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.”
The Labrewatory’s manager Chris Sears is pictured here with some of the equipment at the North Portland brewery. The 3.5-barrel craft beer lab can serve as a bridge for brewers who are leaving one brewery and starting out on their own. Additionally, those firmly rooted in bigger brewhouses can experiment and collaborate at the new site. Photo by Jim McLaren
By Jim McLaren
For the Oregon Beer Growler
The intersection of North Interstate Avenue and Northeast Russell Street is a good place to catch a snapshot of Portland beer culture: past, present and, perhaps, even the future.
On the corner there’s Widmer Brothers Brewing, a craft beer founder and icon. A block or so east, there’s the White Eagle Saloon & Hotel, part of the ubiquitous McMenamins chain.
Now, go a couple of more blocks to the east. At 670 N. Russell St., you’ll find a white, one-story building fronted by a couple of glass-paneled garage doors. Over one door it says:
Portland’s Craft Beer Lab
Sitting at the concrete-topped bar, manager Chris Sears explains the owners “thought there was a need for a place where people can come in and have a laundry list of experimentals and collaborations.”
The concept is simple — sort of. If it works, true Beer Geeks will have nirvana in their own backyard.
The idea for a “craft beer lab” begins with Thad Fisco, owner of Portland Kettle Works. The company is a full-service brewery fabricator that has been making steel for breweries from Norway to Japan, from Canada to Costa Rica. Just as importantly, Fisco has a long-running partnership with Jon Kellogg, a commercial real estate developer. The duo worked on rehabbing two blocks of North Williams Avenue in what Portland Monthly called the “reinvention of old streetscapes that harnesses PDX’s entrepreneurial spirit and love of the past.”
As it turns out, Fisco owned a rundown taxi cab garage that needed some reinventing. He also had an idea for making beer. But, in a unique way, without making beer. Huh?
Explanation — the folks making your favorite beer at most breweries may not have the space to make test batches of their beer daydreams. Even if they do have the room and time, they might not want to risk having you turn up your nose at their experiments.
That’s where The Labrewatory’s 3.5-barrel system comes in. Manager Sears says a brewer can whip up a batch of their latest concoction or work on a collaboration with another brewer and do it in a very quiet, pragmatic way.
The facility will be producing enough beer so that any brewer can make an inexpensive batch and split tap sales with The Labrewatory. The brewer then has a built-in test audience. Sears says they “will have public comment forms so people can give their opinions of new beers or you can go online to comment on beers by number. You won’t know who made the beer.”
It’s a win-win-win for the brewer, The Labrewatory and you.
The “craft beer lab” can also be a bridge for brewers leaving one brewery and starting out on their own. “We have the former head brewer from pFriem. He’s ventured out on his own.” Sears explains, “They’re a little delayed in their project, but he wants to get his brand going so he can get beer out and build his brand.”
The Labrewatory will, someday, have a head brewer. “We’re in the process of finding a head brewer — somebody with, obviously, experience in brewing and also a good personality because they will be working with other brewers a lot and, kind of a requirement too, the head brewer needs to pour beer at least once a week.” That brewer will be an educator, tutoring customers about the mystery beers and helping the beer makers digest customer input. Sears provided an example of that type of feedback, saying a brew “seemed to be received very well minus a couple of things. Let’s make a couple of tweaks and run it through again or let’s make the tweaks and make a decent-sized batch, put our name on it and sell it.”
Since all beer makers start small, this brewers’ playground will make room for the guy fresh out of his garage. The Labrewatory will offer advice and a chance to put a hobby to a public test. Amateurs will learn how to scale up recipes to commercial size and find out from people, other than family and friends, whether their best is good enough. But, unless they have a license, they won’t be able to take their beer home. It will have to be sold at the The Labrewatory.
The Thad Fisco project, overseen by Chris Sears, has a look as fresh as its business plan. The interior has a gleaming industrial look with metal light and bar fixtures custom-made at Kettle Works. The side of the room across from the bar features burl wood tables against a wall made of wood reclaimed from the old garage. The bar’s centerpiece is a thick tap tower with 16 handles.
The day I was there, you had numerous tasty choices, such as pFriem Blonde IPA, Upright Seven and Epic Brainless Raspberries, each for $4 per glass. As you sit at the smooth, wide bar, you can look toward the back of the building and catch a glimpse of the brewhouse. You can also raise your snifter-shaped glass and appreciate the beer against the backdrop of a well-lighted, subway-tiled, white wall.
“We kind of wanted to give it more of … old-school laboratory vibe,” Sears says. “Of course, in a lab you want it to be bright so you can see what you’re doing and analyze. That plays into the type of consumer we want to bring here. It’s hard to check out the color of your beer if it’s dim lit.”
It’s also hard to imagine that The Labrewatory won’t soon become a “must” for locals and beer tourists.
The Labrewatory hours: 3-9 p.m. Thursday through Saturday, 1-6 p.m. Sunday
Tamale Boy is serving Mexican fare from a food cart to customers at The Labrewatory, but the business is in the process of building out the space next door.
Stories from the print edition of the Oregon Beer Growler.