SASKATOON – The XL Foods beef slaughter plant in Moose Jaw, Sask., is still part of the company’s long-term plan, says co-chief executive officer Brian Nilsson.
However, the facility has to be more competitive before it re-opens, he told a beef industry conference.
The plant has been closed since last April after the company said it couldn’t operate efficiently because of a shortage of cull cows and fat cattle.
It was supposed to re-open at the end of September, but instead the company locked out its employees, who had been without a contract for eight months, saying it needed an agreement that allowed the plant to be competitive.
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XL is negotiating with the unions at all three of its Canadian packing plants, although no bargaining dates are set for Moose Jaw.
Nilsson said Moose Jaw can be a competitive, profitable plant under the right conditions. It has control over some of those conditions, he added, and others it doesn’t.
“We have to do some improvements,” he said. “We probably have to put fab (meat cutting) in the plant. We are firm believers in Moose Jaw and we hope to make it competitive and run the plant.”
Nilsson said competing against large plants that kill 4,000 head a day on two shifts is difficult. The discrepancy between Canada and the United States in the cost of removing specified risk material adds another limitation.
He said the issue has to be resolved by harmonizing regulations between the two countries, but that could take a few years. Another issue is the rise of the Canadian dollar against the U.S. greenback.
“We’ve created a cost structure that was based on the low dollar,” he said. “We are going to have to improve our productivity.”
He said XL increased productivity at Lakeside by 20 percent when it bought the Brooks, Alta., plant.
Nilsson said he believes the Saskatchewan cattle industry will weather the current contraction better than its Alberta neighbours.
“I believe you guys are going to have more cows, not less, so Moose Jaw is part of our long-term plan.”
