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Brian Nilsson, seen here in 2004, and brother Lee have said little to the media about the E. coli outbreak. (SIMON HAYTER/Canadian Press)
Brian Nilsson, seen here in 2004, and brother Lee have said little to the media about the E. coli outbreak. (SIMON HAYTER/Canadian Press)

XL owners giants in the beef business Add to ...

The Nilsson brothers never planned on becoming Canadian slaughterhouse titans – not at first, at least.

Before Brian and Lee Nilsson ventured into meat packing in the late 1990s in Alberta, the Nilsson clan had primarily made their livelihood in cattle trading, starting with their great-grandfather in the late 1800s in Sweden. When Nilsson Bros. Inc. made a $24-million bid for struggling XL Foods and its cattle slaughtering, processing and hide operations in Southern Alberta, the Edmonton-based company said it planned to stay small and focus on the local market.

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Nilsson Bros. was “not looking to be a Cargill or Lakeside,” which were among the biggest slaughterhouses in Canada, Brian Nilsson told The Western Producer in November, 1998. Cattle trading and the auction market their father started north of Edmonton would remain their main business, he said.

Today, their XL Foods is the second-biggest meat packer in Canada – and at the centre of the largest red-meat recall in the country’s history. The state and size of their plant and the speed of their production line have come under scrutiny. The privately held company’s recalled beef products were exported to more than 20 countries before its plant in Brooks, Alta., had its licence suspended on Sept. 27.

At least 15 Canadians in four provinces have fallen ill with E. coli O157:H7 after eating meat processed by the XL plant. On Thursday, the Canadian Food Inspection Agency gave the company the go-ahead to resume limited operations. The federal agency assured the public that no meat would leave the slaughterhouse until it was proven safe to eat.

The Nilsson brothers, co-CEOs of XL Foods, have remained largely silent since the massive recall and E. coli outbreak. They released a statement last week in which XL took full responsibility for the tainted beef and acknowledged food-safety practices fell short. The co-CEOs declined interview requests for this article. At the Nilsson Bros. office in Edmonton Friday, staff said the brothers would not be doing interviews.

“No one’s available for that today,” said Omar Sieben, who is described in various online profiles as a marketing manager and project co-ordinator at the company. “We take all responses or whatever, and I forward it to them. They’re just not interested. Okay?”

Few cattlemen in Western Canada have as extensive an imprint in the beef industry as Brian and Lee Nilsson. From raising cows to owning auction marts, feedlots and slaughterhouses, the brothers are involved in nearly every aspect of the beef business. Nilsson Bros. even offers livestock financing and farm insurance.

As a result, the Nilssons have drawn the ire of some cattle producers who feel they control too many aspects of the market. Others view them as a Canadian success story.

“They saw an opportunity for local ownership of an industry that is critical to Alberta in a way that would compliment their opportunity to raise and grow beef,” noted Lloyd Snelgrove, an Alberta cattle rancher and former cabinet minister in the provincial government. “Personally, I think it took a lot of guts for them to step up and take a run at the plant in Brooks.”

The Brooks plant, known as Lakeside, had been in the hands of U.S. food-processing giant Tyson when XL Foods bought it in 2009 for $105.5-million ($55.5-million paid on closing and the rest to be paid over five years, plus interest).

The National Farmers Union had opposed the deal, contending Nilsson Bros. was involved in too many phases of the cattle business. Also, the sale would mean more than 80 per cent of the beef produced in Canada would be handled by just two companies, XL and Cargill.

In the wake of XL’s beef recall, the union is calling for the creation of more and smaller meat-processing plants. Board member Neil Peacock, who owns a small beef herd in Northern Alberta, believes food safety would improve and prices for cattle would rise if there was more competition.

“How long would GM be in business with only two buyers of their cars?” Mr. Peacock said.

Not everyone agrees that smaller plants are the way to go. Garnet Altwasser and two partners founded Lakeside Farm Industries in Brooks in 1966. Lakeside’s first slaughterhouse, built a decade later, was small. But over time, and through ownership changes, it expanded to the capacity it is at today – slaughtering as many as 4,000 cattle daily and processing them into about two million pounds of beef.

“You cannot go back to the small little plants. We started with a small plant when we built Lakeside and it was just a constant struggle,” said Mr. Altwasser, who remained president and CEO of Lakeside for a decade after it was bought by IBP, now known as Tyson, in 1996.

“Quite frankly, world-scale plants are the safest producers of the product that there is in the meat industry,” he added.

The Nilssons have pledged to improve food-safety practices at the Brooks plant. The Canadian Food Inspection Agency has ordered a list of corrective measures, including addressing maintenance and sanitation deficiencies.

The co-CEOs have been criticized for staying silent for so long. In an interview with Alberta Farmer Express published Friday, Lee Nilsson said that, in retrospect, there may have been a better way to handle communication. The United Food and Commercial Workers Local 401, which represents workers at plant, is calling for a public inquiry into the handling of the bacterial outbreak.

“From the start, our No. 1 priority was to get the CFIA all the information they wanted and to co-operate with whatever they wanted,” Lee Nilsson told the bi-weekly newspaper. “It probably would have made for great reading, but we never felt that at any time it was appropriate to have a debate in the media, and there was no time for that. We were focused on going forward, getting this resolved, and that has been our focus from the very start.”

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