Maple Leaf Foods closes meat processing plant

Maple Leaf Foods Inc. (TSX: MFI) is closing a prepared meats plant in suburban Vancouver and laying off 165 employees as part of a restructuring plan to consolidate operations and cut costs.

Operations will begin to wind down in May and the plant in Surrey, B.C. — which produces sliced meat, deli products and sausage for stores and restaurant customers in Western Canada — will close in September.

"The closure of the Surrey plant is an important step towards consolidating our manufacturing at fewer, dedicated scale plants, resulting in reduced supply chain costs and better efficiencies," Rick Young, executive vice president of consumer foods at Maple Leaf, said Tuesday.

"While necessary, we regret the impact on our skilled and dedicated employees. We will recognize their service and will support their transition to new employment."

The Toronto-based food processing company says production will be consolidated at Maple Leaf plants in Saskatoon, Manitoba and Ontario. The 165 employees who will lose their jobs will be encouraged to apply at other Maple Leaf plants, including three others in B.C., the company said.

Maple Leaf expects closure costs to amount to $12.1 million before tax, with $4 million recorded in the first quarter. The remainder will come when the plant is closed in the fourth quarter.

The company announced a $1.3 billion restructuring plan in October designed to reduce costs and improve profit as the company grapples with weaker sales, rising raw material prices and the high Canadian dollar, which makes its exports more expensive to foreign buyers.

It has already embarked on plans to shut down and consolidate its 24 processed meat operations which could leave hundreds of employees jobless but improve profitability.

In its first move to consolidate operations, it announced in November that a prepared meats plant in Berwick, N.S. would close in April, leaving some 300 people out of work as part of the restructuring plan to reduce costs.

Maple Leaf, which is also Canada's largest baker through its Canada Bread subsidiary, employs about 23,500 people at operations across Canada, the U.S., the U.K. and Asia.

Its well-known brands include Maple Leaf and Burns cold cuts and Dempsters breads. The company was formed in the early 1990s from the merger of meat processor Canada Packers and baker Maple Leaf Mills.

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