Poultry firm Groupe Westco and meat processor Olymel have scrapped plans to buy a competing slaughter plant to house their New Brunswick joint venture, and have chosen a site to build new.
Westco and Quebec-based Olymel announced Tuesday that they expect to get the authorizations they need “shortly” to start construction on a $30 million joint-venture poultry plant at Clair, about 30 km southwest of Edmundston, in northwestern New Brunswick.
Starting this week Westco and Olymel will gradually transfer Westco’s poultry production to Olymel slaughterhouses in Quebec. Once the Clair slaughterhouse is built, Westco production will again be slaughtered in New Brunswick, the two companies said.
A new plant would allow Westco, based at nearby St-Francois-de-Madawaska, N.B., to complete “integration” of its operations in New Brunswick — an objective the company said it has been pursuing for “several years.”
To that end, Olymel and Westco agreed in 2008 to partner on poultry meat production, handling their slaughtering, cutting, deboning and distribution operations for the entire Maritimes from a then-unnamed base in New Brunswick.
Brampton, Ont.-based meat processor Maple Lodge already operates a poultry slaughter plant at St-Francois through its Nadeau Poultry Farm subsidiary, and had rejected the two companies’ offers to buy its facility, Westco and Olymel said Tuesday.
Instead, Nadeau last year took the two companies’ plans to the federal Competition Tribunal.
Nadeau sought an order compelling Westco, a poultry producers’ group, to accept a supply agreement to deliver live chickens to Nadeau’s processing plant. The tribunal in June 2009 dismissed Nadeau’s application.
In another ruling Aug. 20, the New Brunswick Court of Appeal confirmed a decision by the New Brunswick Farm Products Commission that Westco and other producers are not obliged to allocate a part of their production to Maple Lodge.
Olymel and Westco read the decisions of both the tribunal and the provincial commission to mean that even if Westco no longer supplies Nadeau with live chickens, it would still be able to keep its slaughter plant operating by sourcing chickens from breeders in other provinces, particularly Nova Scotia and Quebec.
After the tribunal’s ruling, Westco and Olymel said Tuesday, they made more proposals to Maple Lodge including an offer to buy the slaughterhouse; a possible joint operation agreement; a draft agreement on slaughtering at fair market value during construction of the new slaughterhouse; and payment of a premium along the lines of what Nadeau offers elsewhere.
All these offers to keep Westco poultry flowing to the St-Francois plant were rejected, the two companies said.
“The Olymel-Westco partnership must thus accept (Maple Lodge’s) obstinate refusal, and as a result, Groupe Westco has no alternative but to build a new slaughterhouse in northern New Brunswick if it wishes to complete its egg-to-plate integration and preserve hundreds of jobs in the poultry industry in partnership with Olymel,” Westco CEO Thomas Soucy said in the two companies’ release.
“We really did everything possible to reach an agreement with Maple Lodge and develop a business relationship that was acceptable to all concerned, but they were simply not receptive.”