Monday, December 23, 2013

Kellogg, Heinz closing should teach lessons

There are lessons that need to be learned from the closings of the Kelloggs breakfast-cereal plant in London and the Heinz ketchup plant in Leamington, says Bob Seguin, executive director the George Morris Centre food-industry think tank at Guelph.

The reasons for the closures are more complex than media reports suggest, Seguin writes in a report for the agriculture and food industries.

The closures demonstrate that investments are necessary to keep facilities competitive, that companies need skilled workers, that they have to keep up with many changes such as trends in consumer preferences, packaging, processing and information technologies, and invest in research and development.

The closures also reflect the increasingly competitive global environment.

On the other hand, several major investments have recently been made. 

Seguin mentions the Dr. Oetker plant being built in London, Ont., the many investments in canola-processing plants in Western Canada, the Premium Brands’ purchase of Piller Sausages and Delicatessens Ltd. of Waterloo and the $184-million investment Oxford Frozen Foods is making in wild blueberry processing in New Brunswick.

He could have added Maple Leaf Foods Inc. investment in a large bakery in Hamilton, its companion investments in a centralized meat-processing plant at Hamilton and a distribution centre south of Guelph and a Chinese investment in an infant-formula plant in Toronto.

Seguin says “the primary focus of any significant market or policy responses must be on obtaining new domestic and foreign investments, and re-investments in this industry. Entrepreneurial growth and investments (re-investments) in scale and new technologies must be complementary priorities.

“New investments in developing new and needed labour pools for a successful food manufacturing industry must be encouraged and spurred. 

'The industry’s past successes using traditional sources in rural and urban Canada are not sustainable,” Seguin says. “New investments in seeking both domestic and foreign labour as well as improved management expertise (for a much more competitive marketplace) must be priorities in order to successfully compete.”

Canadians need to be aware of increasing global competition, he says. This includes learning from competitors, including the public policy and regulatory supports available to these current and new competitors, he says.

Governments need to expand their approaches to regulatory reform, moving “beyond just removing unneeded or outdated regulations.

“The competitive impacts within a dynamic marketplace must become a critical factor in the regulatory choices and processes for implementation. 

"Improved measures of results, impacts and effectiveness must become standard if the domestic industry is to adapt while sustaining public demands for different regulatory standards,” he writes.

He says public research needs to be better coordinated with private-sector innovations.

“It is important to build upon past research successes, and to seek more innovative market and policy responses needed to match Canada’s innovation investments and successes (real results in the marketplace) with its competitors,” he writes.

The report is posted on the George Morris Centre website.

I wish he had added another admonitiation to marketing boards of all types and provinces - stop acting only for farmers and start looking into supply-chain innovations and improvements. That might mean yielding centralized marketing-board controls to individual farmers so they can pioneer their own futures.