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Stroh Will Shut Van Nuys Plant, 390 to Lose Jobs : Brewing: Intense competition within the beer industry and a declining share of the Western market helped force the closure.

December 21, 1989|JAMES F. PELTZ | TIMES STAFF WRITER

Stroh Brewery Co., citing its lagging beer sales in the West, said Wednesday that it plans to close its Van Nuys brewery early next year and lay off the plant's 390 workers.

The plant, capable of brewing 2.9 million barrels of beer annually, lately has been operating at only half of capacity, said Lacey Logan, a spokeswoman at Stroh's headquarters in Detroit.

She said "very intense competition within the brewing industry and declining market share for Stroh in the West" made the closure necessary. Stroh is the nation's third-largest brewer.

Bottling at the plant will end Feb. 16, and the facility will be closed by March 2, she said. Severance pay for the brewery's 300 hourly workers will be negotiated with Teamster Local 896, and severance for its 90 salaried personnel will be based on years of service, Logan said.

The plant, built by Jos. Schlitz Co. in 1954, was acquired by closely held Stroh in 1982 when it purchased Schlitz for about $500 million. The plant currently bottles such beers as Stroh's, Old Milwaukee, Schaefer and various Schlitz brands. It also bottles Stroh's natural juice sparkler and White Mountain Cooler wine cooler.

Logan said Stroh announced its decision just before Christmas because the Van Nuys workers had heard rumors about a possible shutdown. "Employees wanted to know their fate as soon as possible, before Christmas," she said.

Until this week, it appeared Stroh was about to be purchased by Adolph Coors Co., the fourth-biggest brewer, for $425 million under a tentative agreement announced Sept. 25. But the companies failed to reach a definitive merger pact before a deadline of last Friday that was set when they signed a letter of intent on the proposed deal.

Negotiations between the companies are expected to continue, but the expiration of the agreement also enables Stroh to hold merger talks with other companies.

Stroh also tried to sell the plant to Coors, based in Golden, Colo., and other brewers, but "to date no other brewery has expressed an interest in buying the facility," she said.

Stroh currently has about 11% of the U.S. beer market, compared to 41% for industry leader Anheuser-Busch Cos. (which also has a brewery in Van Nuys) and 21% for runner-up Miller Brewing Co., a unit of Philip Morris Cos., according to Beer Marketer's Insights, an industry newsletter in West Nyack, N.Y.

But Stroh has been under pressure to cut costs in the face of slowing sales and excess capacity, said Benj Steinman, the newsletter's associate publisher. He said Stroh overall will sell 18 million to 19 million barrels of beer and other beverages this year, well below its 25.7-million-barrel capacity.

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