The Reynolds plant is in southwestern Toronto, which was a thriving industrial hub for much of the first 75 years of the 20th century. Manufacturing has not abandoned the area, but ‘for sale’ and ‘for lease’ signs are prevalent.iStockphoto/Getty Images/iStockphoto
A Toronto plant that makes the Alcan brand of aluminum foil used in millions of kitchens across Canada will be closed despite performing "exceptionally well."
Reynolds Consumer Products Inc. will close a plant formerly owned by Alcan by the end of next year, confirming fears employees expressed when Canadian regulators approved the takeover. Reynolds bought the factory in 2014. The decision will eliminate about 100 unionized jobs, in the latest demonstration of how globalization has battered Canada's manufacturing sector.
"It is a business decision to consolidate our operations," said a memo addressed to "Dear RCP Employees" that quoted Ken Lane, Reynolds' business unit president. Reynolds makes a product called Reynolds Wrap that competes with Alcan foil.
"These decisions are very difficult, particularly when they affect an operation that has performed exceptionally well," the memo quoted Mr. Lane as saying.
The memo said Alcan foil will still be made and sold in Canada, but by a contract provider. Production of Alcan foil containers will be shifted to a plant in Wheeling, Ill. "This is a business decision made on production needs and reducing overall operating costs," the memo said.
An e-mail from the company's head office in Lake Forest, Ill., said production of Alcan foil is "transitioning to an affiliated Reynolds facility in London, Ont."
The Toronto plant currently has about half as many workers as it did when Reynolds took it over from Novelis Inc. three years ago. Six months before the $35-million deal was approved by the federal Competition Bureau, employees said they feared the plant would close and their jobs would disappear.
"It has been downsizing over a period of time," said Omero Landi, an area co-ordinator for the United Steelworkers of Canada, which represents the plant's hourly workers.
It is another sign of "the de-industrialization" of Toronto, Mr. Landi said. "There's the economic pressure to do it in other places, there's the economic pressure to consolidate operations, there's the economic pressure of selling the land for what it's worth."
The plant is in southwest Toronto, which was a thriving industrial hub for much of the first 75 years of the 20th century. Manufacturing has not abandoned the area, but "for sale" and "for lease" signs are prevalent.
"Reynolds is one of the many, many examples in and around Toronto that have disappeared. [It] paid fairly good wages, had good benefit plans, pension plans, people worked there 30, 40 years," Mr. Landi said.
The labour contract with the company calls for two weeks of severance pay for every year of service for employees who have worked at the plant for five years or more, he said. The maximum severance is 52 weeks.
The union is scheduled to meet with company officials on Tuesday to discuss the closing and severance for employees who worked there less than five years, he said.
Novelis was spun off from Alcan Inc., in 2005 after anti-trust regulators raised concern about reduced competition when Alcan bought rival Pechiney SA of France.
That deal was part of a global aluminum industry consolidation. Alcoa Inc. launched a hostile bid for Alcan in 2007 that eventually led to the takeover of the Montreal-based aluminum giant by Rio Tinto PLC.
Rio Tinto licensed the Alcan name for aluminum foil to Novelis. Then Hindalco Industries Ltd. of India bought Novelis.
A year after those deals, Alcoa sold its Reynolds consumer products business to Rank Group Ltd., the private investment company of New Zealand billionaire Graeme Hart.
The takeover of the Toronto plant and other Novelis operations in Canada by Reynolds was approved by the Competition Bureau in May, 2014.