For Rob Crawford, the union head at Heinz’s food processing plant in Leamington, Ont., Thursday is a bittersweet day.
Layoff notices started going out to more than 700 employees in the morning at the same time press releases were hitting the wires hailing a new agreement to save a manufacturing facility that’s been at the centre of the town’s economic life for more than a century.
Heinz still plans to leave the southwestern Ontario town on June 27, but a new group of Canadian investors is picking up some of the slack, striking a deal to continue production at the plant and preserve 250 jobs as well as take on additional workers during the peak harvesting and processing season.
“I’m pretty happy that it’s coming together,” Crawford said.
The new group, called Highbury Canco Corp., is formed of four investors, led by Toronto businessman Pradeep Sood, an entrepreneur who’s served on the Toronto Board of Trade and has chaired the Ontario-India Business Forum.
The plant’s new ownership group has said it will work with the local UFCW 459 and allow the union to continue on in the facility. “They made a commitment to respect the collective bargaining rights,” Crawford said.
But that could mean for workers who are rehired a reduction in the average wage, which is about $25 an hour on average.
“I’d rather not comment on that until we get there. Will they be lower? Possibly,” Crawford said. “Will there be a pension and benefits? Absolutely. They’ve made that clear.”
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In a separate interview, Sood said the group has just begun assessing the financial model to determine how to maintain a profitable plant in Leamington – a town Heinz helped establish as the country’s tomato capital.
“We have to make the project viable and sustainable. We have to look at every aspect of cost and sales to decide how we make that happen,” Sood said. “There’s no point in doing something without sustainability.”
The group of investors are all Canadian Sood said, and one is from the Leamington area. Sood declined to name the other three parties in the new company.
The group has signed a letter of intent with Heinz, and hopes to finalize a transfer of ownership of the plant in the weeks ahead.
Heinz announced in November it was pulling out of Leamington, delivering a devastating blow to the southwestern Ontario town of 28,000 that Canadian folk singer Stompin’ Tom Connors once anointed “ketchup country”.
The Heinz announcement is one of several made by major firms in recent months in southwestern Ontario as a parade of companies shift production from the country’s manufacturing heartland to lower-cost regions abroad.
Cereal maker Kellogg said in December it was shuttering its 90-year-old London, Ont. plant in order to expand production at a Thailand facility.
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Though Heinz is pulling out of Leamington, it will continue make its products with the new company to be shipped and sold across Canada. Soot said Heinz was seeking a “co-packing” agreement with a third party who would continue producing some of its products for the Canadian market.
The new agreement also means growers can continue to grow supply crops like tomatoes and beans bound for the processing plant. But with the net number of products falling, the new company won’t require all of what’s typically processed by Heinz.
While tomato juice and a selection of other products will continue to be made and packaged ketchup, for example, won’t be, Soot confirmed.
“It won’t be to the same scale but it’s certainly better than zero,” Soot said of the new deal.
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