Maple Leaf plans expansions, closures across prepared meats business

In what it calls the final phase of its “value creation plan,” one of Canada’s most iconic food firms plans sweeping consolidations and staff reductions in its processed meats operations across the country.

Maple Leaf Foods’ latest plan, announced Wednesday, calls for construction of a new $395 million prepared meats facility at Hamilton, Ont., and major expansions of its meat further-processing plants at Brampton, Ont., Saskatoon and Winnipeg.

The Toronto company aims to consolidate its meat further-processing into those four plants, expecting the new and upgraded facilities to serve as “highly efficient, category-focused ‘centres of excellence.'”

The consolidations, however, spell closure for six Maple Leaf further-processing plants, including:

  • the company’s Brockley Drive wiener plant in Hamilton, whose lease expires in 2014;
  • its Courtland Avenue deli and luncheon meat and wiener plant in Kitchener, in later 2014;
  • the Hub/Larsen sliced meats plant on Edinburgh Drive in Moncton, to be closed in later 2014;
  • Maple Leaf’s dedicated bacon plant at North Battleford, Sask. in the first half of 2013;
  • the former Shopsy’s sliced meats plant on Bartor Road in Toronto, by the end of 2014; and
  • the former Schneiders plant making Hot Rods meat sticks on Panet Road in Winnipeg, by the end of 2014.

The company’s distribution of processed meats, also, will be redirected to just two centres, a new “purpose-built” facility to be built somewhere in Ontario by early 2013 and an existing distribution centre at Saskatoon.

Other distribution plants, however, are now scheduled for closure at Coquitlam, B.C. in early 2012, Kitchener and Burlington, Ont. in early 2013 and Moncton in late 2014.

“Opportunities”

The total infrastructure and equipment investments over the next three years will total $560 million and are expected to create about 1,150 new jobs. On the other hand are 2,700 jobs to be eliminated, mostly during 2014, from the processing and warehousing closures, for a net reduction of 1,550 from Maple Leaf’s workforce.

“While this initiative is fundamentally about growth, the closure of facilities will result in the loss of jobs,” company CEO Michael McCain said in a release.

However, he pledged Maple Leaf “will seek alternative uses of these facilities to create job opportunities in the affected communities.”

The new jobs created at the new and expanded sites, meanwhile, “will be sustainable and allow our people to develop new skills and experience working with world-class technologies,” he added.

The proposed new Hamilton meats operation, for example, will be a 402,000-square foot plant “which will be competitive with best-in-class facilities in North America” when completed in 2014, employing 670 people making Maple Leaf and Schneiders deli meats and wieners, the company said.

Winnipeg’s Lagimodiere Boulevard plant, starting this fall, will undergo an $85 million expansion to 340,000 square feet from 270,000, adding 345 new jobs.

By mid-2013, the plant is to be a “centre of excellence” for ham and will also be the largest bacon processing plant in Canada, taking capacity from Moncton and North Battleford. New ham and bacon smokehouses, coolers, packaging lines and other equipment will be added.

The company’s Walker Drive plant at Brampton, Ont. will get $25 million in new equipment and plant upgrades by early 2013, to consolidate production of sausages, boxed red meats and chicken strips, expanding to 240 employees.

Maple Leaf’s Saskatoon plant, meanwhile, is to see $45 million invested in a two-stage expansion, starting with a 27,000-square foot expansion to set up a “cooked-in-bag” smoked sausage line by the end of 2012, followed by upgrades to the plant’s continuous wiener line in early 2013, with “neutral” impact on payroll.

“Close the cost gap”

The company had hinted at the new Hamilton site in October last year when it said it would build a new larger-scale prepared-meats facility somewhere in Canada at an unnamed location starting in 2012.

Maple Leaf had said at the time that the move would be part of a larger “value creation” strategy along with a new Canada Bread “mega-bakery,” also at Hamilton, announced in February that year. The Canada Bread consolidation at Hamilton meant closure for three of the company’s bakeries in the Toronto area.

Maple Leaf underwent similar consolidation in its slaughter and primary processing operations starting in 2006, redirecting its fresh pork needs through its slaughter and processing plant at Brandon, Man., closing a Saskatoon plant, selling its Burlington, Ont. plant and cancelling plans for a new Saskatoon facility.

McCain on Wednesday described the company’s latest moves as “one of the largest single investments in the Canadian food industry” toward a “highly efficient, world-class prepared meats production and distribution network that will markedly increase our competitiveness and close the cost gap with our U.S. peers.”

Apart from the investments, the company said it expects to book restructuring costs of about $170 million before taxes related to the latest moves, of which about $120 million will represent cash costs.

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