American Keg won’t be American-owned anymore.
The Pottstown company, the only U.S. keg manufacturer that beat the drum of protecting U.S. manufacturing in a trade battle with German, Chinese, and Mexican manufacturers, has sold a “major stake” in its business to Germany’s Blefa, the companies said on Wednesday.
Terms were not disclosed. But American Keg chief executive Paul Czachor said that Blefa has pledged to expand the Pottstown plant with a “multimillion-dollar investment” that will boost its capacity and add local jobs.
“I don’t know how many jobs we will add,” he said. “It will be numerous.”
In November, American Keg said it employed 32 workers.
Blefa has a keg-servicing and distribution facility in La Vergne, Tenn., but does not manufacture kegs in the United States. Czachor said that Pennsylvania officials helped convince Blefa on the economic viability of the Pottstown plant, and the expected plant expansion, slated for early 2021, does not include local or state tax incentives.
“While I’m proud of establishing American Keg as the only manufacturer of kegs in the U.S., there is a lot we can learn from Blefa to make our production more efficient," American Keg owner Scott Bentley said in a statement.
American Keg reached the Blefa deal about six weeks after the U.S. International Trade Commission threw a lifeline to the beleaguered firm in late November by slapping punitive tariffs on German and Chinese keg imports. The commission had previously placed similar tariffs on Mexican keg imports.
Marc L. Busch, professor of international business diplomacy at Georgetown University, said on Wednesday that the commission’s decision and American Keg’s deal with Blefa represented a “case study of protectionism shoring up, for a brief period, the value of an asset looking for a buyer.”
Investigators for the U.S. Commerce Department found during the probe in 2018 and 2019 that the Chinese government subsidized keg manufacturers, giving them an unfair competitive advantage. Chinese keg imports now face unfair-trade tariffs of 16% to 222%. German keg imports face tariffs of 7.5%.
Blefa was among the big companies that fought the punitive tariffs at the U.S. International Trade Commission. Buying part of American Keg will give the German company a source of U.S.-made kegs that would not be subject to import tariffs.
The favorable commission decision could lead to higher prices for kegs for consumers and craft breweries, and that it would not financially save American Keg over time if it was not competitive, critics warned.