H.J. Heinz Co. has signed a letter of intent with a Canadian consortium to acquire the Heinz Leamington factory and become a contract packer for Heinz.
Highbury Canco Corporation is an Ontario-based consortium of investors.
“We will continue to manufacture certain identified Heinz products and as well provide certain distribution and logistics services to Heinz in Canada,” Highbury’s Pradeep Sood said in a media release. “The Leamington plant has an excellent workforce, and Ontario farmers are amongst the best in the world.”
In an interview with Radio-Canada, Sood said the plant will produce tomato juice and “more than 10” other products for Heinz. He wouldn’t elaborate.
“Heinz becomes one brand for us. We can diversify. Heinz was not necessarily wanting to produce their own products,” Sood said. “Once you own the plant, you run it the way you want to. Heinz will be one of our customers.”
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Highbury intends to employ approximately 250 employees, plus additional seasonal employees.
Sam Diab is a member of that consortium, and the current factory manager at the Heinz Leamington facility.
"As a member of this community, I am honoured to be a part of this team who is focused on saving important jobs at the Heinz plant in Leamington," Diab said in a release. "We have a knowledgeable workforce, a vibrant local community, and this is a solid plan for a bright future.
'I'm excited, but more relieved than anything.' - Leamington Mayor John Paterson
"We are at a critical stage in this process and are relying on the assistance of our strategic partners to move forward. In the next few weeks, we will be working closely with Heinz, local farmers, United Food and Commercial Workers Local 459, and all three levels of government."
CBC News was first to report an announcement was coming this week.
Heinz announced last fall the 105-year-old plant would cease operations in June and nearly 800 people would be out of work in June.
Leamington Mayor John Paterson said Wednesday night was the first time he slept well in months.
“I’m excited, but more relieved than anything,” Paterson said. “We’ve been working very, very closely with them for some time now.”
Paterson said he couldn’t identify which products will be produced in Leamington.
“At least we know there will be a selection of Heinz products being made in Leamington,” Paterson said.
Paterson said the municipality will have “no impact” on who gets jobs in July.
Highbury called the United Food and Commercial Workers union "a strategic partner" in the deal.
"We are encouraged by Canco's stated commitment to respecting collective bargaining rights and the importance of good union jobs, and we are looking forward to building a productive relationship with the new ownership that benefits employees, investors, and the community alike," UFCW Local 459 president Rob Crawford said.
“A letter of intent is not a legal document. It’s not contractually binding. So until the actual agreement is signed, this isn’t a guaranteed situation. But I think it really tells you Heinz still wants to work in our municipality,” Paterson said. “We’ll all keep our noses to the grindstone to make sure that happens.”
Michael Mullen, a senior vice-president with Heinz, says the deal is subject to the successful completion of the full transaction but calls it "great news for Heinz and for Leamington."
He says Heinz received many expressions of interest in the facility and said the company is happy it was able to find a "strong new partner" in Highbury Canco.
CBC News sources say the company set to move into the plant will produce tomato juice for Heinz.
Sandra Pupatello, the CEO of the Windsor Essex Economic Development Corporation said everyone has been working together to help save jobs in Leamington.
"All levels of government have been very helpful. It is a matter of finding when and where they can be helpful. It's still very early days to be doing that, so at this point, our roles have been getting information," Pupatello said. "So we use all of those contacts to talk to people, get people into the funnel."
'Just the beginning'
Pupatello said Thursday's announcement is just a start, but it could lead to better news in the future.
Sources close to the negotiations tell CBC News a Canadian food processor will continue to make tomato juice for Heinz.
The company will then sell the juice in the Canadian market.
Locally grown tomatoes will be used to make the juice.
The Leamington plant was the last in the Heinz chain to process whole tomatoes. Tomato paste made in the U.S. is used at all its other U.S. plants. If Heinz wants to maintain a share of the Canadian tomato juice market, it cannot simply add a packaging line and make tomato juice from concentrate (paste) in the U.S. and ship it to the Canadian market.
According to the Canadian Agricultural Products Act, tomato juice sold in Canada must be made from whole tomatoes.
Patterson said that whoever takes over the processing needs to get up and running quickly.
"If it's going to be a success this year, I think it needs to happen pretty soon. Tomato farmers have to get underway right away. So I think if anybody is going to be successful … it has to be announced soon," Paterson said.
Chatham-Kent-Essex PC MPP Rick Nicholls said Thursday's announcement "will be good news for the town of Leamington."
Nicholls also told CBC News two other companies are interested in opening in Leamington and "offer jobs to workers displaced by Heinz."
"This is just the beginning. There is more good news down the road but I don't want to build up expectations," Nicholls said.