WINNIPEG – Competing with America’s largest food processors is akin to dancing with elephants, said the president and chief executive officer of Maple Leaf Foods.
Michael McCain described the challenge as daunting, especially with changes sweeping through the processing industry.
“We have to be a little more nimble, a little more agile than our dancing partners,” said McCain, who heads the largest food processing company in Canada.
He made his comments while speaking with several reporters in Winnipeg for an agricultural journalism conference.
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He focused on the rapid change within the hog industry and his company’s efforts to fend off competitors such as Smithfield Foods and IBP.
In the past few years, Maple Leaf has moved away from the concept of smaller plants operating with a single shift. That included the closure of its Edmonton plant.
The company is starting to slaughter hogs at its new $120 million processing plant at Brandon, Man., and wants to add a second shift there within four to five years.
Workers have felt the effects of change, especially when it comes to their paycheques. Maple Leaf bargained for wage rollbacks with its workers two years ago, saying savings were needed for the company to stay competitive in a global market.
Asking workers to take a pay cut was an “unpleasant, stressful and personally debilitating process,” McCain said.
But it will now pay dividends for the company.
“Today we have a labor cost that’s competitive with the Americans. Not higher, not lower.”
That has put Maple Leaf on equal footing with its competitors south of the border, McCain said.
The company won’t have time to rest on its laurels. Consolidation of the industry continues, depressed hog prices have dogged farmers for several months, and Manitoba producers are awaiting some sign that Maple Leafs’ Brandon plant will mean more money in their pockets.
Consolidation continues to thin the ranks of producers, processors and food retailers, but it is a “manageable reality,” said McCain. It means the company will have to forge closer bonds with its partners in the supply chain, including retailers who carry the Maple Leaf brand on their shelves.
“You can call (consolidation) a good thing or a bad thing. The reality is that it’s there.”
As for depressed hog prices, he acknowledged they may be the worst since the Depression, “which is unfortunate.” But he believes the Asian market is secure and will continue to grow, helping lift prices out of the doldrums.
“These cycles exist,” he said, referring to the rise and fall of hog prices. “They’ve existed for a long time.”
Meanwhile, Manitoba hog producers were cautioned not to expect a made-in-Manitoba price for their animals once the Brandon plant is in production.
McCain said he does not want a price war to unfold on the Prairies between processors trying to secure hogs.
“Our mission is not to pay less or more than the North American average price.”
