|
Pig plants have a rough ride in the west
June 2, 2006
A $110-million Maple Leaf pig processing plant in Saskatoon is on hold after construction bids came in 25-30% higher than expected, apparently because of a booming western Canadian economy. And Saskatoon's cost to service the proposed site have also increased dramatically.
According to a Reuters news story earlier this month a company spokesperson said it was too soon to speculate whether Maple Leaf would look at other locations because of the higher than expected bids. The postponement didn't prevent Saskatoon city council from deciding last week to push ahead with sewer services to the site of the proposed Maple Leaf plant in spite of a 70% increase in costs.
Saskatoon city staff told their council on May 26 that they had received only one bid for the sewer contract and it came in at $17.6 million instead of the $10.1 million the city had included in its budget. The staff report said the main reason for the difference was because "the final design had not been completed at the time of the budget preparation". The report also cited "increased length for the Maple Leaf Foods local servicing segment".
Saskatoon is fast-tracking the sewer project as a result of Maple Leaf's plans, prompting one councillor to ask "are we doing this right now just for Maple Leaf?" City staff assured her that the project "is part of a permanent development scheme and Maple Leaf is just one component of that."
Saskatoon provided a number of direct subsidies to convince Maple Leaf to stay in the city including a land purchase of $2.4 million, $3.5 million to demolish the company's current Saskatoon facility, $2.5 million to construct a primary sewage treatment plant, and nearly $8.5 million in tax exemptions.
Maple Leaf was also promised $35 million in provincial grants to convince them to stay in Saskatoon and replace an existing pork plant with a larger one.
The company's first quarter financial results released in late April reported a 33% decline in revenues "primarily due to lower earnings from pork operations and reduced earnings from hog production operations."
A competing hog facility being planned for Winnipeg has also run into challenges. According to the Winnipeg Sun, two large industrial companies announced in April that they would scrap expansion plans if the OlyWest pig slaughterhouse goes ahead in St Boniface. One pharmaceutical company even suggested it would pull up stakes and take its 400 jobs with it.
The companies are leading a group of 25 businesses that say they will fight the pig plant during this fall's municipal elections. Despite the opposition, the Winnipeg City Council voted on May 25 to reaffirm its earlier decision to provide $3.4 million in incentives to attract the OlyWest facility.
Last year Maple Leaf considered shifting its Burlington pork plant to a business park on Hamilton's east mountain, but withdrew in the wake of opposition by residents and some councillors. Before the company backed out, the provincial government agreed to provide Hamilton with $20 million to help service the North Glanbrook Business Park, the location being considered by Maple Leaf facility.
Neil Everson, the city's director of economic development, told the planning committee early this month that he had contacted every major industrial and commercial realtor in the greater Toronto Area and "we can't get North Glanbrook up fast enough to deal with the enquiries" from companies interested in locating there. "There will be no difficulties in selling this park, provided we can get the infrastructure in place and get that park ready as soon as possible", Everson declared.
Some recent media coverage of the Maple Leaf and OlyWest projects can be found at the following locations:
|
