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  • Thursday, November 20, 2008 4:54 PM | Anonymous

    BY ERIC ENGLISH Bay County has a bright spot in an otherwise bleak landscape for commercial construction in Michigan. Work is streaming along on a new $16 million beer and liquor distribution center along US-10 in Monitor Township, four miles west of Bay City. The giant new facility will be operated by Mount Pleasant-based wholesaler Fabiano Brothers Inc. "We have 60 to 80 trades people on the site each day," said Brad Laackman, construction manager for CSM Group, a Grand Rapids contractor overseeing the project. "We are on schedule and we are doing really good," Laackman said during a Nov. 12 site tour. Construction of the 191,000-square-foot facility is about 80 percent complete and the first of some 300 Fabiano employees now working in other offices will occupy the building in December. The building will house corporate offices, sales and training centers and warehousing and distribution of beverages. The building features a glass-and-brick facade facing US-10 that softens the appearance of the shipping facility behind it. "We really wanted to build something the community can be proud of. We didn't want to just put up a big box or a warehouse," said James C. Fabiano II, a partner-owner of Fabiano Brothers. The company hopes the building will anchor a corporate "marketplace" of other commercial development on the 71-acre property some day. Fabiano said lots are for sale, but he still is searching for buyers. "I'm in the process of trying to land some people," he said. "I'm chasing leads trying to sell out the park." For now, his task isn't likely to be an easy one. Commercial construction activity in Michigan is grinding to a virtual standstill as the state's and nation's economy worsens, according to Damian P. Hill, a spokesman for the trade group Associated General Contractors of Michigan. Construction is underway on a beer and wine distribution center, to be run by Fabiano Brothers Inc Construction of a beer and wine distribution center in Bay County is about 80 percent complete. 2 "There's not a lot of work going on, and it's not just up your way," Hill said. "Unfortunately, it's kind of a perfect storm." The group estimates that commercial construction activity nationwide declined about 3 percent from September to October, and 11 percent compared to a year ago. Laackman said trade workers finishing the Fabiano center also are working on the $1 billion expansion of Hemlock Semiconductor Corp. in Saginaw County. "A lot of the contractors are on both jobs, but it hasn't pulled workers away from either one," he said. Material costs for the Fabiano building were kept in check by bidding the work in 2007 at set prices, Laackman said. Most of the concrete and structural work is completed. Now, offices are being finished in wood paneling and stone, including a hospitality area that will include a "training bar" for product demonstration and education. A special system for shelving inventory will be installed in the warehouse areas, which measure 360 feet in length, or more than a football field. Fabiano said the new facility will improve efficiency and help Fabiano Brothers Inc. to continue growing. "We hope to wrap it up by year's end," he said. "Hopefully, we'll have our occupancy permit in December."

  • Thursday, September 18, 2008 5:56 PM | Anonymous

    by Janet Miller | for Ann Arbor Business Review Thursday September 18, 2008 Jim Wanty, Kit Morgeson and Douglas Wanty of O&W. O&W Inc. is celebrating its 75th anniversary as a family business in Washtenaw County by looking back to its Prohibition-era founding - and forward to further growth in new markets and sustainability. Today, the Ypsilanti-based company runs a four-county distribution network for more than 70 brands of beer, wine and specialty beverages, said Kit Morgeson, marketing manager and a fifth-generation family member. With the Liquor Control License number 007, O&W is one of the oldest beer and wine distributors in the state. The company has grown to using cutting edge and green technologies, from hand-held computers for its sales staff and drivers to using bio-diesel fuel for its trucks. It's also gone from the days when a keg of beer cost $5 to today, when the deposit alone for a keg is $30 and craft beers are building market share. Despite rising fuel costs and a sour economy, O&W expects to continue to expand, said President Jim Wanty. "There's going to be some consolidation at the wholesale level," Wanty said. That means there will be opportunities for O&W to purchase other distributors and expand its reach, he said, although that could be one to three years away. That doesn't mean O&W is untouched by the struggling economy. Off-premise sales - such as supermarkets, beer and wine stores - are down, while on-premise sales are up, Wanty said. And O&W is being bruised by rising fuels cost: It pays a $500 per load surcharge from the manufacturer that isn't passed along to the retailer, Wanty said, and pays higher costs to fuel its own delivery fleet. "It's coming at us from both ends and cutting into our profits," Wanty said. Overall, sales at O&W are flat, Wanty said: "People are buying more economical brands for home consumption, but when they go out, they're paying top dollar." O&W began in 1915 when William Seagert opened the Union Bar on West Liberty Street, when the Old Town stands today. On the side, he began distributing products he had hauled from the Stroh Brewing Company in Detroit to other area taverns. After Prohibition ended, he passed the distribution side to his son-in-law, James O'Kane. His son-in-law, Hugh Wanty, joined the growing firm in the 1940s. By 1954, they built a warehouse in what was then rural Ann Arbor on Jackson Road, adding wine and acquiring distributorships in the 1960s. A key decision came in 1967 when O&W became the distributor for Miller Brewing Company. "We wouldn't be here today if it wasn't for that decision," Wanty said. Miller Brewing's market strategy transitioned from highbrow beer drinkers to the much more lucrative mass market. "Their marketing went from the champagne bucket to the lunch bucket," Wanty said, "to the guy on the street. The guy with the truck." That decision continues to serve O&W well today. Miller Lite is its biggest label and in the top three of the nation's top selling beers. O&W continued to grow, purchasing distributorships in western Wayne and Monroe counties, a move that tripled business overnight, Wanty said. Five years ago, O&W moved its operation to Ypsilanti when it built a 100,000-square-foot warehouse, with room to expand. The area now includes Washtenaw, Livingston, western Wayne and Monroe counties. Now O&W is looking for new markets - such as wine, which it dropped years ago. This fall they became the sole distributor of Bo Merlot, a California label (think Rose Bowl) to honor University of Michigan football coaching legend Bo Schembechler. As O&W moves forward, it is also looking at sustainability issues, including using bio-diesel fuel to re-lamping the keg cooler with compact fluorescent bulbs. Whatever directions O&W takes, it will remain a family business, Wanty said. "We want to be here forever." BY THE NUMBERS 3.1 million: Sales of cases of beer, wine and specialty beverages sold per year. 1,700: Total number of retails customers 950: Number of retail customers that are on premise (bars or restaurants) 750: Number of retail customers that sell off premise

  • Wednesday, September 17, 2008 5:58 PM | Anonymous

    BY ALEX NIXON anixon@kalamazoogazette.com KALAMAZOO -- Politicians in Lansing have talked about expanding the state's successful bottle-deposit law to include water and juice bottles. But beverage wholesalers that serve counties close to Indiana and Ohio say the state needs to find a way to eliminate fraud before adding the 10-cent deposit to more containers. ``I think they need to fix this problem first before they start expanding it,'' said Randy Siesser, president of Kalamazoo Beer Distributing Co. Kalamazoo Beer serves retailers in Kalamazoo, Branch and St. Joseph counties as well as parts of Allegan and Van Buren counties. From 1990 -- when the bottle bill went into effect -- through 2005, Kalamazoo Beer collected more deposits each year than it refunded. The extra deposits go to the Michigan Treasury Department, which returns 25 percent of the unclaimed deposits to retailers. It sends 75 percent to the Department of Environmental Quality. In the past two years, Siesser said his company has ended up owing more deposits than it's collected. The problem is getting worse for Kalamazoo Beer, Siesser said. In 2004, it sent $100,000 in surpluses to the Treasury Department. In 2005, it was $40,000. But by 2006, the flow had reversed, and the company owed its retailers $70,000. Last year, it owed them $83,000. In the beverage-supply chain, wholesalers hold the deposits. Return machines to blame? Siesser says the shortfall seems to be linked to the expansion of reverse-vending machines, the automated collection devices found in many large grocers such as Meijer, Wal-Mart and Harding's. ``There's a lot of foreign containers coming into the flow of cans and bottles, especially from Indiana,'' Siesser said. ``They get into the system through those reverse-vending machines.'' Reverse-vending machines make returning large numbers of containers quick and easy. They're also more cost-effective for retailers, who don't have to pay workers to sort through bottles and cans. But the machines don't distinguish between bottles sold in Michigan and those sold elsewhere, Siesser said. The machines read bar codes on bottles and cans but can't determine where the containers were purchased -- only if the store sells the brand. In general, the machines are an advantage, Siesser said. ``They make picking up the empties at the store a lot easier,'' he said. ``It's good for the wholesalers and good for the retailers. ``They just need to upgrade the machines.'' Question of impact State officials say they can't track fraud but they say the problem is limited. DEQ spokesman Bob McCann says the money his agency gains from unclaimed deposits -- which funds cleanup at contaminated sites -- far outweighs any losses from fraud. ``When it comes to fraud, the numbers are pretty low,'' he said. ``I don't think that it's the problem that it's made out to be.'' Michigan is one of only 11 states in the nation that charge bottle deposits. And its 10-cent deposit is twice that of other states. New York and Michigan are the only Great Lakes states that require deposits on bottles and cans of beer and soft drinks. Ohio and Indiana do not charge deposits, and Siesser and others suspect people from those states bring their empty bottles and cans to Michigan to collect deposits. Last year, Michigan Attorney General Mike Cox announced his office had cracked a deposit-fraud ring that was responsible for an estimated $2 million in fraud. During the past seven years, the proportion of deposits that go unclaimed has gradually decreased. In 2000, 5.6 percent of deposits collected weren't claimed. Last year, it dropped to 1.8 percent. Officials say that a tighter economy may be contributing to more bottles and cans being returned. But the state does recognize that some wholesalers are taking in more empty containers than deposits, and it now allows wholesalers with shortfalls to trade credits with those who have extra deposits. Hit by economy That's kept Kalamazoo Beer from owing tens of thousands of dollars to its retailers. But the company still loses money because it pays a third-party processor to pick up the empties. ``Over the course of the year, these over-redeemed cans and bottles probably equal a $20,000 hit to my bottom line,'' Siesser said. Kalamazoo-based Schupan & Sons, through a joint venture with a manufacturer of reverse-vending machines, processes about 50 percent of the returnable bottles and cans in the state, said Tom Emmerich, president of Schupan's beverage-recycling division. Separate from the joint venture, Schupan & Sons handles another 20 percent of the market. The company is neutral on the issue of bottle-bill expansion, Emmerich said, though approval would probably mean more business for Schupan. Emmerich said he knows fraud is a problem for some of the wholesalers with whom he works. ``I've heard a lot of talk about it. I know it's real,'' he said. ``But I haven't seen an alarming rate of wholesalers over-redeeming.'' Emmerich said the larger issue is declining sales. He points to the declining economy and an increase in sales of noncarbonated beverages, such as sports drinks and bottled water. In recent years, as the state's economy has declined, the amount of deposits collected has declined as well. Since 2002, deposit collections have fallen nearly 8 percent, to $409.5 million. A package of bills expanding the deposit law would also provide stronger penalties for returning containers bought outside Michigan. Bottle deposits shrinking Sunday, August 17, 2008 Kalamazoo After peaking in 1998, total bottle deposits collected by the state have dropped off in recent years to a 10- year low in 2007. And in a sign of tighter economic times -- and possibly fraud -- the percent of those deposits going unclaimed also has become smaller. Year Collected Refunded Unclaimed Percent (in millions) (in millions) (in millions) unclaimed 1990 $294.4 $289.0 $5.4 1.8 1991 $364.1 $354.6 $9.5 2.6 1992 $361.7 $363.2 $-1.5 -0.4 1993 $369.2 $362.1 $7.1 1.9 1994 $383.0 $380.0 $3.0 0.8 1995 $391.9 $387.1 $4.8 1.2 1996 $403.6 $394.2 $9.4 2.4 1997 $412.9 $401.5 $11.4 2.8 1998 $457.8 $443.2 $14.6 3.2 1999 $429.0 $407.0 $22.0 5.1 2000 $418.9 $395.4 $23.5 5.6 2001 $441.9 $424.4 $17.5 4.0 2002 $443.9 $425.8 $18.1 4.1 2003 $434.3 $422.7 $11.6 2.7 2004 $428.4 $417.8 $10.6 2.5 2005 $427.6 $415.4 $12.2 2.9 2006 $415.8 $399.5 $16.3 3.9 2007 $409.5 $402.2 $7.3 1.8 Source: Michigan Department of Treasury

  • Thursday, September 27, 2007 1:13 PM | Anonymous

    BY JOE SWICKARD FREE PRESS STAFF WRITER  

     A get-rich scheme played for laughs on classic primetime TV was run for real, authorities said today, in announcing the break-up of an alleged racket that cashed in big time on Michigan's bottle deposit law. Fifteen people in Michigan and Ohio - the alleged smugglers as well as merchants - were charged in felony warrants with bundling millions of out-of-state cans and redeeming them for the dime-apiece deposit in Michigan. State, local and federal agents arrested at least 13 suspects and seized more than $500,000. “A half-million in cash is not ‘Seinfeld,’” said Matt Frendewey, spokesman for the Michigan Attorney General, referring to an episode of the comedy show with a similar theme. Investigators alleged that millions of foreign cans were collected, crushed and packaged in plastic bags approved for packaging and sold at a discount to Michigan merchants who then redeemed them. The state pays bulk redemption by weight. 

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