Canada Bread to build baking facility in Ontario

by Eric Schroeder
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TORONTO — Canada Bread Company, Ltd. on Jan. 12 said it will invest approximately C$100 million in its Fresh Bakery operations to construct a new 370,000-square-foot baking facility in southwestern Ontario. The company plans to select the specific location for the plant by the end of March, with construction beginning within six months after the site is decided and production commencing 12 months after that.

“This new bakery facility will be the largest in Canada and reflects our commitment to investment and growth as Canada’s leading value-added bakery business,” said Richard Lan, president and chief executive officer of Canada Bread. “It will drive significantly improved efficiencies in our manufacturing and supply chain, providing the capacity to support organic growth and the growing needs of our customers.”

The new facility will be designed in a way that integrates modern equipment, best-in-class technologies and sound environmental principles to ensure it operates to the highest standards of operating efficiency, quality assurance and environmental management, according to Canada Bread.

In line with the new facility opening, the company said it will close its three existing bakeries in the Greater Toronto area, which Canada Bread said have “aging assets that have been further constrained by urban development and cannot support the business’ long-term growth.”

Production will be transitioned over a two-year period as operations at the three plants are wound down, with the first bakery currently expected to close in late-2011, the next in early 2012 and the third in early 2013. Employees will be given opportunities to consider the 300 positions at the new facility or other available jobs elsewhere across the company’s operations, Canada Bread said.

In addition to the C$100 investment in land, building and equipment, Canada Bread said it expects to incur restructuring costs totaling approximately C$25 million, which includes C$5 million in non-cash items. These costs include asset decommissioning and severances, and will be recorded in the company’s financial statements over the next three years.

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