Maple Leaf Update: Company to book $170M before tax charge in streamlining plan
Maple Leaf Foods will book a $170 million charge for severance, plant closures and other costs associated with a major overhaul of its Canadian business.
The chief financial officer of Canada’s largest food processor told analysts today the before tax charge reflects the costs of the streamlining announced late Wednesday.
About $120 million of the charge is a cash cost to the company.
The company says it regrets having to cut eight per cent of its workforce, or some 1,550 jobs.
But Maple Leaf believes it is behaving as responsibly as possible.
Maple Leaf is shutting down plants in four provinces as it tries to become more competitive and increase its profits.
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.
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 by 2014.
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.
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.