New Brunswick

Moosehead lays off 27

Twenty-seven management and administrative employees at Moosehead Breweries Limited's head office in Saint John will lose their jobs immediately.

Twenty-seven of just under 100 management and administrative employees at Moosehead Breweries Limited's head office in Saint John will lose their jobs immediately due to major changes in a contract.

The Moosehead Country Store will also close.

Company president Andrew Oland says the cuts are due to changes in a contract relationship between Moosehead and a large international brewer, which will result in either the loss of, or significant reduction in the brewing and packaging of that company's brands at the Saint John brewery.

"We do not foresee more staff layoffs in terms of this contract. If this contract is not renewed there will be a corresponding layoff of hourly-paid employees. If we were to lose the contract we expect that would not be before October of 2012," Oland said.

The contract changes are a direct result of the exchange disparity between Canada's dollar and the U.S. currency and not related to the quality of work, he stated in a news release.

"Unfortunately current economic conditions give our contract partner more options for its beer production," said Oland. "We are not immune to global market conditions."

Affected employees will be "compensated fairly" and will be offered career counselling, said Oland.

Administrative employees are not unionized.

The announcement came on the same day a new economic report was released by the Atlantic Provinces Economic Council predicting sluggish growth in the New Brunswick economy. The report blamed weak capital investment and government fiscal restraint.

APEC President Elizabeth Beal said the province would have to raise taxes. 

"I think they're going to have to get in and have another look at the revenue picture. Do they go with another increase in the HST as has been done in other provinces?" she said.

"Do they look at rebalancing income tax rates beyond what they've done already? I don't think the province is going to have a lot of choice if it wants to match its expenditure requirements with the revenue coming in."

In September, the brewery announced a $20-million expansion plan, adding onto its main bottling line to include new labelers, as well as more modern equipment for packing, inspecting and moving products.

Last March, unionized employees voted to ratify a new collective agreement, ending a five-week labour dispute.

The new seven-year contract kept health benefits in place for all retired workers — the issue that was at the heart of the lockout.

It also introduced a retirement savings plan with mandatory joint employee and employer contributions for all employees.

Workers also received a modest wage increase of about one per cent per year.