TORONTO - Labatt Breweries has announced plans to close its Lakeport Brewery facilities in Hamilton and lay off 143 workers, a move it says will help keep it competitive.
The company said Tuesday that all production of Lakeport beer will be shifted to Labatt's operations in London, Ont., effective April 30, while the availability of Lakeport products in stores will not be affected.
The decision comes as Labatt tries to boost its operating efficiency for the discount beer brand as other beer giants slash prices.
However, the brewery's closure also delivers another blow to the labour market in Hamilton, which has seen massive layoffs in some of its key industries.
"It is unfortunate that closing the Hamilton brewery is the only rational business decision available to us, however, we have determined that we will do everything we can for the employees," spokesman Charlie Angelakos said in a release.
"Canada's beer market is intensely competitive and we need to continually seek the lowest possible overall, and brewery-specific, production costs."
Lakeport was acquired by Labatt in 2007 as part of a $201.4-million takeover of the popular brand, which helped coin the phrase "buck-a-beer" because of its low price.
As the economic downturn played out, beer sales across the country tumbled, affecting all of the major brands.
In 2009, domestic beer sales tumbled 2.8 per cent over the previous year, according to the Brewers Association of Canada, an industry watcher. Sales fell even further in Lakeport's home province of Ontario, slipping five per cent on the year.
"Our data has shown over the years that people do buy slightly less beer during a recession," said association spokesman Andre Fortin.
"People tend to think of it as a recession-proof business, I'd qualify it more as recession resistant."
Labatt does not release sales data for Lakeport and representatives for the company were not immediately available to comment.
The job cuts will affect 99 hourly staff who are currently working, 22 hourly employees who are currently laid off, and 22 full-time, salaried staff in Hamilton.
The city has felt the squeeze in recent weeks after Siemens announced plans to lay off 550 workers over the next 18 months as it shutters a facility there. Local steel plants, like Stelco, have also faced massive job cuts over the past few years.
In February, Canada Bread Co. Ltd. (TSX:CBY) gave Hamilton some relief when it announced plans to open a new massive bakery facility in the city, creating up to 120 construction jobs and up to 300 jobs once the plant is completed next year.
Canada's beer industry has blossomed over the past decade with microbreweries sprouting across the country and stealing small shares of the market away from larger brands like Molson (TSX:TAP.A) and Labatt.
"They're mostly smaller breweries but it does speak to the competitiveness of the industry," Fortin said.
"They're in every region of the country so they affect overall national sales and provincial sales."
