Jobs on the block as feed companies merge

Friday, May 23, 2008

by MARY BAXTER

Rob Flack, president and CEO of Masterfeeds, said Thursday that the acquisition “brings more ruminant business our way,” by significantly increasing the company’s share of dairy, beef and horse feed markets in Ontario.

Flack attributed the consolidation of the two businesses to “excess capacity” in the province’s feed industry. He said it has been created by producers exiting or downsizing their operations in response to tough market conditions in the hog and beef market and “enormous increases” in feed costs.

Lydia Botham, a spokesperson for Land O’Lakes Canada noted consolidation has become a trend not only in agriculture but also in many other industries.

“People want to have that size and scale to have a place in the marketplace,” she said, describing Land O’Lakes Canada as having a regional presence, primarily in Ontario, while Masterfeeds was a “strong player” in the national feed industry.

The acquisition, announced Wednesday, will involve Masterfeeds buying licensing agreements that permit the use of certain Land O’Lakes brands as well as some future brands and nutrition technologies developed by Land O’Lakes Purina Feeds. The deal also involves Masterfeeds buying two feed mills in Wingham and Peterborough from Growmark previously leased by Land O’Lakes Canada. Masterfeeds will take over Land O’Lakes Canada’s existing commitments to supply certain Growmark cooperatives in Ontario.

Flack said Masterfeeds does not plan to continue operating the Peterborough plant, although it will retain some jobs at that location. Jobs will also be lost at Land O’Lakes Canada’s regional office in Guelph “because we won’t assume those employees,” he said. Regional and business operations will be consolidated in London where Masterfeeds maintains its national head office.

The jobs of Masterfeeds’ 375 employees nationwide won’t be affected by the acquisition, Flack said.

Botham confirmed Land O’Lakes Canada currently has 90 employees in Ontario. Those not offered a position with Masterfeeds might possibly be offered positions with the Agronomy Company of Canada, one of Land O’Lakes Canada’s parent companies (U.S.-based Land O’Lakes Inc. is the other owner). “For employees who don’t have a position, then there will be a severance package,” she said.

The companies are not releasing financial details of the transaction but Flack did confirm it would be a cash deal with June 2 as the target closing date. BF