Brewery gets hopped up with $430,000 of your money

With only Ward 6 Councillor Frank Manzo and his Ward 4 counterpart Lou Turco opposed, City Council voted last night to give up to $430,000 to ailing Northern Breweries.

The company, which traces its history in Sault Ste. Marie back to 1899, owes exactly that amount in back taxes on its local plant, but the handout will be funneled through the Sault Ste. Marie Economic Development Corp. because Ontario municipalities aren't allowed to write off tax arrears.

At least, they can't do that until a municipal tax sale of the property has been attempted.

Northern Breweries also owes $750,000 in back taxes on its Sudbury operation. That city recently tried a tax sale but no prospective purchasers could be found. Here in the Sault, a municipal tax sale can't legally be held until next year.

New owner

Bill Sharpe, who bought Hamilton's Heineken Brewery in 1992 and introduced the Lakeport label to Ontario, has recently become the new owner of Northern Breweries.

Sharpe was in the Council Chambers last night to ask for the money to retain and and expand Northern Breweries' Sault Ste. Marie operations.

He says he wants to invest $1 million in the local plant, including about $300,000 for a new labelling machine and other equipment upgrades, as well as $600,000 for exterior renovations.

Sharpe would like to see a waterfront Brewery District develop around the back end of the Northern Breweries site, with restaurants and shops.

Bruce Strapp backs company's request

Sharpe told councillors last night that it's critical that the brewery have a clean balance sheet to begin its turnaround.

His money request was supported by Bruce Strapp, chief executive officer of the Sault Ste. Marie Economic Development Corp. (EDC).

Help from the City is also being sought from the Ontario Government, and $170,000 of the money provided by the City last night would be provided only if the provincial money is not forthcoming.

The $260,000 that will be made available immediately will be funneled through the EDC.

Previous cutbacks

This isn't the first time in its lengthy history that Northern Breweries has found itself in a tight scrape.

The company has previously had to close operations in Timmins and Thunder Bay.

"In the 1990s, the Ontario Government lifted the monopoly that Northern had on draft beer in Ontario communities north of the French River, and more recently the permission of Brewers Retail to open on Sundays has eroded much of Northern Breweries' market share," says Strapp.

"As a result, Northern Breweries has come to realize major financial problems in recent years."

Part-time staff

The brewer's deteriorating fiscal fitness has also forced it reduce its remaining production facilities in Sudbury and the Sault to part-time operations, with employees being topped up to full-time levels by unemployment contributions.

The City of Sudbury recently agreed to forgive Northern Breweries' outstanding tax bill of $750,000 based on Sharpe's commitment to create some 80 jobs within four years.

He's planning to close the Sudbury plant for approximately one year to renovate and modernize it to produce canned and bottled beer and non-alcoholic beer, mostly for Southern Ontario.

The Sudbury facility will also bottle and package beer for other companies, producing brands like President's Choice.

Sault fills the gap

The Sault Ste. Marie brewery will be ramped up to fill the company's production needs while the Sudbury plant is closed.

From the 14 part-time jobs it currently offers, the Sault operation is expected to grow to more than 40 jobs over the next four years with the addition of a second shift.

"Once the Sudbury operation comes back online," Strapp says, "Mr. Sharpe will convert the Sault Ste. Marie facility into brewing Northern and specialty labels for the Northern Ontario and U.S. marketplace."

After last night's decision, the EDC is now expected to enter into an agreement for expansion of the Sault plant that will ensure back taxes are paid.

Next year's pending tax sale will therefore be cancelled.

However, Sharpe conceded he currently does not have a business plan for the turnaround.

"It's appreciated," Sharpe told councillors last night. "I won't let you down."

Voting for the handout

James Caicco Pat Mick Jody Curran David Celetti Terry Sheehan Steve Butland Neil DelBianco Debbie Amaroso John Rowswell

Voting against

Frank Manzo Lou Turco

Absent

Jason Collins Bryan Hayes