Brewer to temporarily lay off 25% of workers while canning's future is
decided
Thursday, January 15, 2009
By Len Boselovic, Pittsburgh Post-Gazette

Iron City Brewing said yesterday it will temporarily move production
of Iron City and IC Light cans outside Pittsburgh, effective March 1,
resulting in the layoff of 25 percent or more of its work force.

President Tim Hickman said he hopes to finalize production
arrangements in the next few weeks with a brewery that will produce
the canned beer under contract while Iron City decides whether to fix
or replace the canning line. Iron City will continue producing bottles
and kegs at the Lawrenceville plant.

"We're still committed to these products. We're still committed to
Pittsburgh," said Mr. Hickman.

He said resolving the production problems will secure the brewery's
long-term future in Pittsburgh. But Iron City risks the same type of
protest that Rolling Rock drinkers mounted in 2006, when Anheuser-
Busch purchased the iconic brand for $82 million and moved production
from Latrobe to Newark, N.J.

One union worker who asked not to be identified wasn't happy about the
Iron City decision.

"If it's not brewed and bottled in Pittsburgh by Pittsburghers, it's
not Iron City Beer," he said.

Mr. Hickman emphasized the beer in the cans will be the same and cost
the same as if it were produced in Pittsburgh. "It's our recipe. It's
our brew master. It's the same quality product," he said at a news
conference.

He estimated that 25 to 30 of the brewery's 81 workers will be laid
off when can production is halted. Workers will alternate weeks on and
weeks off, Mr. Hickman said. "Our goal is to have an improved, more
efficient can line within a 30- to 90-day time frame," he said.

Union officials have heard rumors about moving production in recent
weeks, speculatiing on High Falls Brewery in Rochester, N.Y. When
asked about those rumors last week, Mr. Hickman said: "We're here.
We're plugging away."

Yesterday, he said getting High Falls to temporarily produce the cans
was an option.

Mr. Hickman said the canning line has caused serious production
problems over the last 60 days, issues that weren't anticipated when
he took over following the brewery's emergence from bankruptcy in
2007.

"It starts. It stops. That impacts us financially," he said.

Despite that, sales of Iron City have increased 20 percent over year-
ago levels and sales of Augustiner Lager have more than tripled, he
said.

"We've done all the things we need to do to become cost competitive,"
Mr. Hickman said.

A new canning line would cost about $1 million. Mr. Hickman said
whether the equipment is repaired or replaced, the brewery will be
able to finance it through a credit line it negotiated before the
onset of the credit crisis that has left many credit-worthy businesses
unable to borrow. He declined to identify the financial institution.