Skip to main content

Food makers have announced plans to close several plants in Ontario recently, including HJ Heinz in Leamington, Kellogg in London, Smucker’s in Dunnville and Lance Canada in Cambridge.

dave chidley The Globe and Mail

After a slate of plant closings and thousands of layoffs, a stronger, more efficient Canadian food manufacturing sector is emerging.

More than 140 Canadian food plants have closed and 23,800 jobs have vanished since 2006, but those losses have helped the country's biggest manufacturing employer retool to become more competitive, new research says.

The report, written by professors at Western University's Ivey Business School, says Ontario has borne the brunt of the plant losses, but that 63 have opened in that time and 67 companies announced big investments in existing factories.

Story continues below advertisement

"Closing a plant has impacts on many levels and no one likes to read about another manufacturing site being closed. However, what we found in our research was an industry in transition rather than one in decline," says Dr. David Sparling, chair of agri-food innovation at the Ivey Business School and co-author of the report.

"Almost 90 per cent of closures occurred in multiplant companies, largely the result of companies reorganizing and consolidating production in fewer large plants to achieve greater scale and efficiency. The results are leaner operations, higher productivity and stronger companies better equipped to compete."

Mr. Sparling points to Maple Leaf Foods Inc. as a company that is at the forefront of the change.

The maker of Schneiders and Shopsy's meats is nearing the end of a seven-year revamp that cost more than $1-billion. It is upgrading or closing old plants while opening two distribution centres and four factories in Winnipeg, Saskatoon, Hamilton and Brampton, Ont., in a bid to reduce production costs while boosting shareholder returns.

"The result will be a strong, more profitable, Canadian-based food company that is poised for growth both within and beyond our borders," Michael McCain, Maple Leaf Foods chief executive officer, told The Globe on Wednesday.

Maple Leaf spokesman Dave Bauer said technology and economies of scale will create about 1,000 high-skilled jobs while allowing the company to reduce its overall payroll by 1,500 people.

"In the wake of the rise in the Canadian dollar and its enormous impact on the viability of Canadian manufacturing, we had to think big, invest or see our market position shrink," he said.

Story continues below advertisement

The food industry is Canada's biggest manufacturing employer, and No. 2 in revenues. While it is easy to tally jobs lost, it is much harder to count the number of jobs added. However, Mr. Sparling figures the food sector has added slightly more jobs than it has lost. And these jobs are more likely to be off the processing line – higher skilled jobs in such areas as marketing and computers systems.

Unlike other manufacturing sectors, food makers survived the economic slump of 2007 and 2008 with solid revenues and employment levels. And since then, companies have been making their operations more efficient, spending on new technology and producing innovative kinds of food with simpler ingredients to appeal to a broader range of consumers.

"This is an industry that isn't really exciting in terms of dramatic growth but when you're talking about surviving a recession with increasing revenue, it is exciting," Mr. Sparling said in an interview.

The rise of the dollar to par with the U.S. currency was a big driver of the industry's restructuring, he said.

"We've talked to a lot of CEOs and what we've found is … the industry knew that at an 80-cent dollar, they're fine. Competition is pretty easy. At [par], everybody had to sharpen up."

Food makers have announced plans to close several plants in Ontario recently, including H.J. Heinz in Leamington, Kellogg in London, Smucker's in Dunnville and Lance Canada in Cambridge.

Story continues below advertisement

But there have been success stories, including the soon-to-open Dr. Oetker pizza plant in London, which will employ about 125 to make 50 million pizzas for the U.S. and domestic market.

---------------------------------------------------------

Highlights of the Ivey report:

  • Since 2006, 52 per cent of the jobs lost in food making have been in Ontario.
  • Foreign-owned food plants are more likely to close than Canadian-owned ones.
  • Canadian-owned plants are more likely to restructure or invest than foreign-owned factories.
  • Quebec has balanced plant closures with openings.
  • The food industry is in better shape than it was in 2006.
  • The recent decline in the value of the Canadian dollar gives food makers a chance to compete against imports and expand exports.
Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

If your comment doesn't appear immediately it has been sent to a member of our moderation team for review

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.