Decline in demand forces plant closure

Shawinigan, Que. – Seventy-four employees are going to be directly affected by the news today that Canada Bread Company is closing its snack cakes bakery.

Canada Bread says the closure will improve efficiencies in the company’s network by reducing overhead and supporting a focus on higher margin products and new market opportunities.

The plant produces snack cakes under the Chevalier, Cadbury and Obsession brands. The plant is set to close on May 3.

“We have experienced a significant decline in consumer demand for snack cakes in recent years,” says Richard Lan, president and CEO of Canada Bread.

“We are conducting a strategic review to identify category expansion opportunities. Based on the outcome of this work, there could be potential in the future to utilize this plant to support other manufacturing requirements. However, based on declining capacity utilization we have no alternative but to close the facility. We deeply regret the impact this decision has on our people and are committed to supporting their transition to new employment.”

Closure costs to be incurred in 2013, including severance, decommissioning and asset write-downs are expected to amount to approximately $3.1 million before tax, $1.6 million of which represents cash expenses.

Canada Bread Company, which is 90 per cent owned by Maple Leaf Foods Inc., is a leading manufacturer and distributor of fresh bakery products, frozen par-baked products and fresh pasta and sauces.

The company had 2012 sales of $1.6 billion and employs approximately 5,500 people at its operations across North America and in the U.K.