Food manufacturers retool to boost competitiveness
Ivey School reports plant closures more a sign of transition than decline.
LONDON, Ont. — Canada’s food manufacturing industry is reorganizing to be a strong global player, according to a report by the Ivey Business School.
The Changing Face of Food Manufacturing in Canada: An Analysis of Plant Closings, Openings and Investments tallies 143 plant closures between 2006 and 2014, resulting in projected losses of almost 24,000 jobs, but overall no decline in employment.
The report by David Sparling and Sydney LeGrow examine plant openings, major investments as well as plant closures.
It says the food manufacturing industry went through a challenging period in 2007 and 2008 when 48 closures outnumbered the 27 openings and plant investments. But from 2008 to 2014, 105 closures were balanced by 105 openings and plant investments.
Looking at the closure numbers, they note Ontario was the hardest hit while Quebec’s picture was more positive.
The most commonly cited reason for closures was that the plant was no longer competitive and, in many cases, production was being consolidated in another plant.
The report observes that closures appeared not to be a sign the industry had lost its competitiveness, but rather it was reorganizing production to retain its competitiveness.
Openings were often large scale and incorporated new technology to drive down costs. The authors say investments and openings helped to balance the situation with investments coming from foreign and domestic companies, both small and medium enterprises and multinationals.
“Almost 90% of closures occurred in multi-plant companies, largely the result of companies reorganizing and consolidating production in fewer large plants to achieve greater scale and efficiency. The results are leaner operations, higher productivity and stronger companies better equipped to compete,” says Sparling, chair of Agri-food Innovation at the Ivey Business School at Western University in London, Ont.
Click here for a copy of the report.