Canadian French-fry giant McCain Foods Ltd. says it is ending construction of its first Russian manufacturing plant and halting sales to the country because of the invasion of Ukraine.
The facility, in the Tula oblast about 200 kilometres south of Moscow, began construction in 2021 and was expected to cost $212-million. McCain suspended construction on Feb. 24, when the Russian invasion of Ukraine first began, and announced Thursday it was abandoning the project.
“The Russian invasion of Ukraine has been deeply concerning to all of us at McCain Foods,” Charlie Angelakos, vice-president of global external affairs and sustainability, said in a statement. “Our thoughts continue to be with those affected by this crisis and we have done everything in our power to put the health and safety of our employees at the centre of our response.”
McCain also said it was suspending all shipments of its products into Russia.
A report by Russian newspaper Kommersant in 2020 estimated that McCain Foods had a 20 per cent share of the country’s processed potato market at the time.
Kevin MacIsaac, general manager of United Potato Growers of Canada, said McCain differs from its rivals by building factories all over the world and sourcing their raw potatoes locally, rather than having production concentrated in a single geographical area. He said McCain, the largest French-fry maker in the world, has had experience successfully running facilities in countries with unstable economic conditions, such as Brazil.
However, he said, McCain was likely affected by the decisions of fast-food restaurants such as McDonalds that have announced in recent days they are suspending Russian operations.
“This would create quite a drop in the quantity of fries needed in [Russia], although it will be eventually replaced at a later time,” Mr. MacIsaac said.
Sylvanus Kwaku Afesorgbor, a professor of agricultural economics at the University of Guelph, told The Globe before the cancellation was announced that international sanctions placed on Russia likely made the economics of a Russian facility less attractive.
He said measures, such as Russia’s partial ban on the SWIFT payment network, made it more difficult to pay suppliers across borders.
McCain’s move came as Canadian engineering giant WSP Global Inc. said it would break off ties with Russia.
The Montreal-based company confirmed it has no employees or offices in Russia, Ukraine and Belarus but that it was working on an unspecified number of assignments for projects in Russia. It said it will end that work and no longer pursue contracts in Russia and neighbouring Belarus, a Russian ally which has allowed its territory to be used as a staging ground for Russian troops and equipment.
“WSP is deeply troubled by the conflict in Ukraine and has been closely monitoring the situation, including the sanctions which have been recently imposed,” the company said in a statement accompanying fourth quarter results. It estimates its overall exposure to the region at under $1-million.
Gowling WLG, an international law firm with headquarters in Ottawa and an office in Moscow, said it was unwinding and ending its Russian business because of concern about the humanitarian crisis in Ukraine.
“We will no longer accept new instructions from Russian clients, sanctioned or not, and we will end relationships with Russian clients in a manner that complies with our professional obligations,” Gowling said in a statement Wednesday night.
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