Baroda-based Oronoko Iron Works Inc. hasn’t even turned two years old yet, but the company already has plans to at least double the size of its plant later this year.
The reason: Strong growth in the nation’s $19.6 billion craft brewing industry has boosted demand for its material handling products, which include roller mills, hoppers, bins and other custom equipment that brewers use to move ingredients like malted grains around their brewhouses.
The Southwest Michigan operation, one of the few manufacturers in the state to specifically target the burgeoning craft brewing industry, seeks to add another 10,000 to 15,000 square feet at its existing facility, which has capacity to build about 200 machines annually, according to founder and CEO Rusty Riley.
Despite Oronoko’s success in manufacturing brewing and distilling equipment in West Michigan for customers nationwide, the number of manufacturers that supply purpose-built equipment for the craft beverage industry remains small, a perplexing phenomenon for many brewery owners who say they’d like to find local suppliers.
Industry sources attribute manufacturers’ hesitation to a variety of factors ranging from the steep learning curve needed to produce brewery-quality equipment to the challenges of courting brewers away from out-of-state suppliers with whom they’ve maintained long-established relationships.
Those were challenges Chicago-based Malt Handling LLC, a consultant and designer of material handling systems for craft beverage companies, embraced when it launched Oronoko Iron Works. The idea behind spinning off Oronoko was to harness Michigan’s manufacturing prowess to bring product innovations to market, Riley said.
“We worked with a number of machines — mills in particular — and took things we didn’t like and that customers didn’t like and made them more user-friendly so they operate better in a brewery or a distillery setting,” Riley said.
Riley wanted to build the manufacturing operation near its Malt Handling headquarters but avoid the inflated Chicago real estate prices and at the same time, locate it in an area with a strong craft brewing scene.
“Michigan historically has been very heavy in manufacturing and aerospace and tool and die,” Riley said. “We knew about the vibrant brewing community in Michigan, but the state also has a robust workforce. You have the capability that we need to make this happen. … From a fabricating and engineering standpoint, there’s a wealth of knowledge here and an incredibly skilled workforce.”
While Grand Rapids-based Brewery Vivant intended to integrate as much locally sourced equipment into its operation as possible, the brewer of French- and Belgian-inspired ales has struggled to find manufacturers who meet its needs.
“I think the local manufacturing expertise is capable of building brewery tanks, however they are a little slow to the game,” said Jason Spaulding, co-owner of the Brewery Vivant. “Fifteen-plus years ago, lots of us built trusting relationships with as local of manufacturers as we could find. (But) back then, it was out of Wisconsin. We have continued to use some of the manufacturers because of that long-term relationship and trust that they know what they are doing.”
In Spaulding’s two decades in craft beer— he co-founded New Holland Brewing Co. with Brett VanderKamp in 1996 before launching Brewery Vivant in 2010 — he’s seen more West Michigan manufacturers embrace the industry, albeit slowly.
For example, Brewery Vivant recently contracted with Greenville-based Psycho Brew LLC to build a 10-barrel supplemental process tank, the first tank the brewery has been able to source from a local supplier in its five-year history, Spaulding said.
“When you look at Psycho Brew, they had been doing homebrewer and nano (brewery) stuff for so long, but because they’re the only ones around here who are manufacturing, now you see that they are starting to do bigger and bigger stuff,” Spaulding said. “They’re just reacting to the demand from people to keep up (with their growing equipment needs).”
Psycho Brew began producing small 5-barrel brewing systems in 2010 for home brewers and gradually built larger brewing systems for brewers such as the 15-barrel system Cedar Springs Brewing Co. commissioned, said co-owner Chris Breimayer.
The company’s equipment can be found in the brewhouses of several of West Michigan’s newest craft breweries, including Dutch Girl Brewery Inc. in Spring Lake, Newaygo Brewing Co. LLC and the under-development Greyline Brewing Co. in Grand Rapids.
Strong demand for brewing equipment drove annual sales for Psycho Brew to grow 74 percent from $1.4 million in 2014 to $2.5 million in 2015, Breimayer said. The company forecasts it will reach more than $3 million in annual sales this year.
Last month, the company also moved into a new facility, increasing its production footprint from 2,000 square feet to 8,500 square feet.
Psycho Brew partners with Belding-based Digital Fabrication Inc. to assist with its larger projects like the one for Cedar Springs Brewing.
While Breimayer expects the company will remain focused on niche equipment and not produce anything larger than 15-barrel systems, he believes there is plenty of run room for brewery equipment manufacturers. That’s especially true as more small-scale neighborhood breweries open throughout the state and beyond, he said.
The Boulder, Colo.-based Brewers Association reported breweries in the U.S. now number 4,144 as of November 2015, up from 3,464 the previous year and the highest number since before Prohibition.
“I don’t see an end to it at this point — I see more demand,” Breimayer said. “Michigan has a great beer presence in general, but there are a lot of states just starting out. Florida was a pretty dead market, but now we’re selling more to that market than ever before.”
Despite the potential growth market for brewing equipment, some manufacturers say they’re hesitant to dedicate too much of their operations to serving the industry.
“It’s a sporadic thing,” said Andy Ordway, director of business development for Portage-based W. Soule & Co., a full-service fabricator and industrial mechanical contractor. “If a new brewer comes in and we do work for them, then they are done — unless they are doing an expansion.”
W. Soule has manufactured custom brewing equipment such as fermenting pots for breweries including Founders Brewing Co., Bell’s Brewery Inc. and Arcadia Brewing Co. However, Ordway doesn’t expect much growth out of the low-volume industry, which comprises about 5 percent of W. Soule’s total annual book of business.
In addition to concerns over order volume, brewery equipment manufacturers also need to contend with perception issues regarding the quality of locally made systems versus products from more established overseas companies, said Riley of Oronoko Iron Works.
“There’s a stigma attached to equipment from the U.S. and North America — people have treated it as second-best,” he said. “But we’re starting to see that shift. We’re very capable of producing the same level of quality and innovation as anywhere in the world, and you can get it close to home.”
ESTABLISHING A PEDIGREE
Since brewers maintain stringent standards when it comes to equipment such as tanks and fermenters, it can be challenging for manufacturers inexperienced in food-grade stainless steel to gain the confidence of brewers, industry sources said.
That’s especially true when it comes to larger-scale tanks, said Brad Stevenson, chief production officer at Founders Brewing.
The company has sourced a handful of its smaller tanks — the ones visible from the brewery’s taproom — from Lake Orion-based Craftwerk Brewing Systems in Southeast Michigan. But for larger systems, Founder relies mainly on German-made products.
While acknowledging it’s not impossible for local manufacturers to begin producing large-scale tanks and brewing systems, Stevenson said it would take some time to gain expertise and contacts in the industry.
“There’s a tremendous amount of knowledge to gain,” Stevenson said. “You’d have to have a knack in sanitary stainless steel fabrication for food services, and then you’d have to build up the engineering on the brewery side.”
His was a common message among many of the breweries in Michigan contacted for this report.
“When you have a 150-barrel minimum order for a tank, there are not a whole lot of places designed to roll that type of steel,” said John Stewart, director of brewing operations at Perrin Brewing Co. in Comstock Park, which has also worked with in-state supplier Craftwerk in the past.
That said, manufacturers with experience supplying food-grade equipment to the dairy industry are “automatically deemed OK” because of that sector’s already high standards, said Tyler Glaze, quality manager at Elk Rapids-based Short’s Brewing Co.
Short’s has sourced eight of its smaller tanks for its pub brewery and small-scale production line from Craftwerk, but relies on out-of-state manufacturers for systems larger than 100 barrels, Glaze said.
He would welcome having an established local supplier “with a nice pedigree of installs” to help cut down on transportation costs, which currently add $35,000 to the cost of a large-capacity tank that’s up to 40 feet long and 15 feet in diameter.
While some manufacturers may lack the capabilities to produce large-scale brewing systems, there are other products that companies could begin producing locally for the brewing industry.
For example, there are numerous small fittings and connectors ubiquitous to every brewery that suppliers currently source mostly from China, said Nate Hukill, founder of Chelsea-based Bitter Old Fecker Rustic Ales LLC.
“There are plenty of machine shops and people in the state who are more than capable of doing this,” said Hukill, who sourced much of his brewing equipment from an Ohio supplier. “When you go from making car parts to making 50-barrel fermenters, that’s a big jump. But there are other parts and pieces breweries are messing with every day that machine shops could turn out fairly easy.”
Editor’s Note: This story has been updated with information about the brewing system Cedar Springs Brewing Co. commissioned from PsychoBrew.