City without a heart at painful anniversary.

Byline: BEER ALASTAIR GILMOUR

TEN years ago the power of the City battered Sunderland. More recently we have come to distrust the world of corporate finance through its culture of huge and unjustifiable salary packages, but when Vaux Brewery was forced to close on July 2, 1999, few ordinary folks understood what was going on behind the scenes.

A company that was about to be asset-stripped, but was made a very good offer instead by an in-house team, could surely do no other than accept. Could they? The reality was the closure of the 162-year-old operation and its sister company Ward's in Sheffield with the loss of not only 700 jobs but incalculable goodwill and a heritage that is woven into every stitch of Wearside's fabric.

The brewery had been founded in 1837 by Cuthbert Vaux. And it belonged to Sunderland.

But, despite the brewing business being extremely profitable, in March 1999 the board accepted the advice of a corporate finance company - a subsidiary of Deutsche Bank - to close both breweries. This caused chairman Sir Paul Nicholson to resign, but managing director - and younger brother - Frank Nicholson started a campaign to save his "beloved brewery".

Mark Anderson, former Vaux finance director, says: "Frank called me at home from London. He said, 'We've got a bit of a panic, we're going to close the brewery'. I sat for a bit just thinking, then my brain clicked in to go for a management buy-out.

"We got great support from the staff and we worked very hard at it; one minute we were up, next we were shot down, told the bid wasn't good enough. But we had to keep the staff motivated and keep the business going through the period of exclusivity. We thought we'd cracked it, but they put obstacles in the way all the time. In any management buy-out you have to have a willing buyer and a willing seller - we didn't have a willing seller.

"We had a viable business. Vaux and Ward's were the heart of it.

Together we were brewing half-a-million barrels a year (32 million pints) and at the time of closure both breweries were each making pounds 25m in profit before tax.

They were family-type businesses and we believed in what we were doing, but banks have to draw a line for the final pound on the table." Mark Anderson has now formed the Maxim Brewing Company with ex-colleagues Doug Trotman and Jim Murray, resurrecting the Vaux and Ward's core brands such as Samson, Double Maxim and Ward's Best Bitter.

Mark says: "Frank Nicholson was a great leader, but when he had to stand up in front of everybody to announce the decision he found it very difficult. I also remember Peter Reid, then Sunderland's manager, came to support us and the fans held up red cards at the Stadium of Light.

"It was a very odd time. It was not a planned approach, it was, 'That's it, get rid'. I even discovered I was one of the assets to be sold with the pubs." The situation was raised in Parliament. An excerpt from Hansard proves if nothing else that little is new in the world. A stinging and eloquent address from Sunderland South MP Chris Mullin pretty much sums up the situation.

He told the House: "This is an unhappy tale ... It is about a clash of cultures. On the one hand is a long-established, respected company managed by successive generations of the same family who take the old-fashioned view that their responsibilities extend to their workforce and to the public interest as well as to their shareholders. On the other hand are the City institutions which acknowledge only an obligation to make for themselves and their clients the fastest buck in the shortest possible time, regardless of other considerations." Tesco snapped up the brewery site for about pounds 13m soon after the closure.

It insists it is keen to build a supermarket at the hub of a mixed development, but other agencies have different ideas for a jobs-led mixed development with hotels, shops, offices and apartments. Public inquiries have come and gone. It's a stand-off.

"I don't reckon an hour of any day goes by when I don't think about what happened and what might have been," says Frank Nicholson. "Because we were like a big family at Vaux, the loss of the brewery and the consequences that flowed from it were in many ways like a family bereavement. I said at the time that the closure was an enormous waste of people, property and potential and 10 years on that seems a justifiable description as many of them found little or no job security, the brewery site sits derelict and the support that the company gave to the Sunderland community has not been replaced. All those responsible have moved on into comfortable retirement, leaving behind the disastrous effects of what my brother Paul has so aptly described as their 'act of corporate vandalism'." Internationally-acclaimed playwright Ed Waugh recalls every day that he spent at Vaux (in the press and publicity office) was a complete joy.

"What I liked was its family feel," he says. "Four and even five generations had worked at the brewery and it was where the Scout movement began, with Sunderland having one of the first, if not the first Scout troop in the world. They met and drilled under Baden Powell - a friend of the Vaux family - in what was to become the bottling hall.

"It breaks my heart to see the old Vaux site. Ten years after its closure the place is still a wasteland. How can a supermarket company hold a city to ransom? If the elected representatives can't sort out the problem after a decade, then the people of Sunderland should cast their eyes to Iran and learn about taking matters into their own hands." The 1999 management buy-out attempt had offered pounds 70m for the brewery and some of the pubs, but that was rejected when the board was told it could earn pounds 15m more if it went ahead with the asset-strip.

"They were desperate to try to justify the unjustifiable," said Sir Paul Nicholson after the closure. "It was a feeble decision to kowtow to their City gods. It should never have happened.

"There should still be a brewery here, a brewery employing hundreds of people and contributing to the economic life of Sunderland." Frank Nicholson was renowned for knowing every Vaux worker by name.

He also knew their wives' or husbands' names - and their children - which highlights the essence of the business. The overwhelming feeling was family and beer - both of which get into the blood.

He says: " I am often asked how we would have coped with the traumas suffered by the industry in the years since 1999, which have seen a dramatic decline in beer consumption, the growing influence of the anti-alcohol lobby and the disappearance of large numbers of pubs. My answer is that we would have built on the inherent strengths of Vaux, which lay in its outstandingly able and loyal workforce, its popular brands like

Samson, Lambton's and Carling and its excellent pubs, to create a bigger and even better brewery that would have matched the achievements of our most comparable competitors, Greene King and Marston's (Wolverhampton and Dudley as it was then), whose huge success shows what 'could have been' for us.

"These two have filled the gap left by the disappearance, or submersion into foreign companies, of the big brewers of old - Whitbread, Bass, Allied and S& N.

"It was not to be and we have not even got a redeveloped site to mark the 10th anniversary of the closure. I wonder if we will have one to mark the 15th or even the 20th.

The failure to reach a satisfactory compromise - vital to restore to health the heart of Sunderland - is little short of a disgrace and saddens me very much since Vaux always sought a 'middle way' in all that it did. Its lesson seems to have been forgotten already." Sunderland's remaining beer producer is the Bull Lane micro-brewery.

To give some idea of the scale of the loss a decade ago, it would take it - brewing every single day - 548 years to reach the annual output of Vaux and Ward's. By comparison, Frank Nicholson's redevelopment speculation seems like tomorrow.

[e-mail]

CAPTION(S):

HISTORY One of the Vaux horse-drawn drays, which were a distinctive sight in Sunderland, is now a museum piece at Beamish.