A Nova Scotia dairy processor’s gain will be a loss in central Ontario as retail ice cream giant Baskin-Robbins moves to close the last of its company-owned plants.
Baskin-Robbins, the world’s biggest chain of ice cream specialty stores, said Wednesday it will permanently shut its facility at Peterborough, Ont. by mid-October, lay off its 80 staff and shift the production to "existing partner suppliers."
To make all the ice cream for the chain’s 113 franchised Canadian stores, the Boston-area company said it will shift the work to Scotsburn Dairy, which already produces ice cream products for the chain at Truro, N.S.
To handle the Peterborough plant’s remaining production, which in total fed about a third of the chain’s 4,200 shops outside the U.S., the chain said it will shift the work to plants owned by Texas-based processing giant Dean Foods.
"We deeply regret the need to close the Peterborough plant, but the facility, which is already operating around the clock, is unable to keep up with the demands of our rapidly growing international business," Peter Laport, Baskin-Robbins’ vice-president for global strategic manufacturing and supply, said in a release.
"We have explored other options, but modernizing the facility and adding capacity are unfortunately not viable."
The Peterborough plant is also the only remaining manufacturing facility Baskin-Robbins directly operates in North America, Laport said.
"We believe it makes sense to focus on our core skills of franchising, retail and product innovation, rather than ice cream production."
About 15 staff at Peterborough are to be gone by the end of this month, with the remaining positions phased out as plant operations ramp down leading to the closure in mid-October. "A few managers" will stay on until year’s end, the company said.
Scotsburn, founded by dairy farmers in 1900 in the Nova Scotia town of the same name, bills itself as the largest Atlantic Canadian-owned dairy processor and distributor in the region, and the largest maker of ice cream and frozen novelties in Atlantic Canada.
"Nova Scotia is very pleased that Baskin-Robbins is expanding its relationship with Scotsburn, which is a tremendous endorsement of the high-quality products produced by the company," provincial Economic Development Minister Percy Paris said in a release.
The exclusive supply deal with Baskin-Robbins will result in more employment and lower operating costs at the Truro plant, he said.
Scotsburn operates several processing and distribution plants in Nova Scotia, New Brunswick and Newfoundland, plus a distribution centre in Charlottetown and two in Labrador.
Baskin-Robbins said it will book one-time charges in fiscal 2012 of about $16 million to $18 million, including a $4 million non-cash charge, on the Peterborough closure.
Starting in 2013, the company said, it expects the shift in production to third-party suppliers to save about $4 million to $5 million a year.
Closure and outsourcing aside, Baskin-Robbins said it "remains committed to the Canadian market" and is "actively recruiting additional franchisees to expand its current base" of shops in Canada.
The company said in March that its expansion plans in Canada will have an "initial focus" on Toronto, Ottawa, Calgary, Edmonton and Vancouver.
Franchisee candidates must meet Baskin-Robbins’ minimum financial requirements including a minimum net worth of $300,000 and minimum liquid assets of $125,000 per location.