Kraft Spinoff CanGro Continues to Shrink Jobs Through Closures, Outsourcing
Three days before Kraft announced, on January 30, 2006, the elimination of 8,000 jobs worldwide as part of a new "growth" strategy, a deal was sealed for the sale of five of its Canadian brands and manufacturing sites to two private equity partners, Sun Capital and EG Capital Group, operating as CanGro Foods.
The deal included five manufacturing facilities: four in Ontario (St. David's, Dresden, Exeter and Toronto) and one in Chambly, Quebec, employing in total some 800 permanent employees and large number of seasonal workers. Sun Capital's managing director stated that the new company would work to "Help CanGro's management team and employees to develop and implement a growth strategy to further advance the company's market position and strengthen its customer relationships with Canadian retailers."
Last May, CanGro sold its soup brands to the Baxters Food Group, which eliminated jobs when production was transferred to its plant in Quebec. This was followed by the November closure of the Chembely canned vegetable plant in order to ''enhance productivity and competitiveness''. The closure eliminated 52 permanent production jobs and 63 seasonal jobs. Last week, CanGro announced that it would be closing or selling its canning facilities in St. David's and Exeter effective March 31. St. Davids has 149 permanent employees, Exeter 119, plus a large number of seasonal workers. The plants are organized by UFCW Canada.
"Outsourcing our branded canned fruit business with multi-year supply agreements will improve our competitive position," Bruce Major, CanGro chief executive officer said in a prepared statement.
Cessation of activity would also have a catastrophic effect on the area's farmers, who have been supplying the local canned fruit industry for over a century. "CanGro is outsourcing to countries where they can get their fruit the cheapest. The industry here is dying", said the head of the Ontario Tender Fruit Producers Marketing Board.
Of 800 union jobs at Kraft Canada's operations sold to CanGro, nearly half have been eliminated in just two years of private equity ownership – not to speak of seasonal jobs and the impact on agricultural income. Sun Capital includes as part of its Mission ("consistent, top decile returns/benchmark, measure and improve") the exhortation to "lighten up and have fun." For workers and farmers, CanGro has been a catastrophe.