PRESS RELEASE: DECEMBER 09, 2006

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Olymel closes plants

MONTREAL (CP) - Meat processor Olymel LP will close two pork processing plants east of Montreal next spring, cutting almost 560 jobs, as the Quebec industry continues to restructure due to global competition and a strong Canadian dollar.

Olymel, a company with operations in Quebec, Ontario and Alberta, has already hired former premier Lucien Bouchard to help restructure the troubled industry in the province.

The company said Monday that a plant at St-Valerien-de-Milton that has 153 employees and another at St-Simon-de-Bagot with 406 employees will close at the end of March.

Olymel had announced the closure of the St-Simon-de-Bagot plant, near St-Hyacinthe about 50 kilometres east of Montreal, earlier this year but the union representing workers there fought the decision and the matter is still before the courts. The plant had been slated to close in September.

Company spokesman Richard Vigneault said the St-Simon plant is still open but will shut down in March.

The union representing workers in St-Simon refused to comment until Tuesday, saying it needs to be cautious because of the court challenge.

In St-Valerien, a different union expressed anger at Olymel's decision.

"It wasn't subtle. We are direct victims," said Louis Bolduc of the United Food and Commercial Workers union.

He said the St-Valerien plant wouldn't have been targeted except to legally justify the St-Simon closure.

Boluc said the St-Valerien plant "is a model of productivity, a profitable and excellent plant."

He was expecially surprised by the closure because Olymel hadn't asked for wage concessions from employees, as is often the case when a plant is losing money.

Olymel recently said about 4,000 of its jobs in Quebec are at risk in the fresh-pork sector if nothing is done to improve production, marketing, slaughtering and processing conditions.

About 50 per cent of the company's production is exported internationally and Olymel has been hurt by the appreciation of the Canadian dollar, which makes exports more expensive in key target markets such as the United States and Japan.

The Olymel streamlining announced Monday reflects the struggles pork producers are facing across Canada to improve their finances in an increasingly difficult market.

Earlier this fall, Maple Leaf Foods Inc. (TSX:MFI), the Toronto-based food processor with 24,000 employees, announced it is backing out of fresh pork international markets and cancelled plans for a $110 million pork plant in Saskatoon. The company also said it will wind down another plant over three years and plans to sell its animal feed business.

Olymel announced in September it had hired Bouchard to negotiate with the company, its unions, other producers, the provincial government and stakeholders in the industry "with an objective of finding lasting solutions to the grave problems facing the company."

Among the problems facing Olymel is a strong Canadian dollar, volatile hog deliveries and payroll costs that are significantly higher than those of its competitors.

Bouchard, who became premier shortly after Quebec's 1995 sovereignty referendum and stepped down in 2001, is now a partner at Montreal's Davies Ward Phillips & Vineberg law firm.

The former Parti Quebecois leader is known as an expert negotiator and was hired by the Videotron cable company, a subsidiary of Quebecor Inc. (TSX:QBR.SV.B), and the Quebec Liquor Corp. to settle their difficult labour disputes. He is also known for his oratory abilities and his charismatic personality.

As premier in the late 1990s, Bouchard also managed to persuade major union leaders to agree to public-service employee cuts to help wipe out the provincial deficit.

Olymel has said that by the end of 2006, the company will have lost $155 million since 2003.

Olymel accounts for 60 per cent of Quebec pork production and employs 11,000 people at plants in Quebec, Ontario and Alberta. The company ships about half its production to the United States, Japan and Australia.

It slaughters, processes and sells pork and poultry products and is expected to generate almost $2.5 billion in sales this year. The company sells its products mainly under the Olymel, Lafleur and Flamingo brands.



 

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