Posted on: Saturday, February 12, 2005

Molson Coors to shutter plant

By Sandy Shore
Associated Press

DENVER — Only days after completing a merger that created the world's fifth biggest brewer, Molson Coors Brewing Co. said yesterday it plans to close a Tennessee plant in early 2007 in a cost-cutting move at a facility that employs 410 people.

The Memphis plant, which has a brewing capacity of 3 million barrels a year, produces Coors Light for export, plus Zima XXX, Keystone Light and Blue Moon. It is one of 19 breweries owned by Molson Coors which employs about 15,000 people.

"The beer business today is incredibly competitive and, unfortunately, tough decisions like this one must be made to compete and grow," CEO Leo Kiely said in a prepared statement.

A Teamsters official, Nate Jackson, said company officials will meet with employees to talk about help that may be available.

"Any time you're notified that families are about to lose their jobs because of a plant closing, it's a shock," he said. Memphis economic development officials did not return a call seeking comment.

Molson Coors said the closure is part of the overall plan to save $175 million by combining Golden-based Adolph Coors Co. and Canada's Molson Inc.

The deal closed Wednesday, but company officials had few details on how the savings would be achieved during a conference call with analysts, leaving some skeptical of how many efficiencies would be achieved.

"It was surprisingly quick," Benj Steinman, editor of Beer Marketer's Insight Inc., said of the closure. "It just took two days after the merger became official and it almost suggests they want to communicate quickly that they really are going to deliver these synergies."

Closing the Memphis brewery is expected to save $32 million to $35 million a year beginning in 2007, the company said.

Coors said last year it will spend up to $190 million to build brewing operations at its Elkton, Va., facility to cut transportation costs and improve efficiency. The brewery will produce up to 7 million barrels a year, and is expected to be completed by early 2007.

Steinman said that made the Memphis plant "an easy opportunity" for savings.

Molson Coors said it would provide assistance to the laid-off employees in the form of outplacement services, financial planning, tuition reimbursement and retirement planning services.

Molson Coors stock climbed $1.45, or 2 percent, to close at $73.10 on the New York Stock Exchange yesterday.