Leamington, Ontario is a self proclaimed Tomato Capital of Canada and is also the home to a household ketchup giant, Heinz. Ontario is also the location of a tourist spectacle, one giant tomato statue that was partly funded by Heinz in 1961, to top it all of, also holds an annual tomato festival that was originally a company picnic. Because of its history, most of residents one way or another has a family member who has worked at the century old Heinz plant.
On 2013, a group of investor's 3G Capital and Berkshire Hathaway, Warren E. Buffet's company bought Heinz. They recently announced to close the plant and gave layoff notices to its 740 workers.
The decision was excused due to a fluke in the Canadian Law and a regulation that bans using tomato paste to make tomato juice.
In spite of the plant changing its executive order, Heinz brand is still the biggest customer. The plant now also produces tomato juice, soups, sauces and also SpongeBob SquarePants canned pasta.
One of the three proprietors of the new plant, Sam Diab is full of Heinz history. His grandfather who was an immigrant was once a caretaker at the old Heinz plant. His mother followed his grand fathers footsteps and eventually held a senior financial position in the plant as well.
Mr. Diab left a management job at the Heinz headquarters in Pittsburgh to run the factory on 2012. Now Mr. Diab is the president and chief executive of the Highbury Canco who partially owns the company.
Mr. Diab worked on a plan to save the factory after finding out on October of 2012 that the plant was shutting down. He said, "you know, it was difficult when you have hundreds of people around you" and "I see a different future for the place"
He made failed attempts to discourage 3G and Berkshire Hathaway from closing the plant, even though his plan included cost cutting. The company needed a new strategy even thou Heinz bought about half of Ontario's tomato crop, worth roughly $50 million a year.
As prospective buyers look around the plant, Mr. Diab still proposed that new owners focus on landing Heinz as a customer. Many of the prospecting buyers were simply looking to tear down the plant and redevelop the land.
Mr. Diab said, "My heart wasn't in the tour," "I didn't actually think it was going to go anywhere because they didn't have the background in food."
But surprisingly two investors called back the next day. Pradeep Sood and Surjit Babra, investors from Toronto, were impressed that the plant came "with a trained, ready-made work force." After a couple of weeks, Mr. Diab and the investors formally entered a partnership, bidding for the plant and its equipment with the contracts to continue using them to make Heinz products.
In the beginning, employment was cut to 250 from 740 employees. Because of this new union contract, the basic rate for unskilled plant workers fell to 16 Canadian dollars. Also tomato farmers supplying the plant declined.
Eager to make things happen for the new established company, Mr. Diab's focus is primarily on expansion. They landed a contract to produce industrial tomato paste for a local canning company, allowing also executives to raise employment to 325. Company sales ending in 2015 will be around 75 million to 120 million Canadian dollars.
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