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Thursday, January 1, 2015
Maple Leaf Foods network transition nearing completion
Maple Leaf Foods is reporting solid progress with its network transition, a strategy that began with the company's primary pork processing operations, and since 2010 has focused on its prepared meats plants and distribution network.
In the past four years, the company has closed five plants, expanded three others, consolidated 17 distribution centers into two and built a 400,000 square foot state-of the-art processing facility. To enable this transition, the company simultaneously simplified its product portfolio to realize scale efficiencies and moved from multiple operating systems to one integrated platform.
The company is nearing completion of this structural shift in its supply chain, with current status as follows:
The expanded Lagimodiere plant in Winnipeg, Manitoba, is fully commissioned with only minor optimization remaining.
The McLeod plant in Saskatoon, Saskatchewan, is in the final stages of transition and while not yet operating to expectations, performance is improving and variances are not material to achieving the company's overall strategic targets.
The consolidation of the eastern distribution network is complete and achieving its targets.
The expanded Walker Drive facility in Brampton, Ontario, is fully commissioned with only minor optimization remaining.
Strategic capital spending is complete (with the exception of performance guarantee holdbacks and cash flow timing) and total capital spending over this period of investment is largely in-line with 2010 estimates.
Wiener production at the new facility in Hamilton, Ontario, is nearly fully commissioned with minor adjustments expected to be completed by the end of the first quarter of 2015. Commissioning of the final sliced meats and deli operations is well underway, and based on current operating performance trend lines, is expected to achieve full production by the end of the first quarter.
The processing plant on Panet Road in Winnipeg will close December 31, the sixth of eight plant closures. At the two remaining legacy facilities in Kitchener, Ontario, and Toronto, production has significantly ramped down. While some capacity will be maintained to ensure the company meets its commercial requirements, these plants are expected to close by the end of the first quarter of 2015.
"Maple Leaf Foods is in the final stage of completing a complex strategy to step-change profitability in our business," said Michael H. McCain, President and CEO, Maple Leaf Foods. "While there is always some element of uncertainty of timing given the unpredictable nature of start-ups, we are clear on the benefits and see a much brighter picture for 2015. We have dramatically increased scale and technology, consolidated production into fewer, highly efficient plants and streamlined our product mix. We will complete the transition early next year and have a clear path to realizing our financial targets."