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Sale of Springhill Farms Welcomed by Pork Producers and Municipal Leaders

by 5m Editor
21 October 2007, at 5:32pm

CANADA - News that Hytek has agreed to purchase Springhill Farms is being greeted by pork producers and municipal leaders with enthusiasm and excitement.

Earlier this month (October 11) La Broquerie, Manitoba based Hytek Ltd. announced it has signed a deal to purchase the Springhill Farms pork processing plant in Neepawa.

Hytek, the largest privately owned pork producer in Canada, with pork production and marketing operations across Canada and the United States, as well as pork production and processing operations in China, expects the deal to close in January.

Deal Expected to Close in January

“There’s the standard due diligence period that will be undertaken from now to early January and then we’re looking at closing the deal at that point in time,“ states Guy Baudry, Hytek Limited vice president business development. He notes Hytek is looking to balance its production in western Canada with processing and has been pursuing processing capacity for he past couple of years.

Hytek Plans Additional Investment in Value Added Processing

Currently Springhill’s workforce, of about 350 people kills approximately 3400 hogs per day and cuts approximately one third of that. Baudry notes Hytek plans to invest an additional $35 million to take the plant to full operational level of 4000 head per day, doing primary and secondary cutting and realizing all of the value added opportunities that can be done at the plant.

“With that level of investment this will create an additional 200 jobs at the facility so, in the end here, we’re looking at having an operational staff of about 550 people,“ says Baudry.

Pork Producers Applaud Announcement

“This is really great news for the swine industry,“ says Manitoba Pork Council Chair Karl Kynoch. He points out the ability to process hogs locally reduces freight rates for producers, brings added competition for hogs to the market, creates direct jobs and spin-off jobs for all Manitoban’s.

Kynoch believes the recent trade action launched by the U.S. industry against the Canadian industry underscores the reliance Canadian producers have on U.S. packing plants and the border risk that reliance creates. “Anytime that we can expand the processing capacity here in Manitoba we reduce that border risk and the threat of a trade action against us.“

He observes Hytek’s purchase of Springhill combined with Maple Leaf’s plans to double shift its Brandon facility means the industry has two plants in Manitoba. “That’s really positive to have two very strong processing plants. It also gives producers a little bit better level of confidence that there’s going to be shackle space to process hogs here.“

Saskatchewan Pork Producers Encouraged by Springhill Expansion

Saskatchewan Pork Development Board (Sask Pork) Chair Joe Kleinsasser agrees. “We need more than just one healthy packer in the country.“

Sask Pork has been working diligently with its producer members to restore primary pork processing capacity lost in Saskatchewan with the closure of the Mitchell’s Gourmet Foods plant in Saskatoon.

Kleinsasser admits its too early to be certain but he views Hytek’s purchase of Springhill Farms as good news. “Certainly the last thing we need is to have more shackle space taken out of the industry.“

He is confident that with Hytek’s track record they have the ability to succeed in the venture.

Kynoch agrees, “It’s a very strong company to put behind a processing plant.“

Springhill Purchase Ends Effort to Establish New Winnipeg Processing Plant

Kynoch admits some disappointment in the fact that the Hytek purchase of Springhill will bring an end to the company’s effort to locate a world class primary pork processing facility in Winnipeg.

“With respect to the proposed Winnipeg plant,“ as Baudry explains, “Pending the successful completion of this deal, we are going to withdraw our application for OlyWest in the city of Winnipeg.“

Springhill Announcement Applauded by Town of Neepawa

Hytek’s take over of Springhill is especially welcome in Neepawa and its surrounding area. Neepawa Mayor Bob Durston says the additional $35 million investment planned for enhancing value added processing and the 200 additional jobs that will create is great news for the area.

“When Springhill Farms first started all 350 employees, at that time, did not come from the town of Neepawa.“

He explains that they came from the area and from outside the area and bought or built homes and that is what is expected with this latest announcement. People will choose where they wish to live based on housing availability and it will create opportunities for housing developers.

“Value added is important because it really retains jobs here,“ Durston stresses. “We’re importing those 200 new jobs from elsewhere with the additional processing of the hogs so it’s good news that Hytek is planning to do not only the slaughter here but also the processing here as much as they can to add value to the product.“

Increased Kill Offers Improved Efficiency

Kynoch believes the fact that Hytek plans to bring the plant to full capacity is especially significant. “One thing that we’ve always heard is, to make these plants run efficiently and be able to turn the best profit margin, they need to be running full capacity. If a plant is running efficiently then that means they can actually pay a little bit more for the hogs and that, in turn, puts more money back in the producer’s pocket.“

Hytek to Build on Springhill’s Market Development

As for markets, Hytek plans to build on the international channels Spring Farms has already established. “We’re going to build on the existing international markets that have been developed by Springhill Farms.“

“From that perspective, these pork products go internationally. They go into North America, South America, eastern Europe, Russia, China and Asia. So it’s continuing to build on those international channels that have already been established by Springhill Farms.“

“We’re really happy to hear that Hytek has shown the interest to purchase that plant and we look forward to Hytek doing a great job in that plant,“ says Kynoch. “And hopefully, in the future, a lot of producers will look forward to doing business with them.“

Durston adds, “It’s a win win for everybody. It’s a win for Springhill Farms and it’s a win for Hytek to have a slaughter and processing plant here in Manitoba. It’s a win for Neepawa because we can look forward to working with Hytek for many years in the community. They are good corporate citizens, good community people.“

Hytek Confident in Viability of Manitoba Hog Industry

“We believe in the long term fundamentals of the hog industry in Manitoba,“ says Baudry.

He notes Hytek is heavily invested in and partnering in different communities in Manitoba from a capital perspective and from a staffing perspective. “We are really looking forward to this new partnership with Springhill and with the town of Neepawa and area and we’re looking forward to being proud community partners.“