March 25, 2014

Maple Leaf gets US$4.5 million loan to improve production

 

 

 

The Canadian government is putting CAD5 million (US$4.5 million) into Maple Leaf Foods' new Hamilton meat plant, a loan which is half the cost of a new piece of machinery that's expected to make the production of deli meat safer and more efficient.

 

The loan was announced by Pierre Lemieux, parliamentary secretary to Agriculture Minister Gerry Ritz.

 

"When it comes to agriculture, our government is not sitting still," Lemieux said. "We know that innovation is the cornerstone of a strong and successful industry. With this investment, we are supporting new processing technology that will keep jobs in Ontario."

 

Rick Young, Maple Leaf's executive vice-president for transformation, said the support is an important expression of confidence in a company struggling to reshape itself for global competition.

 

With the government money, Maple Leaf intends to install a fully automatic system for producing deli meats.

 

Young said about 140 of the approximately 700 jobs at the new plant will be management and technical positions, sharply reducing the number of human hands that will touch the product as its goes through the system.

 

In the summer of 2008, Maple Leaf suffered a major blow when its operations were linked to a deadly listeriosis outbreak.

 

Maple Leaf president Michael McCain has said the new Hamilton plant is a key piece of the company's hopes for the future. When fully up and running, it is expected to be able to produce 750 hotdog packages and 1,300 packages of prepared meat per minute. That increased efficiency is critical to the company as it struggles to recover from a 2013 net loss of CAD58.5 million (US$52 million), compared to profit of CAD42 million (US$37.5 million) in 2012.

 

The new CAD400-million (US$357 million) Hamilton plant will produce wieners, deli meats and other products. It replaced three older factories. Transfer of wiener production from an older plant in Hamilton is to be finished during the first quarter of this year while production of sliced meat is to start in the second quarter.

 

Maple Leaf's challenges mirror issues facing the entire industry. Agriculture department figures show the meat industry had shipments worth CAD23.8 billion (US$21 billion) in 2012 and is the largest sector of the Canadian food manufacturing industry. Those figures also show the industry has had a tough period.

 

Between 2011 and 2012, Canadian beef exports fell 19% while exports to the US specifically dropped 21%.