Heinz plant closure expected to have widespread economic impact

Thursday, November 14, 2013

By MATT MCINTOSH and SUSAN MANN

The closure of Heinz's Leamington processing plant will have a widespread impact on the economy of southwestern Ontario, say members of Ontario's agricultural industry.

The H.J. Heinz Company of Canada announced the plant's closing to their employees yesterday. By mid-2014, hundreds of salaried, unionized, and seasonal workers will loose their jobs as a direct result of the closure.

But Heinz employees are only a portion of those affected by the announcement.

"The region has built a huge industry around Heinz, so the decision to close completely is very bad news," says Larry Verbeke, a Leamington town councilor and a member of the Essex County Federation of Agriculture's executive board. "It's going to impact everyone from employees to fuel suppliers, tomato growers, machinery dealers, and so on."

Verbeke adds the plant closure might also lower land values in the area.

Walter Brown, tomato farmer and director on the Ontario Processing Vegetable Growers board, highlights the financial burden put on growers. He notes that after a series of very dry years Leamington area tomato farmers invested a lot of money into irrigation; some even collectively financed a water line leading into Essex County from Lake Erie.

"We invested time and money in those systems so we could stay competitive in the global market, only for that market to disappear in a single day," says Brown. "Of course, growers also have significant amounts of money invested in machinery which is no longer needed."
 
Other commodity groups are also concerned over the plant closure. The Leamington plant is a major white bean processor, and Marinus Bakker, an Ontario Bean Producers’ Marketing Board director, says he is uncertain what will happen to the market once the plant shuts its doors.

"Heinz buys the majority of our white beans, so we're naturally concerned when one of their major facilities closes," he says. "We have not had the time to digest the company’s decision, so we are not sure what's going to happen at this point."

Thompsons Limited, however, sells Ontario white beans to Heinz facilities around the world, and Brian Coutts, farm services manager for the Blenheim branch of Thompsons Limited, says he believes the company will remain a major buyer despite the closure.

Nevertheless, Thompsons’ services will see some major changes, he says.

"We do a lot of crop consulting with tomato growers in the Leamington area, specifically with fertilizer, agronomy, and crop protection. Now that the (Heinz plant) is closing, we have to focus on what is going replace the tomato," he says.

Premier and Agriculture Minister Kathleen Wynne says in a prepared statement emailed by her agriculture ministry communications director she is “extremely disappointed with the decision by Heinz to close its Leamington operations.”

She adds that she is working hard “with elected officials, economic development officers as well as agricultural groups to explore opportunities for the food processing sector in the area.”

The agriculture ministry has a regional team in the area meeting with growers, community members, economic development agencies and the company, says Mark Cripps, agriculture ministry communications director. “There is the potential for alternative uses for the current facility.”

Ontario Federation of Agriculture president Mark Wales says the closure of Heinz’s Leamington plant will make it harder for the agriculture sector to meet the premier’s challenge issued earlier this fall to double its growth and create 120,000 new jobs by 2020. “This was a large processing facility and we need processing facilities to process what we grow. Not only have we lost the processing facility, we will also lose the acreage of crop that was filling it.”

The federation plans to reach out to other producer organizations to explore new opportunities to keep the land used for processing tomatoes in agricultural production and safeguard the economic stability of the rural community.

“We need to get another processor in to replace this one,” Wales says. “If there was a good idea for the facility, like a good use for it or something, that would be a role for government.”

Another thing that’s needed is a transition plan for processing tomato growers. With the Leamington plant slated to close by June next year, “that means there is no 2014 crop for the farmers who were growing those tomatoes. There are some small Ontario processors but really they are not going to take up the slack so there will need to be some help.”

Wales asks what crops the farmers will grow. “They have a lot of capital investment in that (tomato growing) equipment and what happens to it? Is there something else they can use it on and is there another crop they can grow?”

Currently the farmers’ opportunities are limited to growing corn and soybeans. But other crops need to be developed for farmers to transition into. Wales says “we’ve had a transition for tobacco when that industry eventually collapsed.” BF