Lakeport Brewery in HamiltonPhotographer: Glenn Lowson
It's last call for Hamilton, where beer has been brewed for 170 years. The city's legacy as one of Canada's oldest beer makers is about to run dry unless a last-ditch offer can salvage its only remaining brewery.
As beer giant Labatt Brewing Co. Ltd. prepares to shut the Lakeport plant it bought three years ago, a small Calgary company is rushing to finalize a bid it hopes could save beer making in Steeltown - before the building is stripped of its parts and rendered unsuitable for brewing.
Labatt bought the Lakeport brewery three years ago. But the company is moving production of the discount Lakeport brand to a bigger plant in London, Ont., where it says it can churn out beer at a lower cost on newer equipment.
Eyeing an opportunity to expand its own operations, Calgary-based Minhas Creek Craft Brewing Co., maker of the Boxer brand of discount suds, wants to move in and is expected to put in an offer by Wednesday for the operation.
But Minhas has one big problem: As Labatt carts out the building's equipment, Minhas has no idea what's left inside.
Minhas is bidding either for a working brewery that needs a few pieces of key equipment installed - or a shell of a building that has been stripped down to the electrical wiring. Labatt isn't saying what machinery and equipment it is taking out, only that it is removing anything usable.
"That concerns us. If they start to pull out equipment right away, they may be trying to make sure that no deal is possible," said Ravinder Minhas, who founded Minhas Creek with his sister, Ranjit Minhas. The company uses a brewery in Wisconsin, but wants a facility in Ontario.
But the last thing Labatt wants is another brewer to set up shop at the facility. Labatt isn't required to sell the brewery, merely to vacate the plant. It leases the building from the Hamilton Port Authority, but owns the equipment inside.
To preserve jobs in the city, a group led by city council and the local Teamsters is urging Labatt not to gut the operation, so a new small beer maker can move in and keep about 140 brewers working.
"The equipment is not formally for sale, however we are hoping they would entertain the offer for the good of Hamilton and beer drinkers," Mr. Minhas said.
So far, Labatt is refusing. One of the primary benefits of the Lakeport purchase in 2007 for $201-million was that it eliminated a discount rival, giving Labatt 40 per cent of the discount beer market in Ontario.
"We've been crystal clear from the start that we are using all the equipment from the brewery," said Jeff Ryan, director of corporate affairs for Labatt. He wouldn't discuss specifics, but suggested that meant everything the brewer can use elsewhere.
Mr. Minhas said that if the company goes beyond removing tanks and canning equipment, and strips out pipes and wiring, it would be difficult for another brewer to start up.
Labatt, which has two years left on its lease, has started a search for a new tenant, but wants to sublet only to a company that is not in the brewing business. "We're open to other tenants... in other industries," Mr. Ryan said.
Minhas Creek is hoping its bid will entice Labatt on the grounds that it can save the company severance by keeping the employees working, while also taking over the remainder of the lease. It is also offering to pay market value for the equipment, provided the plant can be operational within four months.
Labatt's decision to move Lakeport production to London has angered Hamilton residents, including brewery employees and local bar owners who have talked about organizing a boycott of Labatt owner InBev SA. The Belgian company owns two dozen brands, including Labatt Blue.
Labatt was scheduled to close operations in Hamilton at the end of this month, but tempers flared when Labatt suddenly shut down the plant on Friday, ahead of schedule, and sent workers home.
Hamilton city councillor Bob Bratina is leading the push to find a new brewer, but is worried Labatt will make it impossible for the building to be used. He wanted Port Authority officials to oversee the dismantling, and was upset when Labatt started the process last Friday, two weeks early.
"I'm afraid they may go beyond the simple removal of their own equipment and do something by accident or otherwise to incapacitate renewal of the plant," Mr. Bratina said.
The Lakeport brewery was opened in 1947. Hamilton's beer-making legacy is older than Canada itself, dating back to the 1840s.