The food industry’s long-term stability makes it crucial to Toronto’s economy, says David Soknacki of Ecom Food Industries Corp., seen here April 4, 2012.Tim Fraser for The Globe and Mail
The food-processing sector is emerging as an unsung hero in Canada's largest city.
As manufacturers across the country struggle to create jobs in the face of a strong loonie and a rocky economy, Toronto's food-and-beverage industry is quietly employing tens of thousands of workers and providing the city and the province with a much-needed recession-proof base.
The industry generates sales of about $20-billion a year and employs around 60,000 people in the city – more than the automotive industry, and a number that has risen 20 per cent in the past decade. There are now more people working in food and beverage processing in Toronto than in any other North American city, except Los Angeles.
While Montreal, Calgary and Vancouver also have a high concentrations of workers in the food and beverage business, the industry is particularly crucial to Toronto's jobs picture, making up 1.7 per cent of all workers, according to a report on Toronto's prosperity, released in March by the Toronto Board of Trade. More important, the industry generates spinoffs for the rest of the province, and provides employment for many knowledge-intensive professionals, ranging from food scientists to plant managers.
"The economic benefits of the entire food and beverage cluster are huge," the report says, noting that the sector is essentially immune from recession. Because people always need to eat, it continues to grow even when the economy is stagnant.
Board of Trade president Carol Wilding said the food cluster is often taken for granted, but is increasingly important to the entire region. Farmers in surrounding areas essentially plug into Toronto's healthy economy by sending their products to markets and processors in the city, she said.
"The Toronto region is a hub," Ms. Wilding said. "For every $1 of input in to the food value chain [in Toronto] you actually create a $6 multiplier effect on the provincial economy."
In the city itself, the industry includes food processing, warehousing, distribution, retailing and food services. The specialty food sub-group is growing the fastest, the city's research suggests, partly because of the demand from an increasingly diverse community. Interest in organic and local products has also helped light a fire under specialty food producers.
David Soknacki, a former Toronto city councillor who founded a company that makes flavour extracts, said the food sector has a relatively low profile because many of the companies involved aren't associated with brand names. Many stay below the radar as private-label packagers, or suppliers to bigger firms.
In addition, he said, a lot of the employment is dispersed across the service sector, spread among thousands of caterers, restaurants and wholesale outlets, where it is less visible.
Over all, Mr. Soknacki said, it is the food industry's long-term stability that makes it so important to the city's economy. "It has flourished, even after [the North American Free-Trade Agreement] even after the strengthening of the dollar, and even after the turmoil of 2008. It is a very robust sector of the economy."
Because many companies in the food business operate away from the city centre and high-density corridors, the state of Toronto's outlying infrastructure is crucial to the sector, he said, both for the distribution of products and to allow employees to get to work. The city needs to work closely with the surrounding regions and the provincial government to make sure that highways, ports and airports are functioning efficiently, and that public transit – outside the core – is effective.
James Milway, executive director of the Martin Prosperity Institute at the Rotman School of Management at University of Toronto, said one of the factors that makes the food sector so important to the city's economy is the proximity of a huge market in the northeastern United States.
Like auto parts, "what really helps [this]cluster along is having sophisticated customers at your doorstep," he said.
Often, the companies that best exploit these export opportunities are the large ones, he said, so governments should be careful about focusing all their support on small businesses in the food sector.
A report released by the Martin Institute this year said it is the large food businesses in Canada that are the most productive and innovative in the sector, and they should not be neglected in favour of small firms.
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SOME OF TORONTO'S BIGGEST FOOD FIRMS:
Maple Leaf Foods Inc.: This diverse food processing company has 18 meat and bakery facilities in Toronto and surrounding region, employing about 6,300 people.
Kraft Canada: The international food giant, which also owns brands such as Cadbury and Christie's, has seven plants in Southern Ontario, making cookies, chocolate bars, cough drops and candy. It employs more than 2,400 people in the region.
Weston Foods: The bakery arm of George Weston Ltd. has 14 production facilities in Ontario, many of which are in the Toronto area, making it one of the biggest food employers in the city.
Campbell Soup Co.: The U.S.-based company employs about 400 people in its Toronto plant, making all of the soup that it sells across Canada.
Nestlé Canada Inc.: The Canadian arm of the Swiss food conglomerate has a chocolate factory in the west end of Toronto that employs 450 people.
Fiera Foods: This baker of bagels, croissants, buns and pastries employs more than 1,000 people at its facilities in the north end of Toronto.