Sector viable despite Heinz and Kellogg closings, study finds

By Debora Van Brenk, from  The London Free Press / The Observer

Stifled by regulatory issues and legacy costs such as outdated plants, Canada’s food-processing sector will grow only with concerted efforts to guide new and long-time companies, says a leading Canadian agricultural think-tank.

“You don’t do this on the back of an envelope. You don’t do it at the 11th hour. You need to do this early,” said Bob Seguin, executive director of the George Morris Centre for agricultural policy and author of a report about the imminent departure from Southwestern Ontario of two food giants, Heinz and Kellogg.

Heinz is closing its Leamington tomato-processing plant and Kellogg its London cereal factory, shutdowns that will cost the region more than 1,300 full-time jobs.

Seguin is author of a new analysis of trends in the food-processing industry and concludes it’s a viable sector but needs tweaking and considerable shepherding.

He said consolidation in food-processing will continue in the next 10 years, but other companies will want to enter the marketplace. Enticing and hanging onto companies in Southwestern Ontario will require looking at factors that might be disincentives — unneeded regulations, outdated technologies, government red tape, for example — and figuring out how to overcome them.

It means asking not just “ ‘how can we help you?’ but ‘how else can we help you?’ ” Seguin said. It could also mean more co-ordinated efforts by governments and agencies in job-training, streamlining regulatory approvals and reinvesting in technology.

“Sometimes, the stuff that’s here-and-now needs attention and care and feeding,” he said.

Seguin noted the imminent opening of a frozen pizza plant in London by German company Dr. Oetker is one example how a business can be cultivated, in this case by the private sector and all levels of government.

“It’s not as if we’re getting worse at food processing — we’re getting better,” he said.

But so is the rest of the world.

•$92.8 billion: value of Canadian food and beverage shipments
•14.5%: industry’s share of manufacturing in Canada, second only to transportation
•280,000+: employment
•55%: share of food-processing manufacturing in Ontario and Quebec.

Sources: Agriculture and Agri-Food Canada, George Morris Centre

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