Maple Leaf Foods in $2 million meat recall

The temporary shutdown of a food processing giant Maple Leaf Foods plant which produced meats linked to a countrywide outbreak of listeriosis, shines a spotlight on the big food processor, a company which makes a variety of foods but has been losing money and slicing away its hog slaughtering operations in a major restructuring. Radio 680News reports that the Toronto-based company, formed years ago from the merger of Maple Leaf Mills and Canada Packers, has shut down the Toronto plant for several days as part of a precautionary $2 million recall of prepared meats being investigated as the possible source of a potentially deadly listeria bacteria. The outbreak has killed at least one person and sickened at least sixteen others.

“We believe it is important to take these broader preventative actions to respond to this situation promptly, comprehensively, and in the best interests of our consumers,” said Rick Young, president of Maple Leaf’s consumer foods group. “We have a strong culture of food safety that these incidents do not uphold, and we are taking every step required to maintain our very high standards.”

The recall is a major headache for the company as it tries to assure the public its meat products are safe. It also comes at a time when Maple Leaf, which also bakes bread and produces animal feed, is losing money and streamlining its meat business as it faces rising inflationary pressures on its global operations. “Most people don’t understand the specific details of how or why these things happen, so they simply get a general impression that there was a problem with the product and it makes them very wary of that company’s product,” said Adam Finn, a business professor at the University of Alberta. “It usually means the company has to spend a lot of money on promotion and advertising that will re-establish their credibility. One element of that is how they handle the recall.”

In its recent second quarter, the company widened its loss to $9.4 million from $1.7 million as restructuring charges offset a jump in sales to $1.36 billion from $1.3 billion. “We fully expected the first half of 2008 to be very difficult for Maple Leaf due to the extreme inflation and volatility in commodity markets,” president and CEO Michael McCain said when the company reported in late July. “We are focused on persevering through these unprecedented market conditions, maintaining our focus on executing the structural changes we have committed to and passing on price increases to offset the effects of commodity inflation. While the first half has been pressured, we believe the second half of 2008 will show a substantial recovery as markets stabilize and the early benefits of restructuring are realized.”

Maple Leaf employs about 23,500 people and has operations across Canada, the United States, the United Kingdom, and Asia. Last year, it generated sales of more than $5.2 billion. It has been streamlining its operations to improve its finances, and is consolidating its six pork processing plants into one double-shifted operation in Brandon, Manitoba, which will supply meat to the company’s packaging operations across Canada. The company wants to focus on its higher value-added meat and meals business and scale back its hog processing and fresh pork operations in a restructuring expected to be completed by the end of next year.