Plant closures not a blow for food manufacturing in Canada: report

Guelph, Ont. – A new George Morris Centre report says there’s growth and prosperity ahead for the food manufacturing industry.

But, adds the report, “continued consolidation, industry transformation and increased marketplace competitiveness must be central to the industry’s future.”

That’s one of the conclusions from Canada’s leading agricultural think-tank, which released the report in late December. Called Heinz and Kellogg Plant Closures: What Direction for Canada’s Food Manufacturing Competitiveness?, the report was authored by Bob Seguin, executive director of the George Morris Centre.

In the report, Seguin shows how the food industry in Canada is a significant economic driver in its own right and has a role in the broader economy.

The major hurdle it faces is that current and future competitive challenges include the dilemma of matching growth opportunities with legacy issues within the industry.

The report also highlights clear opportunities for Canadian food manufacturing to meet these challenges.

Seguin told the ChathamDailyNews.ca that consolidation in food processing will continue over the next 10 years, but other companies will want to enter the marketplace. Enticing and hanging onto companies in Southwestern Ontario will require looking at factors that might be disincentives – unneeded regulations, outdated technologies, government red tape, for example – and figuring out how to overcome them.

In the ChathamDailyNews.ca story he adds that it will mean more co-ordinated efforts by governments and agencies in job training, streamlining regulatory approvals and reinvesting in technology.

Canada’s food industry at a glance

As of 2011, here’s how the food processing industry looked in Canada, according to Agriculture and Agri-Food Canada.

• Food and beverage shipments were valued at $92.8 billion;
• Food and beverage industry accounted for 14.5% of total manufacturing activity in Canada, second to the transportation equipment industry;
• Food and beverage employment in Canada exceeded 280,000, larger than the transportation equipment industry;
• Food and beverage manufacturing exists in all provinces, but approximately 55% of all establishments were in Ontario and Quebec;
• Over 84% of Canadian food and beverage manufacturing establishments had less than 50 employees, but accounted for 17% of total industry shipments;
• In contrast, three per cent of national food and beverage manufacturing establishments (those with more than 200 employees) accounted for approximately 50% of industry shipments;
• Approximately 25% of food and beverage shipment were exported-with the largest share of exports moving to the U.S.;
• Profit margins in food and beverage manufacturing varied annually but remained relatively stable, but have weakened slightly recently; and,
• Investment in capital stock in food processing stock in Canada hovered around $1.7 billion in constant dollars annually, almost matching estimated replacement needs.

For more on the study, click here.

Picture from Wikipedia