April 12, 2011
 

XL Foods to close Calgary and Idaho beef plants

 

 

Alberta beef packer, XL Foods, intends to cease operations in its two facilities in Calgary next month until this fall at the earliest, and shut down its plant in southwestern Idaho permanently.

 

XL's processing and fabrication plants in Calgary will stop its production sometime in May, due to a significant decrease in Western Canada's cow herd that has greatly affected the mature cattle supply, according to the company. Additionally, challenging competitive conditions in the Canadian marketplace have made it no longer viable for XL to effectively operate the Calgary plants.

 

XL, however, added there is a possibility that operations at the Calgary plants could resume this fall when mature cattle numbers are historically more plentiful.

 

"We regret that we have had to take such extreme action, but the significant changes in the supply of mature cattle and the global competitive landscape have not allowed the facilities to operate at or near capacity," XL's co-CEO Brian Nilsson said.

 

XL said it will continue to be an aggressive purchaser in the fed and mature cattle marketplace at this time of increased financial returns for producers, who can still contact their usual XL cattle buyers about selling to its plant at Brooks, Alberta, about 175km east of Calgary, or its other US plant at Omaha, Nebraska.

 

The XL Four Star Beef facility at Nampa, west of Boise, is to halt production at the beginning of June, XL said on Friday (Apr 8).

 

"The economics of operating the facility, combined with the capital requirements of a plant of this age make it unfeasible to operate," Nilsson said.

 

According to the media, the Nampa plant is about 85 years old.

 

XL said on Friday (Apr 8) that its US buyers will continue to buy mature cattle for the company's plant at Omaha, about 2,000km east of Nampa.

 

However, the organisation did not provide the number of employees affected by the closures, but according to media reports, the closures at Calgary and Nampa will mean layoffs for about 500 employees in each city.

 

XL's moves follow its decision in August last year to permanently close its beef plant at Moose Jaw, Saskatchewan, after a summer-long layoff of all the plant's staff in 2009.

 

Labour contract talks stalled and a lockout of the plant's unionised staff followed, lasting until the plant's closure. XL also cited cattle market conditions as a reason for the Moose Jaw closure.

 

Labour issues are also far from settled at XL's Brooks facility, which XL bought from Tyson Foods in 2009.

 

United Food and Commercial Workers (UFCW Canada) Local 401, which represents the plant's unionised staff, said the company's offer last month for a new contract is nowhere close to where it should be, and advised the Brooks workers to still prepare for a strike.

 

The Brooks plant in February picked up CAD1.6 million (US$1.67 million) in federal funding toward upgrades to its trim sorting and ground beef lines, which would double the plant's beef grinding capacity.

 

XL's owner, cattle feeding and marketing firm Nilsson Bros., entered the packing business in the late 1990s by buying Edmonton Meat Packing and XL Foods. It took over the Moose Jaw plant from the Saskatchewan government in 2000 and bought the Omaha and Nampa plants from Swift and Co. in 2006.