Plant closures in Southwest Ontario price of no industrial strategy

In the space of a month, it was announced that two major employers in Southwest Ontario – the Heinz plant in Leamington and the Kellogg's plant in London – will close. In both cases, the news might have been very different if federal and provincial governments had adopted an industrial strategy that made good jobs and protecting the environment a priority.

Danger of Leamington plant closing known since 1990

The risk that the Heinz plant in Leamington could close was first identified in a 1990 report, Ontario’s Food Processing Industry and the Challenge of Reduced Protection. Now after 23 years of governments relying on tax breaks to create jobs, the plant is closing.

Leamington will lose 740 jobs. Local farmers will be left with no market for their crops.

Ontario provided Kelloggs with $14 million for new plant

The closure of the Kellogg Canada plant in London comes after the Ontario government provided the company with $14 million to help it build a new plant in Belleville. Providing $14 million in interest free loans to a company that made a net profit of $960-million in 2012 and is expected to make $1.3-billion in 2013 was justified by the jobs it would create.

Unfortunately, the funds do not seem to have been conditional on Kellogg Canada maintaining existing jobs. With the closure of the London plant less than 10 years after the Belleville plant opened, it appears the Ontario government has, in effect, been assisting Kellogg Canada with relocation costs.

Loss of decent jobs hurts entire community

Jobs at the Kellogg's plant in London or Heinz plant in Leamington pay a decent wage. That means it will not just be the people losing their jobs who feel the impact. When workers are earning enough to provide for themselves and their families they are able to afford goods and services from local businesses.

Closure of London and Leamington factories reflects view factory sites disposable

For manufacturers it is often easier to build a new plant on a greenfield site than to keep modernizing old factories. The factory in Leamington dates back to 1909 and the one in London dates back to 1924 so both have challenges that newer factories would not.

But treating factory sites as disposable is not necessarily good for the economy as a whole, particularly if we want economic growth to be environmentally sustainable. There is a finite supply of land and from an environmental perspective it makes no sense to be continually paving over farmland or forests, while leaving abandoned factory sites in the middle of towns or cities.

Right to Work not a factor with plant closures

The plant closure announcement reflect research that found right-to-work laws have no impact on employment. Heinz is closing two other plants at the same time as the Leamington Plant. Both are in right-to-work states. Most of the work done by the plants being closed is going to plants in places without right-to-work laws.

What that suggests is that if companies are trying to save money by reducing labour costs they will shifting production to low wage locations overseas, rather than to a right-to-work state.

When Kellogg’s announced it was closing its plant in London, Ontario, as well as another plant in Australia, it also announced it was expanding in Thailand.
 

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