Halethorpe brewery may close Executives of Stroh, plant's owner, may tell workers today

Purchased in July

But facility may have a future as a contract brewer

October 17, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

Three months after Stroh Brewing Co. bought G. Heileman Brewing Co. Inc., workers expect to be told today that the Halethorpe brewery in Baltimore County will be closed.

Executives of Detroit-based Stroh, who are scheduled to be at the plant today, did not return calls Tuesday and yesterday.

Stroh, the nation's fourth largest brewery, completed the acquisition in July.

A closing of the 36-year-old brewery would be no surprise to many workers. "To a person, we're convinced that's what they're here to do," said Charles Stansburge, secretary treasurer of Teamsters Local 570, which represents about 330 of the brewery's roughly 400 workers.

The products brewed at Heileman's Halethorpe plant include Schmidt's, Blatz, Black Label and Colt 45 malt liquor. The company also makes National Bohemian, or "Natty Boh," which long ago became synonymous with Baltimore.

Workers have concluded that either a shutdown or a severe downsizing was imminent from an assortment of signs: The combined company has too much plant space; Stroh owns a big brewery in Pennsylvania; two managers have accepted positions elsewhere with the parent company; and plant managers have given workers permission to look for jobs elsewhere. In addition, they said, spare parts are running low and equipment is disappearing.

"It's like there are grim faces, but others that are not grim because you really don't know," said George Dudok, a 61-year-old worker. "The slogan has become, 'I hope they don't. I hope they don't.' "

Company officials insisted last week that any conclusion was premature. "No decision has been made," said Lacy Logan, a Stroh spokeswoman.

Whatever happens, this isn't the first time the workers in the Halethorpe plant have had to assess their prospects. Through mergers, a bankruptcy and leveraged buyouts, the brewery has changed hands six times since 1975.

Its owners included Carling O'Keefe Ltd.; Carling National Breweries and G. Heileman Brewing. Heileman was taken over for $1.26 billion by Australian investor Alan Bond and then it filed for Chapter 11 protection. The Dallas investment firm of Hicks, Muse & Co. bought the company from creditor banks. Stroh bought Heileman from Hicks Muse.

Taking it in stride

"This is the sixth time we've been through this," said one %J 54-year-old worker, who declined to give his name as he sipped a "Natty Boh" at the Landsdowne Inn, a bar about a half-mile from the brewery. "We've learned to take it in stride."

Jerry Steinman, the publisher of Beer Marketer's Insights, said Bond and Hicks Muse both overpaid for the company. He said their takeovers probably contributed to the Halethorpe brewery's precarious position.

Before the 1987 purchase, Heileman was in a tough fight for market share with industry giants such as Anheuser Busch. "When Alan Bond came along and said we're going to pay all this money, the stockholders said, 'We're rich!'," Steinman said. "But there were fewer resources to fight the bigger guys with all the interest and the debt that Bond had."

During the Bond years, Heileman's market share dropped from 8.7 percent of the U.S. market to less than 6 percent.

Industry shrinks

Even without management missteps, it would have been tough for the Halethorpe brewery. Amid industry consolidation, the building of larger breweries and the growth of Anheuser Busch, the number of older, major breweries nationwide fell from 421 in 1947 to 29 in 1995, according to R.S. Weinberg Associates, a St. Louis-based research firm that follows the beer industry.

Baltimore's casualties have included breweries owned by tTC American, National, Gunther and Globe brands. "Heileman's Baltimore brewery has had a a lot more fortune than a lot of breweries," Steinman said.

That fortune may have run out, some workers fear. When Stroh acquired Heileman, it doubled its number of breweries to 10 and it increased its brewing capacity from 15.4 million barrels a year to about 28.6 million barrels. The company has said that it might have too much capacity. Stroh has already shut down facilities in Perry, Ga. and San Antonio.

"Clearly there will be more closures," said Skip Carpenter, a New York-based analyst with Donaldson, Lufkin and Jenrette.

The Halethorpe brewery, with a capacity of 2.3 million barrels, was Heileman's only major brewery east of Wisconsin. But Stroh has larger breweries in Lehigh Valley, Pa. and Winston-Salem, N.C.

"Those two breweries could influence the value of the Baltimore brewery," said Robert Weinberg, the president of R.S. Weinberg Associates.

May have a future

But Weinberg said the Halethorpe plant might stay open. Stroh is the nation's largest contract brewer, or brewer that produces beer for other businesses, in a growing industry. "If we were talking about this exact situation 10 years ago, I would say odds are that the brewery is gone," he said. "But this is a completely different ball game."

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