Germany's Dr. Oetker is closing its frozen pizza factory in Grand Falls, N.B., in May, eliminating 180 jobs less than four years after taking over the plant from McCain Foods.
Dr. Oetker said it will move 70 per cent of the plant's production to its factory in London, Ont., and the rest will move to Lodi, N.J.
Marcel Deschenes, mayor of Grand Falls, said Dr. Oetker and McCain are major employers in the city and surrounding region, which has a total population of 18,000.
"It's not good news for the community and it's not good news for the employees that are losing their job," he said in an interview. "You can lose 180 jobs in Toronto and you won't feel the effect at all. But in a small community everybody knows each other … all of a sudden you get this slap in the face and it's hard to accept."
New Brunswick's jobless rate in December was 7.8 per cent, compared with the national average of 5.7 per cent, according to Statistics Canada.
In a statement, Dr. Oetker blamed the shutdown on the "increasingly challenging" food market.
"There is nothing our Grand Falls employees could have done differently. Food manufacturers have been facing severe economic pressures over the last few years and today's market has become ultra-competitive. In order for Dr. Oetker to continue operating efficiently within this challenging environment, we needed to restructure our Canadian manufacturing operation," the company said.
Several Canadian food plants have closed in recent years as global food makers have consolidated output in larger, modern factories to cut costs. Last week, Campbell Soup said it is closing its Toronto factory and will supply the Canadian market from U.S. plants. Other food makers that have closed factories include HJ Heinz Co., Kellogg, Unilever Canada Inc., and Smucker's. The plants that have closed are decades old and expensive to update.
Sylvain Charlebois, dean of business at Halifax's Dalhousie University, said the foreign employers facing high Canadian costs and a volatile currency are reluctant to spend millions on robotics and automation to upgrade older Canadian factories, preferring to close up and move production to other plants. The high concentration of foreign ownerships makes the food manufacturing sector vulnerable to job losses, he said.
"It's been going on for more than a decade," he said by phone. "Canadians don't have much control over these decisions…. I don't think it's going to stop here. There are going to be more closures."
Dr.Oetker said it will set up a $4-million fund to help employees with job retraining.
Dr. Oetker, which makes cake mixes, yogurt and other food at plants around the world, in 2014 opened its $100-million London plant with $19-million in federal and Ontario grants.
In the same year, it bought McCain's frozen pizza business and leased the Grand Falls factory from McCain. A spokesman for Dr. Oetker declined to provide more details.
Andrea Davis, McCain's director of government and public relations, said the company was "surprised and disappointed" to learn the plant is closing.
"We had been given no indication that the plant is experiencing difficulties and given the short notice of Dr. Oetker's planned closure, we've not had time for future considerations," Ms. Davis said.
The office of TJ Harvey, the federal Member of Parliament for the area, issued a statement saying the company felt it made no sense to invest in new equipment for a plant that it leased.
"Government could not have affected this decision as Dr. Oetker's was difficult but final," the statement said.