Michael McCain appeared nonchalant last week about the prospects of his main rival expanding in Manitoba.
McCain, chief executive officer of Maple Leaf Foods, described the planned expansion of Schneider’s hog processing plant in Winnipeg as something that “could, on balance, be neutral to positive.”
McCain said the $125 million expansion at Schneider’s Winnipeg facility could foster further optimism about the hog industry in Manitoba.
That was the case with the Maple Leaf plant, which encouraged producers and other investors to build hog barns even after hog prices collapsed in the fall of 1998.
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“Our Brandon plant tends to attract more activity by other people in the industry,” McCain said, noting the Schneider’s expansion was “more or less expected.”
Maple Leaf continues to find all the hogs it needs for its Brandon plant. Earlier this month, it was processing 7,200 hogs a day.
At full capacity in one shift, the plant will handle 9,000 hogs per day.
There have been few reported glitches since production started there last August. That has prompted speculation that Maple Leaf may launch a second shift at its Brandon plant sooner than expected.
“It’s too early to tell,” McCain said during a Feb. 14 visit to the plant. “We’ll take that one step at a time.”
He noted the second shift, which could be launched within four years, will rely on increased hog production in Western Canada.
Ups and downs
McCain is confident that expansion will happen, although he acknowledged that the hog industry is capital intensive and subject to periods of volatility.
“Those challenges are not insurmountable.”
The Brandon plant draws 60 percent of its hogs from Saskatchewan and Alberta. The balance of the hogs come from Manitoba.
Maple Leaf has not ruled out buying American hogs, but only as a last resort.
“It’s not our strategy to buy in the U.S.,” McCain said. “Our primary thrust is to stop the flow of Canadian hogs going south.”
McCain said it would be ideal if all the hogs for the Maple Leaf plant came from within a 400 kilometre radius of Brandon, located in southwestern Manitoba. That would reduce transportation costs and would be easier on the livestock.
The Brandon plant now is drawing about half its hogs from Elite Swine, a swine management company that Maple Leaf acquired last year through its purchase of The Landmark Group Inc.
However, McCain repeated his company’s position that it is not interested in the American model of vertical integration, where the processor also owns the barns.
