Juice supply deal to rescue S. Ont. tomato operations

Growers in southern Ontario’s tomato capital may soon resume plans for a 2014 crop, as Heinz’s storied processing plant in the region switches from ketchup to juice under a proposal to save the plant from closure.

H.J. Heinz Co. announced Thursday it’s signed a letter of intent to sell the U.S. company’s Leamington, Ont. plant to Highbury Canco Corp., a consortium of Ontario investors including plant management.

The letter of intent calls for a co-packing deal, under which Canco will process tomatoes for Heinz into juice and “certain identified Heinz products,” and will provide “certain distribution and logistics services” to Heinz in Canada.

Canco would “assume responsibility” for the site and transition to manufacturing, co-packing and distribution in early July, the company said.

Noting “looming deadlines” for a 2014 tomato crop, Canco said it “hopes to move quickly through the next steps and confirm the commitments made by its strategic partners, which are critical to making the (letter of intent) a reality.”

Heinz had said in November it would shut the plant within six to eight months and lay off over 700 employees. Heinz had sourced tomatoes since 1909 from growers around Leamington, where it built what became the company’s second-biggest plant worldwide. [Related story]

“A testament to the hard-working town of Leamington, Heinz received many expressions of interest in the facility, and we are pleased we were able to identify a strong new partner for the community and for Heinz,” Michael Mullen, Heinz’s senior vice-president for corporate and government affairs, said in a statement Thursday.

Canco said it plans to employ about 250 people along with “additional seasonal employees,” but added the company’s growth plan calls for “subsequent investment in the Leamington site (leading to) additional employment opportunities in the future.”

Canco spokesperson Pradeep Sood said Thursday the company and “all our strategic partners” hope to finalize an agreement with Heinz “in the next few weeks.”

Details of the proposed deal, such as a sale price and the term length, if any, for the co-pack agreement, were not released Thursday.

Sam Diab, the Heinz plant’s manager and one of the principals in Canco, emphasized in a separate release Thursday the talks are at a “critical stage” and Canco will be “relying on the assistance of our strategic partners to move forward” including Heinz, local growers, United Food and Commercial Workers Local 459, which represents the plant’s workers, and “all three levels of government.”

“We believe that our investment in Leamington will become the cornerstone to providing Ontario’s agricultural products around the world, not just in Canada,” Sood said.

Canco “understands how to sell in emerging markets and we believe we can provide a nimble, proactive, customer-focused source of Canadian products for the world,” he said.

For its part, UFCW Local 459 is “encouraged by Canco’s stated commitment to respecting collective bargaining rights and the importance of good union jobs,” Local president Robert Crawford said in a separate release.

Meanwhile, Ontario’s provincial economic development minister, Eric Hoskins, pledged in a separate release Thursday that the province would “continue to ensure that Leamington and its greater community have the ability to take advantage of regional economic development programs and other provincial supports.” — AGCanada.com Network

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