Decision to Close N.C. MillerCoors Brewery Draws Scrutiny

At a U.S. Senate subcommittee hearing Tuesday, Dec. 8, concerns were raised about the recent decision by MillerCoors to close its Eden, N.C., brewery by the end of 2016.

The hearing by the Senate Subcommittee on Antitrust and Consumer Rights examined the proposed merger between AB InBev (Euronext: ABI) and SABMiller (LSE: SAB) and the related proposal to sell SABMiller’s interest in the MillerCoors joint venture to Molson Coors.

The decision to close the Eden brewery, which would eliminate roughly 10 percent of MillerCoors’ total production capacity and destroy about 450 Teamster jobs, was announced on Sept. 14, 2015, just two days before merger talks between AB InBev and SABMiller became public.

“The announcement came as a shock to us. MillerCoors never mentioned the possibility of a plant closure during contract negotiations for a new three-year contract that was ratified in February 2015,” said David Laughton, Director of the Teamsters Brewery and Soft Drink Conference, which represents more than 1,300 MillerCoors brewery workers.

The Eden brewery won the MillerCoors “Brewery of the Year” award three out of the last five years and was awarded the American Manufacturing Excellence (AME) award in 2013. Eden is one of the most modern and efficient breweries in the MillerCoors system.

In testimony before the Senate subcommittee, Diana Moss, President of the American Antitrust Institute, cautioned the planned closure of the Eden brewing facility raises “fundamental questions about strategic intent.”

“An announcement that capacity will be withdrawn from the market in close proximity to the AB InBev-SABMiller merger negotiations could be viewed as a merger-related, anticompetitive reduction in capacity. This kind of ‘gun jumping’ before the DOJ weighs in on the proposed transaction should be carefully scrutinized,” Moss said.

Mark Hunter, CEO of Molson Coors, claimed in his opening remarks that “nothing changes for our consumers, customers, distributors or our communities as a result of our purchase of SABMiller’s ownership interest in MillerCoors.”

“That is not true in my community,” said Vernon Gammon, Secretary-Treasurer of Teamsters Local 391 in Greensboro, N.C., which represents 450 workers at the Eden facility.

Gammon, who worked in the Eden brewery when it first opened in 1978, traveled from North Carolina to Washington, D.C. to attend the hearing.

“I believe North Carolina customers will shoulder the cost of this short-sighted decision and the ripple effect on local businesses will be crippling. Paying the highest price, of course, will be the dedicated workers and their families who will be kicked to the curb after years of sacrifice and hard work that built MillerCoors into the industry leader it is today,” Gammon said.

North Carolina Senator Thom Tillis, who serves on the subcommittee, focused his remarks and questions on the subject of the Eden closure. He noted that the closing would eliminate more than 500 jobs at the brewery alone and would have a significant economic impact on the state. He submitted into the official record two letters he received about the Eden brewery.

The first letter, from North Carolina Senate Leader Phil Berger and Representative Bert Jones, was signed by 113 state lawmakers from both parties, calling for an investigation into MillerCoors’ decision to close the plant. The second letter, from North Carolina Governor Pat McCrory, expressed concern about the planned closure, and urged Sen. Tillis to seek answers about the decision at the hearing.

“It is not too late for MillerCoors to change course,” said Jim Hoffa, Teamsters General President. “We call on MillerCoors to work with us and with officials from North Carolina to save good jobs and keep this state-of-the-art brewery operating.”

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