acquired in 2007, is not affected by the deal and can still be exported to the U.S.

“There’s nothing saying [the company] can’t introduce a new product into the U.S.,” Bridger emphasized. “[But] it can’t have the Labatt name on it.”

The London plant currently employs a small number of students, Ryan said.

“Seasonally we go anywhere from probably 40 to 50 [student employees] on the low end up to over 100 [on the high end],” Bridger said, adding students also fill some temporary jobs there.

Officials at Anheuser-Busch InBev and KPS could not be reached for comment.

Share this article on:

Facebook | DiggDigg |

Copyright © 2008 The Gazette