TORONTO -- Molson Breweries will close seven of its 16 Canadian plants, and cut 1400 jobs through layoffs and attrition as part of plans to merge the operations of Molson and Carling O'Keefe Breweries, the company said Wednesday.
Molson Companies Limited and Carling O'Keefe Breweries, Canada's second and third-largest breweries, announced plans to merge their brewing operations into an equal partnership last Wednesday under the name Molson Breweries. The company would be jointly owned by Molson and by Carling's parent, Elders IXL Limited.
If the deal receives regulatory approval by the Canadian government, existing Molson plants in Lethbridge, Alberta, Winnipeg, Manitoba and Toronto's downtown plant will close over a three-year period. A Molson plant in Barrie, Ontario, north of Toronto, will remain.
During the same period, existing Carling breweries in Saskatoon, Saskatchewan, St. John's, Newfoundland, Vancouver, British Columbia and Montreal will be shut down.
The companies estimates that 900 positions will be lost through normal attrition and early retirement. The other 500 full-time positions will be eliminated. The two companies currently employ 7,500 people.
At the announcement of the merger last week, John Elliott, chairman and chief executive officer of Elders IXL said: 'Canada has far two many plants, which have been built up by regulation over a number of years. The result is that if one is going to compete in this global market .... then we have to have efficient plants.'
The companies plan to compete more aggressively in the U.S. market, expecting a significant increase in exports. They also announced plans to invest $185 million to improve remaining production facilities, particularly the Toronto, Quebec and Vancouver plants.
The deal would give Molson the largest market share in Canada at 52 percent. Rival Labatt Brewing Company Limited, which has traditionally had the largest market share, would trail at 42 percent. Smaller independent breweries hold the remaining percentage. The new company would rank as the sixth-largest in North America and 20th worldwide in size.
Elders purchased Carling in the spring of 1987 for $300 million.
