THE SUNDAY E-MAIL
Ottawa Postal Workers’ News Bulletin
February 16, 2014
On December 10, 2013 US giant food monopoly Kellogg Company based in Battle Creek, Michigan announced that it will be closing its 107 year old food processing plant located in London, Ontario throwing over 600 workers out of work and further devastating the farmers and the socialised economy. Both workers and farmers referred to the Kellogg announcement as a serious body blow to the people of London and one which will be hurting them for a long time to come.
Over 550 workers at the plant are unionized workers and members of local 154G of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union while 65 are non-unionized employees. Bob Martin, president of the local said the workers were shocked to learn they will be losing jobs that pay between $20 and $30 an hour.
The announcement by Kellogg Co. to close its London plant followed an earlier announcement made by giant monopoly US Steel on October 29, 2013 to close Hilton Works and end over 100 years of steelmaking activities in Hamilton. It also came just a few weeks after another US giant monopoly H.J. Heinz Company announced the closure of its 104 year old food processing plant in Leamington, damaging the local farmers and wrecking the community there as well.
The workers at Kellogg were informed of the impending closure at a mandatory employee meeting which the company organised at a hotel during the morning the same day the announcement was made. The meeting lasted not more than five minutes. Aside from the decision to shut down operations, the workers were told the machinery at the plant would be warehoused.
Kellogg had previously announced on November 5, the layoff of 110 unionized workers for New Year’s Day and the firing of 11 managers citing a drop in demand for breakfast cereal. Workers at Kellogg produce 27 variety of cereals. Kellogg Co. had sales of $14.2 billion in 2012, making it the world’s leading cereal company as well as the second largest producer of cookies, crackers and savory snacks.
“It is all about corporate greed” said many workers. “If you read the Kellogg profit statements, they are making more money now than they ever did, but it’s never good enough and it’s usually at the expense of the workers”.
The London plant underwent a $223 million renovation and expansion in 1985 and was considered at the time to be a state-of-the-art food processing plant. Kellogg now has plants in 35 countries and sells its products to more than 185 countries around the world. The London plant is one of the oldest plant in the Kellogg empire. All indications are that Kellogg will be transfering its cereal manufacturing from London to other plants in Michigan and Pennsylvania.
“We have a compelling business need to better align our assets with marketplace trends and customer requirements,” John Bryant, Kellogg’s President and CEO, said in a statement. “To that end, we are taking action to ensure our manufacturing network is operating the right number of plants and production lines, in the right locations, to better meet current and future production needs and the evolving needs of our customers”.
Aside from the closure of the London plant, Kellogg also announced the closure of a plant in Australia and the expansion of a food processing facility in Thailand. All these decisions stem from Kellogg’s Project K which is aiming at restructuring the company by rationalizing its operations throughout the world and by downsizing its global workforce by 7%. Kellogg cites a drop of 2.2% in U.S. sales of breakfast cereals as the main justification for the project. By closing its London plant, CEO John Bryant says that it is looking at “unlocking cost savings”.
In a previous attempt to “unlock cost savings”, Kellogg opened a completely non-unionized plant in Belleville, Ontario in 2008 which was funded from the public purse by the Ontario government. The government gave Kellogg a grant of $2.4 million in 2007, and an interest free $9.7 million loan in 2008 to build the Belleville plant. The loan represented 10% of the company’s capital investment in the new plant which produces Mini-Wheats cereal. The plant currently employs a little over 100 workers.
In 2011, the Ontario Liberal government announced another grant for the Belleville plant of $4.5 million to upgrade the facility while Kellogg invested $43 million for that purpose. The union raised warning flags then. According to local union president Bob Martin, Kellogg representatives have informed him that no London workers will be offered jobs in Belleville.
On January 10, 2014 precisely one month after its “business decision” to close the London plant, Kellogg Co. announced that it had unlocked significant cost savings with Project K that it will be building a new snacks manufacturing facility in Malaysia. Construction of the plant is set to begin immediately.
In a statement regarding the London plant closure, Ontario Liberal Premier Kathleen Wynne expressed “disappointment” and so did Eric Hoskins, Ontario Minister of Economic Development, Trade and Employment. Other political and business leaders expressed the same. However, none challenged the “business decision” of Kellogg Co. and rose as a public authority to defend the public interest. The Harper conservative government did not do anything either.
Under the hoax of “cost savings”, the production of value is being destroyed in Canada in both the goods and services producing sectors. How are Canadians to live without the production of value in their own economy? The ready-to-eat cereals produced in London will now have to be bought from the United States. This means an equivalent value will leave the country rather than having workers produce the value here. This deprives the country of jobs and wealth.
London’s unemployment rate is one of the highest in Canada. According to a member statement by Irene Mathyssen (London-Fanshawe, NDP) made in the House of Commons on January 27, 2014 on the occasion of the resumption of parliament, since November 2006, there are 11,300 fewer manufacturing and food processing jobs in London and 2,600 more unemployed workers.
The whole supply chain from agriculture to services takes a blow from the closure of a food processing plant. At a protest to oppose the closure held on February 1, 2014 in front of the London plant, Ann Slater, vice-president of policy for the National Farmers Union told reporters that “grain for Kellogg was a high value product for local farmers, who will now be pushed into producing soy beans and corn for the export market”. “We have to do something. We can’t just lay down and get run over”, she said.
Without immediate action by the working class to try and reverse this state of affairs, the future does not look good. An organised resistance is necessary to defend the people’s economy, well-being and security.
Plant closures and the destruction of the means of production must be stopped at once. If Kellogg monopoly is unwilling to come to an arrangement with the working class then the government should tell Kellogg that only products the company manufactures in Canada will be allowed to be sold in Canada.
Another possibility at this time is the manufacturing, at the London plant, of cereals under different names using locally produced grains as a joint worker/government initiative or some other arrangement. The issue for us is to discuss these matters and take up the task of political empowernment to create a public authority that will stand up and defend the Canadian economy and involve everyone in a genuine nation-building project that would be placed in the service of the general interest of the society. The answers to the two questions which are being posed time and time again as to Whose Economy? Our Economy! and Who decides? We decide! must be fully implemented.
The closure of the Kellogg plant in London is terrible news for the city who has suffered greatly over the past few years with the closure of Electro-motive Diesel (locomotive plant), McCormick-Beta Brands (biscuit and candy plant) and the closure of the Caterpillar plant.
For your information
In 2006, Cadbury-Schwepps closed down a grape juice bottling plant in St. Catherines (130 jobs); in 2007, Hershey closed its chocolate factory in Smiths Falls (600 jobs), in 2008, Can Gro Corp., which had brought two plants from Kraft closed down those operations in Welland and Exeter (280 jobs), the same year, Campbell Soup Co., closed a plant in Listowel (500 jobs), in 2012, Bick’s pickle plants in Delhi and Dunnville were closed (150 jobs), E.D. Smith closed a plant in Seaforth (180 jobs) and 2014 will see the closure of Heinz in Leamington and J.M.Schneider Inc. in Kitchener. The majority of that production went to Mexico and the U.S.A.