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.”
By Dan Haag
For the Oregon Beer Growler
The phrase “necessity is the mother of invention” could well have been coined with Oregon brewers in mind. How else can one explain decades of behind-the-scenes research and development that have carried the state’s brewmasters to the front of the line?
Case in point, the team at Pelican Brewing Company recently unveiled the “Hopinator,” an innovative system designed to create a more efficient, safer method for dry-hopping beer.
Made in collaboration with designers at Metalcraft Fabrication in Portland, the Hopinator streamlines how the agitator introduces hops to the fermenter. They also redesigned the method to move hops in and out of Pelican’s brews more efficiently and effectively.
Up and running at Pelican’s brewing facility in Tillamook, the Hopinator — also dubbed R2-D2 by the team — bears a slight resemblance to a certain “Star Wars” favorite.
Much like that beloved droid, the Hopinator helps things run more smoothly. Brewmaster Darron Welch has been impressed with the results.
“It overcomes a lot of the utilization problems with traditional dry hopping,” he says.
The new process introduces much less oxygen; the hop pellets go directly into the clean vessel, then the brewer seals the vessel and purges with carbon dioxide.
As a result, there is extremely low oxygen pickup compared to the traditional dry-hopping process, increasing flavor stability and quality.
Because the hops are incorporated into the liquid with an agitator and emulsified in the beer, then shot back into the main fermenter, the brewers are able to extract much more flavor and aroma from the hops than the traditional method of dry hopping. Welch says the benefit is that Pelican is now able to use around 30 percent fewer hops with better results.
Fans of Pelican’s brews will notice the difference.
“What this means for the beer drinker is enhanced taste and aromatics,” Welch says. “It introduces much less oxygen along with the dry hops in an anaerobic environment.” He adds that for beers where the dry hop charge stays exactly the same, there is a better, “punchier” dry hop aroma.
Beyond the science and increased efficiency, the Hopinator addresses many of the safety concerns associated with dry-hopping.
“There’s no more hauling 50 pound buckets of hops up high ladders,” Welch says. Hop infusions are done easily at ground level with the mixing element and agitation built in.
Installing the Hopinator wasn’t as simple as going to a supply store and hooking up a couple hoses. Welch admits that this project had been on his wish list for many years and that development took quite some time.
“It was two trade shows ago at the Craft Brewer’s Conference where we were looking at some of the options that were on the market at that time,” he says, adding that Pelican was close to purchasing a more traditional “hop gun,” a piece of equipment designed in Germany. While there’s much to like about the hop gun, Welch wasn’t convinced it was the right fit for Pelican.
“American craft brewers use a lot more dry hops than any German brewer would rightly consider,” Welch says. “We started looking at ways to design a system that eliminated some of the challenges of that particular equipment.”
Those challenges included constant plugging and the infusion of hops taking a much longer time than desired.
After a series of back-and-forth conversations with Metalcraft about adapting the hop gun for Pelican’s needs, it became clear that a completely new design was in order.
“Metalcraft worked with us to achieve the design we wanted,” Welch says.
Another plus is mobility, as the Hopinator can be moved from vessel to vessel, depending on which batch is receiving dry-hopping. Welch says this eliminates the need for hoses strewn about the floor and streamlines the workload.
While Pelican will not be marketing or selling the Hopinator, Metalcraft will be offering the design to other customers. The Pelican team is thrilled with their creation and have reached the point where they can’t imagine dry-hopping any other way.
“It’s turned out to be a great benefit in terms of time, efficiency, cleanliness and safety,” Welch says.
Stories from the print edition of the Oregon Beer Growler.