H.J. Heinz Co. is closing its plant in Leamington, Ont., a move that will cost 740 jobs and end more than a century of ketchup making in the Southern Ontario town.
The move is part of a major cost-cutting effort by Heinz’s new owners, Warren Buffett’s Berkshire Hathaway Inc. and Brazilian hedge fund 3G Capital, which bought the company in June for $28-billion (U.S.). Heinz is also closing two other factories, in Florence, S.C., and Pocatello, Idaho, shedding a further 610 jobs as it moves production of ketchup and sauces to fewer plants.
Heinz’s cuts underscore the significant pressures facing manufacturing plants in Canada, in part because the loonie has been hovering near parity for the past few years, making exports more expensive. Southern Ontario’s economy has been hit particularly hard in recent years by factory closures as companies shift production to places with cheaper labour and higher productivity. Leamington is about 50 kilometres southeast of Windsor, Ont., and the regional unemployment rate is above 9 per cent.
The Berkshire-led buyout of Heinz, announced in February, prompted fears it would begin to close plants in pursuit of efficiencies, said Erna van Duren, a professor at the University of Guelph who works with the food processing industry.
“Our decision to consolidate manufacturing across North America is a critical step in our plan to ensure we are operating as efficiently and effectively as possible to become more competitive in a challenging environment, and to accelerate the company’s future growth,” said Heinz spokesman Michael Mullen.
Some other facilities will gain from the three closures. Heinz has three plants in Canada – the Leamington ketchup factory, a salad dressing plant in St. Marys, Ont., and a plant in Toronto. Mr. Mullen said production will shift to St. Marys and U.S plants, where a total of 470 jobs will be added.
When that process is complete, Heinz will have 6,800 workers in Canada and the United States.
Leamington Mayor John Paterson said he has known of the closure for more than a week, but kept quiet about it until the official announcement was made in the plant’s cafeteria on Thursday afternoon. “Heartbreak” is how he described the town’s reaction to the shutdown.
“We’re extremely concerned about the employees and their families,” said Mr. Paterson, who has friends at the plant and was once turned down for a job there after graduating from college.
He said Heinz pays $1-million a year in property tax to the municipality, in addition to being a huge buyer of water and electricity. The other major employer in the town is Highline Mushrooms, with 700 employees.
In addition to making ketchup, the Leamington plant makes HP Sauce, baby food and Diana barbeque sauce with three daily shifts. Workers are paid about $25 an hour.
“They’ve been here for 104 years. And in those 104 years there have been so many families that made a good living from that firm. And they have been super-excellent corporate citizens. So there I guess that’s where it will hurt us the most – they will no longer be around in that aspect,” Mr. Paterson said.
Rebecca Zlotnik, 36, has worked at the plant for 11 years and said she will likely have to go back to school to find a way to support her four children, ages 12 to 19. “It’s not just the job, it’s the benefits,” she said, adding there are few other work prospects in Leamington. “I think we’re all going to have to go out farther or we’re all going fight to serve a shake at McDonald’s.”
The Heinz announcement is one in a wave of recent plant closings in the Canadian food-processing industry. Smucker’s closed its Bick’s Pickles plant in Dunnville, Ont., and pickle tank farm near Delhi, Ont., last year, wiping out 150 jobs.
Lance Canada Ltd.’s bakery in Cambridge, which employs 130 people, will close in May, the company’s North Carolina parent said. Canada Bread Co. Ltd and Kraft Foods Group Inc. are expected to close plants in Shawinigan, Que., and Oakville, Ont., respectively.
Editor's Note: A previous online version of this story incorrectly stated that Pocatello is a city in Indiana. In fact, it is a city in Idaho.