THE SUNDAY E-MAIL
Ottawa Postal Workers’ News Bulletin
March 2, 2014
On October 19, 2011 after more than a century of local meat-making tradition, Maple Leaf Foods announced that it would be closing the Schneider food processing plant and distribution centre in Kitchener, Ontario throwing 1,200 workers out of work by the end of this year.
The plant which is located on Courtland Avenue was built in 1924 by J.M. Schneider, at the time a butcher whose sausage was very popular locally. Schneider became a household name in the community and by the 1950’s he had grown his enterprise to become one of the largest meat producers in Canada.
His company, Schneider Inc. was wholly taken over in 2001 by US giant food monopoly Smithfield Foods based in Virginia who was then expanding its world empire and trying to gain control over the global food processing industry. Up until recently, Smithfield operated plants in 26 US States including the largest slaughter house and meat-processing plant in the world which is located in North Carolina. It also carried out operations in Mexico and in 10 European countries. It recorded annual revenue of $13 billion and total assets worth US$7.4 billion.
Just a few months ago, in September 2013, Smithfield Foods itself was taken over by Shuanghui International Holdings Ltd, a Chinese state-monopoly enterprise, in what became the biggest acquisition of a US monopoly by a Chinese firm. The transaction was valued at $7.1 billion and joined two of the world’s largest pork producers into one single huge world monopoly.
In 2001, at the same time Smithfield Foods made its bid to take over Schneider Inc., Maple Leaf Foods, a Canadian giant food monopoly based in Toronto, also with operations throughout the world, had made a bid to acquire Schneider Inc. but did not succeed in making the acquisition.
However, in 2004, Maple Leaf Foods acquired Schneider Corp from Smithfield Foods for US$378 million or about C$515 million which included the assumption of its US$75 million debt. Schneider Corp had become the operating base for Smithfield Foods in Canada and employed 5,000 people at 20 facilities. It generated sales of C$1.24 billion and had earnings from operations of C$54.1 million. After the acquisition by Maple Leaf Foods, a Merger Leadership Council was established which included equal representation from both companies.
Maple Leaf Foods, at the time of the acquisition, employed 18,000 people and reported sales of C$5.1 billion in 2002. Maple Leaf Foods is owned by Wallace McCain, co-founder of McCain Foods Limited who at the time of his death, in 2011, had an estimated net worth of $US 2.3 billion and was ranked by Forbes as the 13th wealthiest Canadian and 512th wealthiest man in the world. Wallace McCain had previously been ousted from McCain Foods Limited after a bitter feud with his brother, Harrison, regarding which family member should lead the McCain Empire.
After his ousting from McCain Foods Limited, Wallace McCain with his two sons, Scott and Michael, and with funding from the Ontario Teachers’ Pension Plan, took over Maple Leaf Foods in 1995 and was appointed Chairman of the Board. Michael McCain is currently the President and Chief Executive officer of Maple Leaf Foods and has been acting in these capacities since January 1999. He is himself listed as part of the country’s top 100 richest man. He is director of Maple Leaf Foods, McCain Capital Corporation and McCain Foods Group Inc. as well as chairman and director of Canada Bread Company which he just sold earlier this month for $1.8-billion to Mexico’s Grupo Bimbo, another giant food monopoly.
When Maple Leaf Foods acquired Schneider Corp from Smithfield Foods in 2004, Michael McCain’s attitude towards the Schneider plant which he had described as being “old” was such that the workers felt that the days of the plant were actually being counted and that the McCain family would simply let it deteriorate and go. After all, the acquisition had allowed the McCain family to eliminate a major competitor and to gain a greater share of the Canadian and other world markets.
All of these monopoly forces taken together and their mad inter-monopoly dog fights for control of the world’s market and for ownership of the world’s means of production have conspired to obtain the closure of the Schneider plant in Kitchener which was an icon of the city. Obviously, Schneider was an obstacle for both Smithfield Foods and Maple Leaf Foods in their quest to gain control of that sector of the economy. By acquiring it, this allowed them to better position themselves on the world scale and to fulfil their most narrow respective monopoly interests.
In 2012, the city of Kitchener celebrated its 100 anniversary. J.M. Schneider dates back to 1890 and actually built the first road from his home to the corner of King Street. Eventually, Schneider came to symbolize the industrious community of Kitchener and its great manufacturing abilities.
When Schneider shuts down at the end of the year, it will mark the end of the old industrial era in the Kitchener core. Kitchener was not only known for its manufacturing of meat produce but also for the manufacturing of shirts, buttons, boots, leather, rubber, beer and other commodities all of which have suffered the same fate that the Schneider plant will be made to suffer at the end of the year.
The closure of the Schneider food processing plant in Kitchener by Maple Leaf Foods is part of a five year massive restructuring plan of its meat-processing business which was disclosed in October 2010. The plan called “Value Creation Plan” aims at increasing the level of profits for its shareholders and is currently in its last phase of implementation. The plan basically calls for the streamlining of all of its operations by integrating its product lines and consolidating the number of plants which it operates throughout the country so as to reduce what it calls “costs of production”.
Through this process, a process dubbed as a “modernization process”, the workforce will be downsized and new technological changes will be implemented so as to improve productivity by getting more work done with fewer workers. In this way, Maple Leaf Foods plan to “create sustainable value” for their shareholders and deliver a 75% increase in EBITA margins by 2015.
Noteworthy is the fact that Maple Leaf Foods’ five year plan was adopted by its Board of Directors following the 30 or more acquisitions that it made in a relatively short period of time, all in the food processing sector of the economy. Maple Leaf Foods carried out these acquisitions and integrated them into its business in order to establish a dominating market position.
Aside from the closure of the Schneider food processing plant in Kitchener, the five year plan also called for the closure of five other facilities located in Berwick, Surrey, Toronto, Moncton, North Battleford and Hamilton, most of which are to be closed by the end of 2014. Production from these facilities is to be consolidated into a new facility which was recently opened in Hamilton and at existing facilities in Saskatoon, Winnipeg and Brampton which have all been expanded. The five year plan also provided for the closure of four distribution centres and the consolidation of this production into two large scale distribution centres; one in Western Canada and one in Eastern Canada. Once fully implemented by the end of 2014, this plan will constitute Maple Leaf Foods prepared meats network.
This five year plan represents an investment of $560 million in capital for the prepared meats network. According to the plan summary, this strategy will raise Maple Leaf Foods capabilities to “level of leading global prepared meats companies”.
Maple Leaf Foods says the plan will create 1,150 new jobs arising from the building of the new facility in Hamilton and the expansion of the three others but the associated plant closures will more than offset that, resulting in a net loss of 1,550 positions from among its overall 21,000 member workforce.
At the time the Schneider plant closure was announced, Kitchener mayor Carl Zehr said in a statement “the local meat-processing plant has provided employment for thousands of people—in some cases, generations of families, for more than 120 years. It is one of the last of the large, traditional manufacturers in our city. In many ways, the J.M Schneider plant has been the backbone of our community for well over a century”.
When the workers were informed of the plan to close the Schneider facility, they were completely shattered and they condemned the closure as a major blow to local working families who have built the Schneider food processing plant and kept it going for years producing wieners, sliced luncheon meats, whole deli meats, sausage, pepperettes and other kitchen goods under the brand names of Maple Leaf, Schneiders and Shopsy’s. They deplored the ruination of the manufacturing base in Kitchener by the monopolies and the end of a manufacturing era.
Maple Leaf Foods is now in the process of scaling down operations at the Schneider plant department by department until all production has been shifted to the new Hamilton facility. Workers at Schneiders have been encouraged to apply for jobs at the Hamilton facility pending availability.
Maple Leaf Foods is one of Canada’s largest meat processors. It carries out operations across North America, United Kingsom, Mexico and Asia while continuing to expand worldwide. It is also notorious for the Lysteria outbreak in 2008 which gave rise to the biggest food recall in Canadian history. Maple Leaf Foods originates from a merger of Maple Leaf Mills Limited and Canada Packers in 1991.
Recently, the Globe and Mail reported that Maple Leaf Foods, despite its gigantic food empire, might also be facing an eventual take over by other international food monopoly vultures who are looming over it. Other US and Asian companies are said to have cast their eyes on it. Apparently, Smithfield Foods made a confidential offer in March 2013 to acquire Maple Leaf Foods and the offer was turned down on April 10. Shortly after, Smithfield Foods entered into take over discussions with Shuanghui which culminated in an announced agreement on May 29.
Kraft Foods and Hornel Foods Corp are also said to be circling around it. The high rate of acquisitions and take overs in the food processing industry not only in Canada but on the world scale by the food monopolies in order for them to globally dominate that very sector of the economy clearly shows that food processing, as an indispensible life sustaining industry, must be taken out of the hands of the monopolies and re-established on the basis of upholding the public interest and that of the general interest of the society.
The ability of our nation to produce the foods required for human subsistance must not be left to chance and placed at the mercy of monopoly vultures and monopoly greed. Canada must build a self-reliant food sector, from farming to food processing and distribution which is not left up to the discretion of the world’s most wealthy because, as owners of the land and means of production, they consider their “business decisions” as private matters and for which the various governments shed crocodile tears by expressing mere “disappointments” with those monopoly decisions to close plants at the detriment of the public interest. A public authority has to come forward and put this matter on the agenda as a crucial question facing the Canadian people and one which requires immediate attention.