"Exciting news" is how Iron City Brewing President Timothy Hickman described the decision to move production of Iron City and IC Light from Lawrenceville to an idled Latrobe brewery.
Former union leader Dave Kelly, who worked at Iron City for 34 years -- 32 years longer than Mr. Hickman has been there -- offered a more historical perspective on the move, expected for months by Iron City's tapped-out workers.
"Well, you finally did it," Mr. Kelly, who retired in October, said of Mr. Hickman.
"You managed to take a brewery that has been through the Industrial Revolution, the Civil War, two world wars, Korean War, Vietnam War and the Iraq war -- even the Great Depression -- [and] move it out of the city that has supported you since 1861."
Mr. Hickman, who has repeatedly affirmed his commitment to brewing in Pittsburgh, said yesterday the Lawrenceville brewery will brew its last batch June 22. After that, production of can, bottle and keg beer will be transferred to the former Latrobe Brewing plant, now owned by City Brewing of La Crosse, Wis., Mr. Hickman said. City Brewing is putting in a new canning line that will be complete in 90 to 150 days, he said.
"This is not a negative thing," he said. "We're moving 40 miles down the road. We don't see that the sales will be impacted."
Beer industry observers said Mr. Hickman is naive if he believes that. They pointed to the sales hit Anheuser-Busch took in Latrobe after purchasing the Rolling Rock label in 2006 and transferring production of the hometown beer to New Jersey.
"That is delusional," said Cris Hoel, a Pittsburgh attorney who specializes in the beverage industry. "They will have steep losses if history is any guide. ... They have some good wholesalers and they have their work cut out for them."
That yesterday morning's announcement confirmed rumors that have circulated for months didn't make it any easier to swallow for union workers, some of whom followed their fathers, grandfathers and great grandfathers into the brewery. They were angry that Mr. Hickman has not kept his commitment to Pittsburgh and contested his statement that he has worked with their leaders about preserving as many jobs of the Pittsburgh workers as possible.
"I feel let down by Tim Hickman, disappointed that me and my fellow co-workers are going to be out of a job," said Rich Malter, president of Local 144B at Iron City.
Mr. Malter said Iron City's president told him two weeks ago he was scouring the country for a canning line.
"Hickman reassured us this wasn't going to happen up until today's announcement. It makes it worse that we were lied to," Mr. Malter said. "He can call his beer whatever he wants, but if it's not made at the Lawrenceville plant, it's not going to be Iron City or IC Light."
The announcement caps what Mr. Hoel termed 20 years of mismanagement that has brought "one of the most glorious breweries in the United States to its knees."
Over those two decades, the brewery was operated by two convicted felons -- Australian tycoon Alan Bond and Pittsburgh businessman Michael Carlow -- before being brought out of bankruptcy by Joseph Piccirilli, whose family made its money in the trash collection business.
The Pittsburgh Water and Sewer Authority took the brewery into bankruptcy in 2005 over more than $2 million in unpaid bills. Mr. Hickman represents an investor group led by Connecticut businessman John N. Milne that reorganized Iron City in 2007. Mr. Milne was subsequently indicted on securities fraud charges.
When the investors pitched their plan to U.S. Bankruptcy Court Chief Judge M. Bruce McCullough in December 2006, they said they would invest more than $7 million, seek significant concessions from the union and maintain operations in Lawrenceville.
Union workers took a 15 percent pay cut, the PWSA agreed to forgive a minimum of $1.2 million in unpaid bills, and city, county and state officials provided grants and low-cost loans to the new owners.
Yesterday, Mr. Hickman said it would have cost $12 million to $15 million to add a new canning line and invest in new ventilation equipment, electrical systems and other infrastructure repairs needed at the Lawrenceville brewery. Those costs weren't foreseen when the owners looked over the plant two years ago despite "thorough due diligence with some very sharp engineers," he said.
Bob Barron, who has worked at Iron City for 29 years, said the brewery's January announcement that it was temporarily moving can production to High Falls Brewing in Rochester, N.Y., while it evaluated what to do with its canning line "was all a smokescreen."
"He had no intentions of doing anything to the can line or anything else at the brewery," Mr. Barron said.
Mr. Hickman said he talked with officials from the mayor's office and PWSA and said they understand that this was a business decision.
"We're here to honor any commitment we made to any government agency," Mr. Hickman said.
Iron City Brewing will maintain a minimal number of employees by keeping its headquarters at the Lawrenceville plant, which Mr. Hickman said is being marketed to real estate developers. A brew pub on the site is possible, Mr. Hickman said.
"There's a lot of things on the table. We don't have anything finalized as of today," he said.
Whether the small number of employees will comply with terms of the concessions and other assistance granted by the PWSA and other government agencies remains to be seen. Mr. Hoel questioned whether Mr. Milne's investment group's long-term plans for the Pittsburgh institution ever included making beer.
"It's become apparent this was a real estate deal all along and the city got snookered," he said. "It is the city ratepayers and taxpayers who are being taken for a ride."
Len Boselovic can be reached at firstname.lastname@example.org or 412-263-1941. First Published June 12, 2009 4:00 AM