High Liner says Burin produced least volume at highest cost amongst six operations
High Liner Food's secondary processing plant in Burin is scheduled to close by the end of 2012. — Transcontinental Media file photo
Jerry Pike has been operating businesses in Burin with his brother Harvey for 28 years and the people who work at the High Liner Foods fish plant are among their customers.
"They're certainly spenders in our business," said Pike.
"It's got to make an effect, one way or another. It's got to have an effect on the community."
Thursday, High Liner Foods announced it will close plants in Burin and Danvers, Mass., to create a more efficient supply chain for the company. The decision affects 121 jobs in Burin.
In a conference call Friday, High Liner CEO Henry Demone said the Burin plant handled the lowest level of production volume and operated at the highest cost to the company. He said High Liner Foods can move production from Burin with little or no capital investment required.
"I think that, as a business decision, it was absolutely the right thing to do, as difficult as it is for people and families in those two locations."
The closure of the Burin plant, which handles secondary processing, could prove troublesome for local businesses.
Pike said there have been few new businesses popping up in Burin, though the Pike brothers did recently open a hardware and building supplies store - Pike's Building Centre. They also operate a supermarket and a convenience store.
"We'll certainly be looking for an improvement in the economy as you go along in time," said Jerry Pike, adding that it's not peak building season yet so the impact of the plant's closure will not be fully felt in the immediate future.
"What will happen to the plant? We don't know. It is a shock to us, definitely. ... We'll have to wait and see."
The Burin plant is scheduled to close at the end of 2012. The plant in Danvers will close in early 2013.
Demone said Thursday's announcement was difficult. He said the 300 employees connected to the two affected plants did outstanding work making quality products for the company.
He made particular note of the closure's impact on Burin.
"When you have 300 employees, it means you have 300 families," and Demone. "The impact on communities is profound, particularly in Burin, which is rather isolated."
He said given the competitive nature of the seafood market, High Liner needed to ensure its supply chain was as efficient as possible.
"We knew we had to do this. We have six plants. Four-and-a-half years ago, we had two. We know that we can do the production in four plants, and we have room for normal organic growth within the optimum configuration of the four plants."
The company expects to save $9.6 million annually before taxes as a result of the decision to close the two plants.
Under a five-year commitment to the provincial government as part of a purchase agreement for Fisheries Products International assets, $4 million was contributed to a Burin employee life and health trust and other capital expenditures. Demone said that money has been paid into the trust.
Demone acknowledged there is a risk the company may not be able to sell the plants.
"We have taken an aggressive stance in terms of thinking that we're not going to get very much for it," he said.
"We have had it appraised and people have been looking at the market, so we think we're conservative. But there's always that risk."
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