Unilever Canada Inc. will close its 50-year-old plant in Brampton, Ont., laying off about 280 workers, the latest in a string of factory closings in the province.
Production from the facility, which makes Lipton dry soups and Knorr sauces, will be shifted to Unilever's operations in Independence, Mo., where another plant will be built.
"Looking at the next 50 years in our savoury business, it became clear that we would need a major technical upgrade to state-of-the-art facilities. So it wasn't a matter of upgrading – it's really a matter of an entirely new plant," John Le Boutillier, chief executive officer of Unilever Canada, said in an interview.
Fluctuations in the currency and gasoline prices were not factors in the decision, although tax advantages in Missouri did play a role, he said. The new U.S. plant will allow production lines to be more flexible, fast and automated, he said.
Unilever's move come amid a wave of high-profile plant shutdowns in Southern Ontario in recent months. H.J. Heinz said in November that it is closing its factory in Leamington while Kellogg Co. is shuttering its cereal-making plant in London. Other closings include a Novartis contact lens solution facility, CCL Industries' aerosol container plant and Faurecia SA's seat mechanism and frames factory. Ontario's manufacturing sector has shed about 24,000 jobs in the past year.
Globalization and technological change are factors, with companies citing changing consumer habits, squeezed margins and the desire to move to lower-cost jurisdictions. Unilever says its decision stems from the desire to have a new facility closer to its main market, the United States. With more than 80 per cent of volume produced in Brampton shipped to the U.S., "for logistical and strategic reasons, a U.S. location was preferable," Mr. Le Boutillier said.
While the weaker Canadian dollar has helped margins at many manufacturers this year, the move below parity has not been enough to alter longer-term plans – especially as factories age and companies weigh whether to upgrade them or build anew.
Most production at the Brampton plant is expected to finish in the last quarter of next year with the final closing slated for March, 2016. Unilever, one of the world's largest consumer products makers, currently employs about 1,500 people in Canada, with the head count expected to drop to about 1,200 in the next two years.
The company says it's sticking with its two other Ontario factories, ramping up investment to upgrade its northwest Toronto plant, which makes margarine and dressings, and its Simcoe ice cream operations.
Canada's most populous province is still grappling with a tough jobs market. Ontario's unemployment rate is 7.3 per cent, above the national average of 6.9 per cent. The unemployment rate in Toronto is 8 per cent while in St. Catharines-Niagara it is 8.3 per cent. Long-term unemployment remains elevated.
More details on Canada's jobs market will come Friday, with Statistics Canada's labour force survey. Economists expect growth slowed to about 13,000 new jobs last month, with the unemployment rate staying at 6.9 per cent.