The H.J. Heinz Co. has completed the sale of its Leamington plant.
The food giant said in a statement released early Wednesday that it has sold it's 105-year-old tomato processing plant to Highbury Canco, which will begin operating the plant on June 27.
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Highbury Canco will take over "all aspects of the operation," according to a Heinz spokesman.
"Highbury Canco will manufacture some of Canada's favorite products, including Heinz tomato juice, Heinz beans, and Heinz canned pastas in the years to come," Michael Mullen, the company's vice president of corporate and government affairs.
Leamington Mayor John Paterson said he's thrilled by the sale.
"I’m ecstatic that it’s a done deal. It’s a sigh of relief," Paterson said. "We were holding our breath waiting for the deal to be signed."
'I'm ecstatic. It's a sigh of relief.' - Leamington Mayor John Paterson
Back in February, H.J. Heinz Co. signed a letter of intent to sell the plant to and hire Highbury Canco as a contract packer for Heinz.
After that, the process slowed down.
"Now that the deal has concluded, the Highbury Canco Corporation is fully focused on establishing a strong production base in Leamington for Heinz and further strengthening our own brand," Highbury Canco director Pradeep Sood said in a media release. "The HCC team is very excited about this venture and we are committed to growth and success over the coming years."
3g Heinz completes the deal with Highbury Canco for the former Leamington Heinz Plant operation. A great day for Leamington.— Mayor John Paterson (@LeamingtonGuy) May 21, 2014
Approximately 10 farmers have signed on to grow tomatoes for Highbury Canco. That's down from the 43 who used to grow for Heinz.
Sood said it seemed like a good opportunity for Highbury Canco to buy a well-maintained plant with a trained workforce and to start the business with a co-packing deal with Heinz.
"In Canada, there is a law that tomato juice can only be sold if it`s made from fresh tomatoes," he said in an interview with CBC`s The Lang & O`Leary Exchange.
"They [Heinz] could get those tomatoes from the U.S., but I would imagine that Leamington being the tomato capital of Canada and looking to the Canadian market for tomato juice, it just made sense if they could find a co-packer in Canada."
Sood said the new owners will be looking for efficiencies to keep the plant globally competitive, but also hope to build the business by seeking out new opportunities to create or pack new products. The company plans to hire 250 employees before assuming operations in June.
"That will be a great start for a few years," Paterson said.
Heinz used to employ about 1,000 people, including seasonal employees.
Sood said expansion is in the plans.
"We intend to add two lines, pretty soon, by 2015 and add addition products and develop our own brand," Sood said.
Sood said his company is in talks with the United Food and Commercial Workers union, which represents Heinz employees in Leamington.
"Hopefully, we can come to some good conclusion for everyone involved," Sood said.
Factory value decreased
Paterson said the Town of Leamington helped expedite the sale by getting a the Municipal Property Assessment Corporation (MPAC) to speed up the assessment of the plant.
"MPAC got an immediate evaluation rather than wait for the appeal process," Paterson said.
The mayor said MPAC decreased the property value from "over $20 million to under $10 million."
"It was a substantial decrease. It’s going to alter the way we do things, for sure," Paterson said.
The town is already planning for less tax revenue.
"We knew ahead of budget time what the reduced value would be, approximately," Paterson said.
So far, Ottawa has not announced any federal funding for Highbury Canco. Ontario kicked in $200,000 to help from the Communities in Transition program to, as Premier Kathleen Wynne said at the time, “help people in the community through this difficult time.”
Paterson said he expects all levels of government to now assist Highbury Canco.
"Hopefully there is a way to bring them back to the table now … and they can come forward with the funding these guys need to move ahead," Paterson said. "Now that the deal has been signed, the province and federal can move forward with whatever funding that they may consider."
Sood said Highbury Canco has request government assistance, but he did not elaborate.
"They’re pretty strict about how they allocate funds," he said of governments in general.
Not speaking specifically about Highbury Canco on Wednesday, Liberal Leader Kathleen Wynne said at a campaign stop at Omega tool in Windsor that partnerships between business and government create jobs.
You can read the entire Heinz statement below:
Heinz Leamington Update
May 20, 2014
“H.J. Heinz Company is pleased to announce that the deal with Highbury Canco Corporation to purchase our Leamington facility is complete. Effective June 27, the factory will cease to be operated by Heinz, and Highbury Canco will take over all aspects of the operation of the Leamington factory. We are pleased that Canco will manufacture some of Canada’s favorite products, including Heinz Tomato Juice, Heinz Beans, and Heinz canned pastas in the years to come." Michael Mullen, Senior Vice President of Corporate & Government Affairs, H. J. Heinz Company.
"Now that the deal has concluded, the Highbury Canco Corporation is fully focused on establishing a strong production base in Leamington for Heinz and further strengthening our own brand. The HCC team is very excited about this venture and we are committed to growth and success over the coming years.” Pradeep Sood, Director, Highbury Canco Corporation.