Heinz Plant Closure Throws Leamington into Economic Shock

After more than 100 years of business, Leamington’s Heinz plant is closing, throwing 740 people out of work and sending the community into economic shock.

I grew up in Leamington.  Many of my first memories are of the tomato harvest.

Tomato season meant family dinners sitting on the tailgate of a pickup truck while Dad and Opa took a short break from the field.

It meant tomato fights that seemed to go on forever because we never had to worry about running out of ammunition.

It meant roads full of slow-moving vehicles and slick tomato shrapnel that had fallen off the back of a wagon.

My worst (if not first) car accident was with a tomato wagon.

The loss comes as a blow to a town that has been hailed by the Conference Board of Canada as a bright spot in Ontario’s tepid economic recovery.

Leamington boasts a 2012 employment growth rate of 33 per cent (though how many of those jobs are filled by temporary foreign workers is unknown) and a GDP growth rate of 10 per cent between 2011-2012.

The town is home to more greenhouse acreage than the whole of the United States – 350 of those acres were built in the last three years.

And the development office reports that the Windsor-Essex manufacturing sector is finally seeing some growth and innovation.

There is a reason why Leamington is known as the Tomato Capital of Canada: on average 225,000 tons of tomatoes – 40 per cent of all field tomatoes grown in Ontario – are processed through the Heinz plant each year.  That’s a lot of tomatoes!

Not only does the plant process a lot of tomatoes (and other crops for use in baby food and HP Sauce), Heinz is by far Leamington’s largest employer and, according to the Windsor Essex Economic Development Corporation, Leamington’s largest taxpayer as well.

Free Trade agreements and corporate buyouts have taken a heavy toll on the fruit and vegetable processing industry in Ontario.  Not only can Heinz now sell all the ketchup Canadians can consume with just a few days production at one of its large US plants, but the private purchase of the H. J. Heinz Company by Warren Buffet’s Berkshire Hathaway and 3G Capital was a precursor to a war on costs at the expense of long term sustainability and community partnership.

This loss will have a huge ripple effect on the local economy, on the workers who are losing their jobs and on the more than 45 farmers who are losing a long-time, reliable buyer – farmers who are left wondering what will happen to their production contracts for next year.

Fruit and vegetable processing plant closures are not new to Ontario.  In 2008, the Niagara Region saw closures affecting 3,500 acres of fruit-producing land.  That same year the federal government invested more than $22 million to assist farmers as they transitioned to growing other, more profitable crops.

In 2009 the McGuinty government stepped forward with a risk management initiative to protect farmers from falling prices, though 30 per cent of the $277 million promised was spent on “other priorities”.

Eric Hoskins, Ontario’s Minister of Development, Trade and Employment, said in a statement on Thursday afternoon that the province is ready and willing to offer support and resources to the affected workers in Leamington. But what type of support will be available?

Leamington area residents, workers and farmers will require transitional support as they begin to grapple with questions of what to do next.  Should workers go back to school for retraining? And what about the 45+ farmers with production contracts for next year?  Will the contracts be honoured?  Will these farmers need to grow other crops?  The cost of transitioning to other crops can be exorbitant as the equipment used to plant and harvest field tomatoes is unique to any other.

Now that the axe has fallen on Leamington’s biggest employer, it’s time for the province to step up with serious measures. This most certainly will challenge Premier Kathleen Wynne’s dual role as Minister of Agriculture. Working with the community to transition to a new, possibly more diverse economic base will be critical to ensure the stability of the community.

In 2010, the Metcalf Foundation put forward policy proposals to help nurture and grow Ontario’s fruit and vegetable processing industry.  The report recommended a series of proposals meant to restore and stabilize Ontario’s medium-sized food processors and encourage a regional structure for food processing in the future. Those proposals, and others, are worth considering today because one thing is certain: doing nothing cannot be an option.

News of the Heinz plant closure is rotten tomatoes enough – now’s the time for fresh economic thinking and real government support through the transition.

Kaylie Tiessen is an economist with the Canadian Centre for Policy Alternatives’ Ontario office (CCPA Ontario). Follow her on Twitter: @kaylietiessen