Maple Leaf revamp benefits farmers: market analyst

Friday, October 21, 2011

by SUSAN MANN

Maple Leaf Foods’ efforts to revamp its further meat processing business and distribution centres should strengthen the market for pork products, says Kevin Grier, senior market analyst with the George Morris Centre.

“That’s positive for farmers,” he says, noting the company’s changes announced Wednesday would have an indirect effect on farmers because the facilities Maple Leaf is changing won’t be buying raw materials directly from producers.

Maple Leaf spokesperson Linda Smith says they’ll be sourcing pork from their Brandon, Manitoba facility because “that’s the way our network is designed.” The company will source chicken and other ingredients from its own Ontario facilities.

The sourcing of pork won’t change because of the changes to Maple Leaf’s further meat processing business and distribution centres, she says.

The company plans to construct a $395 million, 402,000-square-foot prepared meats facility at Hamilton. The new facility will be completed in 2014, employ 670 people and make Maple Leaf and Schneider’s deli meats and wieners. The company is also planning major expansions to its meat further processing plants at Brampton, Saskatoon and Winnipeg. But six other plants, including the ones in Hamilton, Kitchener, Toronto, Moncton, Saskatchewan and a small facility in Winnipeg will be closed by 2014.

Grier says the plant planned for Hamilton will be the equivalent in size to 10 good-sized grocery stores.
 
Maple Leaf’s distribution of processed meats will be redirected to two centres: a new facility being built in Ontario by early 2013 and the existing distribution centre in Saskatoon. Centres in Kitchener and Burlington will be closed in early 2013, while Coquitlam B.C. will be closed in 2012 and Moncton will be shut down in 2014.

Maple Leaf is spending $560 million over the next three years on the changes. The changes will result in the loss of 1,550 jobs with most occurring in 2014.

In a press release Maple Leaf says it’s making the changes to its prepared meats business to reduce operating costs and increase productivity. President and CEO Michael McCain says they’re creating a highly efficient, world-class prepared meats production and distribution network “that will markedly increase our competitiveness and close the cost gap with our U.S. peers.”

Grier says these most recent changes are part of the company’s overall strategic refocusing started in 2006 when it consolidated its slaughter and primary processing businesses, which included selling the Burlington plant.

“It all makes perfectly good sense,” he says.

Even though farmers get concerned about rationalization and plant closures, it’s always better to have fewer, efficient-scale plants than it is to have several, small and inefficient plants, he explains. “Producers ultimately benefit.” BF