Federal Government Putting $28 Million into Maple Leaf Foods

Maple Leaf Foods' new plant will be in London
Maple Leaf Foods' new plant will be in London

LONDON – Lawrence MacAulay, Minister of Agriculture and Agri-Food, on behalf of the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, announced a $28-million investment in Maple Leaf Foods, a leading Canadian producer of packaged meats.

The funding will go toward Maple Leaf Foods’ $660-million capital investment in a new state-of-the-art, environmentally leading facility in London, Ontario. It will feature the latest advanced technologies to improve productivity, animal welfare, and the environmental sustainability of poultry production. This is part of an overall project cost of $744 million, which includes additional start-up and adjustment costs. Maple Leaf Foods will maintain and protect well-paying middle-class jobs and provide skills upgrading for the increase in automation. The new facility will create 300 immediate construction jobs and will employ 1,340 full-time employees by 2023.

To further strengthen the Canadian agri-food sector, Maple Leaf Foods will spend an additional $5 million in activities that accelerate the adoption of advanced manufacturing technologies and reduce their environmental footprint by 50 percent.

“Our government is excited to invest in Maple Leaf Foods’ project to help bring new innovations to Canada’s food processing industry, keep Canada competitive in the global market and create new middle-class jobs in Ontario. This new state-of-the-art facility demonstrates how innovation is creating jobs and helping the environment with more sustainable poultry processing,” says Navdeep Bains, Minister of Innovation, Science and Economic Development.

“Canada’s agri-food industry is a key driver of innovation and well-paying jobs across the country. Our government is proud to invest in Maple Leaf Foods, helping to position Canada as a globally competitive player in the food processing sector and to increase the competitiveness and sustainability of our agricultural sector,” states Lawrence MacAulay, Minister of Agriculture and Agri-Food.

The decision to proceed followed an extensive review by the Company’s management and Board of Directors, led by a special working group that conducted a detailed analysis of all the strategic, capital and operational elements, risks and returns, and alternatives to optimize return on capital. As an indication of the rigour of this process, the new facility is approximately 90% design-engineered, providing a high degree of certainty about project costs and operational outcomes. Maple Leaf expects to incur one-time costs of approximately $140 million, including approximately $45 million in net cash restructuring and other related costs. The Company plans to finance this investment through a combination of cash flow from operations and debt.

Construction at the London site is expected to begin in the spring of 2019, with start-up planned to commence in the second quarter of 2021. The new plant will initially support over 1,450 direct full and part-time jobs, with additional job growth as production volumes increase over time. Maple Leaf will work closely with local agencies to recruit and train people and provide skilled jobs in a safe and inclusive workplace. Construction is expected to generate approximately 300 jobs, with almost 85% of project expenditures supporting domestic construction and installation contractors. The facility is expected to create a further 1,400 indirect jobs in the supplies and services sector and generate an estimated $1.2 billion of annual economic activity once it is fully operational.

“I would like to welcome Maple Leaf Foods to London,” said His Worship Mayor Matt Brown. “London’s commitment to world-class infrastructure and a robust industrial land strategy put London in a competitive position to attract an investment of this magnitude.”

Production from the Company’s three sub-scale and aging plants in Ontario will eventually be consolidated into the new facility. The Company’s plant in St. Marys is expected to close by late 2021, while its plants in Toronto and Brampton are expected to close by mid-late 2022. Each of these plants is 50 to 60 years old, with location, footprint and infrastructure constraints that limit opportunities to expand and modernize to meet growing market demand. Maple Leaf will work with local communities and government to find alternate uses for the facilities when they eventually close.

“We deeply regret the impact that these eventual closures will have on our people and communities,” said Mr. McCain. “While these closures are several years away we are informing our people well in advance, allowing us to openly communicate and support them through this long-term transition. We will provide them with job opportunities at the new facility and other Maple Leaf plants, and services to help them eventually secure new employment.”

“This world-class facility will enable Maple Leaf to meet the steadily growing consumer demand for premium, value-added poultry products and to strengthen Canada’s food system. It will incorporate leading-edge food safety, environmental and animal care technologies that advance our vision to be the global leader in sustainable protein. This is a historic investment in the Canadian poultry sector, providing significant stakeholder and economic benefits and ensuring that Canada has sufficient domestic processing capacity to meet forecasted poultry production and demand,” concludes Michael H. McCain, President and CEO, Maple Leaf Foods.