By Ezra Johnson-Greenough
For the Oregon Beer Growler
In March, Portland’s Metalcraft Fabrication shut down after facing a federal lien, causing the company’s bank funds to be emptied, according to industry insiders. Owner Charlie Frye acknowledged the bank had closed accounts, but did not address this specifically when asked for comment.
The closure came as somewhat of a shock since Metalcraft was one of the greater success stories in Oregon’s craft beer industry. Co-owner Charlie Frye came from well-established manufacturer JV Northwest to found an innovative brewery-centric fabricator. Metalcraft reportedly made more than 1,000 tanks for businesses in 30 states and three countries in the last 10 years, including equipment for some of our state’s best breweries like Breakside Brewery and pFriem Family Brewers.
Many are left wondering how a company that was once praised by beer makers and business journals alike can suddenly close and see some of its relationships with clients go sour.
Charlie Frye and his then-wife Jen Baque opened Metalcraft in 2007, starting off welding furniture and building facade components before picking up work fixing tanks and equipment for breweries. By 2015, the business expanded by moving into a huge new warehouse to become one of the few U.S. fabricators that could make larger equipment — tanks more than a couple hundred barrels and brewhouses beyond 30 barrels. And just last year, Metalcraft teamed with Pelican Brewing Company to develop a new dry-hopping method. The resulting “Hopinator” received a rave review from brewmaster Darron Welch, who said Metalcraft “perfected a design that was exactly what we wanted. Not every fabricator would have been that patient.”
However, it wasn’t long after that when Metalcraft began scrambling to keep the doors open long enough to finish millions of dollars’ worth of projects.
“A number of factors contributed to Metalcraft’s demise,” said Frye in my original article breaking the closure for newschoolbeer.com, “the greatest one being several unforeseen challenges associated with our expansion.”
Metalcraft entered the brewery fabrication business at just the right time — before the big boom that would become the industry’s largest period of growth, post-2010. Growth was quick and used equipment became scarce, which led to longer lead times and down payments. Industry sources familiar with the matter indicated these upfront down payments ranged from 15-40 percent.
“The company got themselves into a cash crunch,” said Thad Fisco of Portland Kettle Works, another local fabricator that has offered to help finish Metalcraft’s work for clients. “[Metalcraft] ignored some basic fundamentals to maintain cash to finish deals. You begin to burn those deposits to finish projects that were contracted previously.” There are no rules against operating this way.
According to Fisco, this is “unfortunately not an uncommon occurrence in the manufacturing industry.”
The practice of taking on new jobs and even discounting them in a mad dash to use that money to finish past work that may not have even gotten underway “unintentionally turns into a Ponzi scheme.” Fisco says this is a critical issue for the industry overall and one that he expects could cause a few more fabricators to go bankrupt.
You might be wondering if this has anything to do with the unsustainable growth of the craft beer industry. Yes, a little. As brewers get bigger, and some more desperate to compete, they may plop down huge sums of money upfront without checking a fabricator’s creditworthiness.
Meanwhile there is mounting competition from China where fabricators routinely offer a cheaper but lower-quality product. Some American companies have even stooped to selling Chinese equipment and marketing it as U.S. made, according to Fisco. However, the larger the tanks, the higher the shipping costs, and that can decrease margins and any competitive advantage.
According to comments Frye made to me in March, he laid off 35 employees, which would’ve been a significant cut to the 50-60 people he reported would be hired by 2015. He also hinted at some financial mismanagement, saying “a business owner should always be aware that their finances are in order and those trusted to manage them are qualified to do so.”
Frye declined to answer additional questions, stating “I'm not prepared to give any more interviews at this time.” For now, then, it’s impossible to know the full story of what happened to Metalcraft. But its failure is bad for both the brewery fabrication business as well as brewers and should serve as a wakeup call to each.
When fabricators go bust, some brewers who have sunk large sums of money into equipment will have invested too much to recover. That may include some of Metalcraft’s clients. Bill Baburek of Infusion Brewing Company in Benson, Neb. is one of those affected by the closure. “They took $45,000 dollars in deposit money from us in late December,” Baburek said, “for a $60,000 tank order, and now we get nothing for it!”
“If another company the size of Metalcraft or bigger goes down, it’s going to be a big deal,” warned Fisco. “It starts to tear the fabric of the system that is in place ... people that are looking to buy right now should take a moment to check the credit of the people they are looking at doing business with. Find out what’s going on with the business before jumping in with both feet.”
Ninkasi’s in-house metal fabrication shop regularly produces artistic, elaborate steel pieces, including tap handles, conference tables and fire pits. Recently, they added a project to that list: a gate to Sierra Nevada’s North Carolina brewery/taproom. The gate serves as a grand entrance to Sierra Nevada’s new facility in Mills River, N.C. Ninkasi fabricators worked with 672 barley kernels, affixed by 13,444 nuts, as well as 540 studs around the perimeter. Photo courtesy of Ninkasi Brewing
By Anthony St. Clair
For the Oregon Beer Growler
While collaboration is nothing new in the craft beer industry, projects typically aren’t 3,000 pounds of steel that travel 2,663 miles — from the Willamette Valley’s Eugene, Oregon to the Blue Ridge Mountains of western North Carolina. However, when Chico, Calif.-based Sierra Nevada Brewing needed a “grand entrance” for its new East Coast brewery in Mills River, N.C. (10 miles south of the region’s urban center, Asheville), they turned to Eugene’s Ninkasi Brewing.
Spanning the width of the 20-foot drive leading to the 350,000-barrel brewery and 400-seat/23-handle taproom and restaurant at 100 Sierra Nevada Way, the gate evokes sheaves of barley with the same shaping as Sierra Nevada’s logo banner. The two members of Ninkasi’s in-house fabrication department, Jazz Khalsa (design and fabrication specialist) and Pat “Phatty Fab” Evans (metal fabricator), worked with 672 individual barley kernels, affixed by 13,444 nuts, as well as 540 studs around the perimeter. Evans built the project with no tape measure or blueprint.
Ninkasi co-founder Jamie Floyd met Sierra Nevada founder Ken Grossman at Beer Camp Across America. During a BCAA cross-country bus trip, Floyd and Grossman began talking metal. Conversation soon turned to Ninkasi’s in-house metal fabrication shop. With Ninkasi’s two-man team producing artistic, elaborate steel pieces — from tap handles to conference tables, bottle openers to fire pits — Grossman and Floyd realized they might be able to work together on the gate for the Mills River facility.
Concept and design began at the end of 2014 and fabrication began in March. “There was only really one design, but it went through several iterations,” says Khalsa. “I channeled the aesthetic of Sierra Nevada, highlighting the barley and brass features. I felt pretty good about the concept, so I only proposed the one to the Sierra team. The Grossmans approved it very quickly.”
“I’m really pleased with the design [Ninkasi] gave us,” says Grossman, “They understand what we’re trying to do here, and I think it’s because we’re both brewers and both share a lot of the same ideals.” The Mills River facility is now brewing beer and serving customers.
For Ninkasi it’s a new type of collaboration that highlights how even in a competitive industry, there is room to work together. “It’s exciting and humbling to be a literal piece of such a remarkable building,” says Floyd. “It gives us all something to strive for.”
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