The head of the union representing most of the 1,550 employees who could lose their jobs in an overhaul at Maple Leaf Foods says he hopes Canada’s largest food processor can sell plants it wants to shut down.
Finding buyers is crucial for workers in four provinces who will lose their jobs and communities where the plants are located, said Wayne Hanley, national director of the United Food and Commercial Workers International Union.
“In the Moose Jaws, New Brunswicks, where these plants have been and there aren’t a lot of good paying jobs, new jobs being created — being able to maintain employment is certainly well received,” he said Thursday.
Maple Leaf announced late Wednesday it will cut the number of its plants to five from 17 by 2014 as part of a corporate streamlining aimed at improving profits and making the Toronto-based company more competitive.
It also plans to build a new distribution centre at a yet to be disclosed location in southern Ontario.
After earlier plant closures — in southern Ontario, Nova Scotia and B.C. — as Maple Leaf refocused its business towards value-added processing, the company found buyers who have kept them going.
In 2010, Maple Leaf sold its Burlington hog slaughter plant to Fearman Pork for about $20 million.
“In Burlington, they had a pork plant and rather than mothballing it and closing it down, they found somebody to sell it to and partner with,” Hanley said.
“It operates just fine.”
Maple Leaf’s streamlining is part of the company’s plan to become more competitive and increase its profits. The company says it regrets having to cut eight per cent of its workforce, or some 1,550 jobs.
But the company is also spending $560 million to build a new plant in Hamilton and upgrade three others in Winnipeg, Saskatoon and Brampton, Ont. That will create more than 1,150 new jobs. Nearly half — 670 — of those jobs will be centred at the new plant in Hamilton, with another 345 added to the Winnipeg hub.
CEO Michael McCain stressed that the company is looking to line up deals for alternate uses for the 10 plants and distribution centres it plans to close in the next three years.
The company did just that in April, when it shut down the Berwick, N.S. plant, which is being converted to a smaller poultry processing plant for Eden Valley Poultry.
It was also able to find a buyer — Premium Brands for its prepared meat processing plant in Surrey, B.C. last month, just weeks before it was slated to close.
Both employers, which are in the process of retrofitting the buildings, will bring jobs to the communities, but for far fewer people than Maple Leaf had employed.
John Prall, mayor of the small town of Berwick, said the shutdown of the sole industrial business in town put 300 people out of jobs — and the announcement came right before Christmas. But some relief came shortly after when the company announced it had found a buyer for the processing plant.
“Most people still think of it as a miracle, we didn’t have any inkling that there was another buyer … people started to breathe a little easier.”
Prall said it will likely employ about 100 employees from Berwick and the surrounding area.
But retail analyst Bob Gibson said given the age of most of the plants, the eight communities in question shouldn’t get their hopes up a new employer will come in to save the jobs.
“Really, who would buy it? I would suspect that it doesn’t look good,” he said.
While there are not many Canadian manufacturers the size of Maple Leaf willing to invest in such plants, there are a number of smaller, regional companies that may be looking to expand.
That’s what happened after Maple Leaf shut the plants in Ontario, B.C. and Nova Scotia.
However, he notes, the potential buyers that Maple Leaf says it may find are not necessarily ones that would create jobs in the communities.
“Maybe the real estate is so attractive that someone wants to just crush it and put up a condo or something,” he said.
But the union representing about 1,200 workers who will lose their jobs at a century-old plant in Kitchener says that’s not good enough and wants the company to reconsider its decision.
Meanwhile, nearby Hamilton, Ont., where the company is opening a large new plant, will see hundreds of jobs added to the community.
Kitchener mayor Carl Zehr said he fought to have that new $395-million plant located in his community, but believes the aging building being shuttered by Maple Leaf also has potential for purchase by a high tech employer, with better paying jobs.
That happened with many manufacturing plants closed in the area during the recession and before, with some properties repurposed into offices for Google Desire2Learn and others as the region becomes known as a technology hub in Canada.
He said the city will continue to discuss with the company options for the best use of the 25-acre property.
“We will work with them as they come up with potential purchasers, but we also want to take a look at not just that building but that entire area,” he said.
The company will book a $170-million charge for severance, plant closures and other costs associated with a major overhaul of its Canadian business.
Michael Vels, Maple Leaf’s chief financial officer, told analysts Thursday the before tax charge reflects the costs of the streamlining.
About $120 million of the charge is a cash cost to the company, which is likely to be spread out from 2012 to 2015, reducing the impact on the company’s quarterly earnings.
But Vels said the company is “behaving as responsibly and empathetically” as possible, as it gives employees years of notice, opportunities to apply for positions at other plants and seeks buyers for the plants it wants to close.
The company will lay off employees at plants including:
- 1,200 employees in Kitchener
- 325 employees in Toronto
- 247 employees in Hamilton
- 332 employees in North Battleford, Sask.
- 461 employees in Moncton, N.B.
- 27 employees at a small facility in Winnipeg
- 87 employees at a distribution centre in Burlington, Ont.
- 37 employees at a distribution plant in Coquitlam, B.C.