At the Greyhound bus station in this small southern Alberta city, it’s been busier than usual for days. With XL Foods’ Lakeside slaughterhouse shuttered amid an E. coli outbreak and lingering uncertainty over when the country’s second-largest meat-packing plant will reopen, some laid-off workers are deserting Brooks in search of a job elsewhere.
They have few options here. XL is an economic engine and the largest local employer by far. Until the first round of layoffs hit a little more than a week ago, about 2,000 labourers toiled in the slaughterhouse, many of them immigrants or temporary foreign workers.
“A lot of people are living paycheque to paycheque,” said Brooks businessman Ken Grewal, who watched 19 people board a bus for Edmonton on Friday. Several were XL workers, he said, taking their belongings with them for the nearly seven-hour ride to the Alberta capital. If the XL plant doesn’t reopen soon, Mr. Grewal worries the departures could morph into an exodus, crippling Brooks.
“It will definitely affect the community. It will affect every single business,” he said. “We are a small community. We are not a big city.”
In this city of about 13,500 people, which last fretted about the slaughterhouse’s survival only four years ago, business owners, politicians and workers can’t help worrying about the ultimate fate of Lakeside. The meat-packing plant is at the centre of the largest beef recall in Canadian history and the source of 16 E. coli O157:H7 illnesses in four provinces.
Even with a Brazilian-controlled company taking over management of the beef-processing plant last week and the Canadian Food Inspection Agency confirming the remaining 5,100 carcasses in the facility tested negative for the potentially deadly bacteria, it’s unclear when the meat packer will be up and running and exporting again. There is speculation its licence to operate could be reinstated this week.
Neither is it clear whether JBS USA, a subsidiary of Brazil-based JBS S.A., a global meat-packing giant whose biggest shareholders are its founding family and the Brazilian government, will buy XL’s Lakeside plant and other operations. JBS USA has agreed to temporarily manage the slaughterhouse for XL, a privately held company based in Edmonton. It has also been given the exclusive option to purchase the slaughterhouse and other properties for $50-million (U.S.) in cash and $50-million in JBS S.A. shares.
The deal would give JBS USA a significant foothold in Canada. On Friday in Ottawa, JBS executives met with federal Agriculture Minister Gerry Ritz and the Canadian Food Inspection Agency. On Monday, company officials are expected to be in Brooks. Mayor Martin Shields hopes he’ll have a chance to meet with them.
Over a cup of green tea in a coffee shop near City Hall, the mayor expresses cautious optimism over the management change. The Lakeside plant was built by local cattlemen in the 1970s and bought by American meat packers two decades later.
In 2008, the community was gravely concerned that U.S. food giant Tyson could shutter the slaughterhouse. So when brothers Brian and Lee Nilsson, co-CEOs of XL, stepped forward with a $100-million-plus bid, Brooks rejoiced.
Now, facing losses in the millions tied to the meat recall and a class-action lawsuit from E. coli victims, XL is in trouble. JBS USA may be Lakeside’s – and Brooks’ – only hope.
“We know they’re window shopping,” Mr. Shields said of JBS.
“People don’t understand how intertwined the cattle industry is with that border out there,” the mayor added. “There are so many live cattle being shipped across the border in the last 10 days. Every long-haul liner that can move in Western Canada and in the Western states is moving today with cattle in it.”
At the end of the day, cattle can simply be processed south of the border.
During a Saturday night meeting of cattle producers at Bow Slope Shipping, frustration over the closing of XL was palpable. Many wanted to know why the CFIA didn’t catch problems at the plant sooner and why the closing has lasted so long.
The Lakeside plant and Cargill’s slaughterhouse in High River, south of Calgary, handle more than 80 per cent of Canada’s beef processing. The Western Stock Growers’ Association is calling on Prime Minister Stephen Harper to “personally intervene to break this impasse” at XL.
The Lakeside plant hasn’t been able to ship beef to the United States since Sept. 13. Its licence to operate was suspended two weeks later, on Sept. 27.
“This is a crucial time in our industry,” Strathmore-Brooks Wildrose MLA Jason Hale told the audience. “We need to ensure that this plant does reopen.”
With their last paycheque already in hand and employment-insurance benefits not expected to arrive for weeks, the financial squeeze being felt by XL workers is expected to ripple throughout Brooks. According to an assessment from a regional development organization, $102,000 will be lost daily in net wages even with employment insurance covering 55 per cent of workers’ pay.
“That is huge,” the mayor said. “That is going to start spinning into the community real quick. It won’t take long.”
Since the layoffs, dozens of XL workers have streamed into the immigration services office for advice and help with their résumés, noted Mohammed Yusuf Idriss, a manager with Brooks and County Immigration Services. Many residents, businesses and social organizations have stepped up to help the workers, donating to the food bank, offering jobs or showing a willingness to provide a break on apartment-rental payments and loans.
The Lakeside plant has not only moulded Brooks’ economy, it has also shaped the community’s cultural fabric. More than 100 different countries are represented in Brooks, the mayor said. The city is one of the most diverse communities in Alberta and is seen as a place of opportunity for many newcomers.
“There are very few places in Canada where an immigrant can arrive and start work the next day,” Mr. Idriss noted.
In truth, the XL layoffs are being felt far beyond Brooks. Many workers have been sending part of their income to relatives in impoverished homelands and, for the moment, that lifeline has been severed.
“Right now, I have no choice. I can’t give,” said meat cutter Kemel Abdella, who had been sending about $200 every month to his ailing mother in Ethiopia.
Mr. Abdella has worked at Lakeside for 11 years. He started at $11.25 an hour and was recently bumped up to $19.10. Because he’s been helping his family in Ethiopia for many years, the 35-year-old has scant savings. He’s worried about covering his coming payments – $765 in rent, plus utilities and car insurance.
“I pray to God every morning that XL will open,” he confessed. “Even this month, I don’t know how I’m going to handle it.”