Regional Report Triad November 2012

REGIONALREPORT Triad

A fight is brewing

Bill Sherrill doesn’t begrudge the General Assembly for approving grants to lure two of the nation’s largest craft brewers to the state or changing laws to allow them to sell beer at their proposed breweries. But the CEO of Whitsett-based Red Oak Brewery LLC would like lawmakers to show his company, the second-oldest craft brewer in North Carolina, the same consideration it gave Fort Collins, Colo.-based New Belgium Brewing Co. and Chico, Calif.-based Sierra Nevada Brewing Co. Sherrill says a state law requiring beer makers to turn all of their distribution over to wholesalers if they produce more than 25,000 31-gallon barrels in a year has stymied his expansion plans.

After Prohibition, state and federal lawmakers created a three-tier system — brewers, wholesalers and retailers — to better collect taxes and regulate sales. Today, states set distribution thresholds. In the 1980s, brewers in North Carolina were limited to making 2,000 barrels a year without going through a wholesaler. That was raised to 10,000 in the 1990s, and Sherrill pushed to get that increased to 25,000 about five years ago. He and a few legislators tried to pass further raises — one to 60,000, another to 100,000 — to no avail. Red Oak makes about 12,500 but wants to more than double that.

Most craft brewers in the state use wholesalers or don’t produce enough to need them, so Red Oak doesn’t have a lot of allies. But Sherrill says the company — whose roots extend to 1991 when he opened Red Oak Brew Pub in Greensboro — needs to deliver its own because of its unique nature. The unfiltered, unpasteurized lagers have no preservatives or additives and have to stay properly refrigerated. Red Oak has 15 refrigerated trucks that make deliveries to nearly 700 bars and restaurants and about 100 grocery stores in the state.

The North Carolina Beer and Wine Wholesalers Association opposes raising the cap. “There are more than 2,000 breweries in the U.S. and 70 breweries in North Carolina, yet the owner of Red Oak is the only one trying to change a law which has generated very little interest in the Legislative Building over the last six years,” Executive Director Tim Kent says.

Sherrill doesn’t release sales figures for the privately held company, but it has posted double-digit increases annually and has 17 employees. In 2007, he opened the 10,000- square-foot brewery on a 12.5-acre tract. He wants to add a beer hall, shops and a hotel.

"That annexation swamps the 3,200 increase that they claimed.”
— UNC Greensboro economist Andrew Brod questioning a Greensboro Partnership report that says the city’s employed has grown by 3,200 since before the recession. He says that number is inflated by Greensboro’s 2008 annexation of a community of about 10,000. The partnership claims the growth came after the annexation. 

Briefs

KERNERSVILLE — Deere-Hitachi Construction Machinery will expand its plant here, investing $97 million and adding 340 jobs to its local workforce of 743 within four years. The company, owned by Moline, Ill.-based John Deere and Tokyo-based Hitachi Construction Machinery, makes excavators for the mining and construction industries. Average annual salary will be $42,102, on par with Forsyth County’s average of $42,588.

WHITSETT — Computer maker Lenovo will open a manufacturing plant here, hiring 115 to produce its Think-brand products. The Chinese company, which has U.S. headquarters in Morrisville, has a distribution plant here that employs 160.

HIGH POINT —  High Point Regional Health System will become a member of the UNC Health Care system, effective early next year. The Chapel Hill-based health-care operator will contribute $150 million for capital improvements in High Point and $50 million to establish a new community health fund. Management at the 351-bed hospital is not expected to change.

TRINITY — Lexington, Ky.-based Tempur-Pedic will acquire rival mattress maker Sealy for $228.6 million. Shareholders approved the purchase, and Tempur-Pedic also will assume all of Sealy’s outstanding debt, pushing the total value of the deal to $1.3 billion.

WINSTON-SALEM —  Drug developer Targacept will close its laboratory operations by the end of the year and lay off 26 workers, leaving it with 43. The latest blow to Targacept was the failure this fall of a drug designed to treat attention deficit/hyperactivity disorder in phase 2 clinical trial.

LEXINGTON — The receiver handling a federal securities-fraud case against ZeekRewards says he has secured about $300 million of company assets and believes there are tens of millions more that can be recovered. The Securities and Exchange Commission claims founder Paul R. Burks was using the auction website to operate a $600 million Ponzi scheme. The SEC says more than 1 million investors may be involved.

WINSTON-SALEM — City Council approved $1.3 million in incentives for Mast General Store to open a retail branch downtown. The Valle Crucis-based retailer, whose seasonal products cater to tourists, has eight stores in North Carolina, South Carolina and Tennessee. The store would be part of a planned $10 million renovation of a historical building that includes 45 apartments.

ASHEBORO — Hyosung USA will close its plant here, laying off 310 workers at the wire-making factory it bought last year from Goodyear. The Charlotte-based subsidiary of Korean industrial conglomerate Hyosung Corp. makes cords that reinforce rubber tires.

WINSTON-SALEM — John Mauceri will step down as chancellor of UNC School of the Arts, effective June 30. After seven years in the job, Mauceri wants to return to conducting and writing music.