On April 2, 2012, I had the opportunity to testify to the Standing Committee on General Government at Queen’s Park. Members of the legislature have been debating the creation of an Economic Development program for the purpose of Attracting Investment and Creating Jobs.
Here is my testimony:
Thank you, Mr. Chair. My name is Bernia Wheaton, and I’m the director of business development at Erie Meat Products. Erie Meat Products is 100% Canadian—in fact, Ontario-owned. For the last 35 years, we’ve been a food processor of poultry, beef and pork products. We’ve supplied our institutional, our food service and our retail customers throughout North America.
I actually joined Erie Meats about 10 months ago, but prior to that served as the economic development officer for the county of Perth. As you know, Perth county is in the heart of southwestern Ontario. Perth county’s economic development office was actually created in 2008—and it was partially funded by an Ontario-based economic development program—to address the needs that business raised in dealing with business retention and business expansions. We’re very familiar with the success of economic development programs in Ontario.
Shortly after our office was created in 2008, Campbell’s Soup announced that they would be shuttering their plant in Listowel and we would be losing 500 jobs. As you can imagine, in a community of 6,500 people, 500 jobs was devastating. I know that many of you have experienced such loss in your own communities. Our unemployment rate went from 4.3% to 8.4%. We were left with a federally approved food-grade 300,000-square-foot food processing facility that was vacant. It’s a monster of a facility, but it certainly had tremendous potential for the right buyer.
We had a number of people express an interest, but it was Erie Meat Products that saw both a short-term and a long-term potential for that facility. In the short term, they were very interested in the 80,000-square-foot freezers that would allow them to expand out of their Mississauga operations and prepare for global exports of their upcoming products. But operating as a cold storage or warehouse facility would be limited job creation, so as an economic development officer I felt like we had to find a way to expedite them into food processing at that facility.
In December 2009, the deal closed. Erie Meats became the owner of the facility and at the time there were four full-time equivalent jobs: the guards in the guard shack. We worked with Erie Meats to develop a plan to put together a program of how we could bring them back into full food production at that facility, which is what the facility was originally built for 48 years ago. We applied to the rural economic development fund administered through OMAFRA. We presented a plan to recommission that facility that had been shuttered by Campbell’s Soup. In March 2010, Ontario invested $3 million in Erie Meats to expedite production and create jobs.
Has Ontario seen a return on that investment? Let’s take a look at the numbers. Erie Meats used that $3 million and parlayed it into a $15-million investment. You’ve talked about leveraging funds; I think that’s an excellent example of leveraging a program. That $3 million went into renovations, went into recommissioning that facility, it went into electrical jobs, mechanical jobs, millwrighting jobs, metal fabricating jobs, the purchase of equipment and installation—all of those high-value, high-paying jobs. Much of those funds went directly into our community in the short term.
We launched into production in October 2010 with a state-of-the-art wiener production facility. Today, we have approximately 250 full-time equivalent jobs in that facility and we’re on our way towards 500, which is our three- to five-year growth plan. It turns out you can’t just have 500 people march into a plant on the first day; you have to hire them on line by line.
Since that initial wiener production facility, two other production lines have gone in and the wiener production line has just added a second shift since March break. Two hundred and fifty jobs means $6.3 million in annual labour income at a very conservative 20% income tax rate. That translates to $1.2 million in income tax payable. That allows people to buy cars, buy houses, buy bikes and backpacks for their kids. The spinoff multiplier effect in our community is noticeable.
Two hundred and fifty people working means that we’ve saved $5 million in EI payments, if those people were to have been on assistance. Three million dollars has led to an increase of $34 million in exports, as Erie Meats now produces product that goes to 15 emerging nations around the world.
Erie Meats is currently shipping three million pounds of food a week out of that facility in rural southwestern Ontario.
Two years later, Perth county’s unemployment rate in 4.7%, while many of our communities are sporting unemployment rates of 7%, 8%, 9%, 10%, 11%. We believe there is a direct correlation between this $3-million investment, the creation of jobs and the lowest unemployment rate in Ontario.
We believe that Bill 11 will attract investment. Bill 11 will create jobs. Bill 11 is the tool that every economic development officer needs in their tool kit as they’re addressing the needs of businesses that are looking to retain jobs and expand jobs in their community.
Erie Meats is the story, it’s an example of how economic development programs work. It’s how they bring the hope of a job to a community that was devastated and I know that the other communities that are dealing with that in southwestern Ontario can benefit from these types of programs.
A job is what the constituents throughout southwestern Ontario want and need. That’s our story.
The Chair (Mr. David Orazietti): We’re going to start with the Liberal caucus. Ms. Cansfield or Mrs. Piruzza? Interjections. The Chair (Mr. David Orazietti): Ms. Piruzza, go ahead.
Mrs. Teresa Piruzza: Thanks for your presentation. As you said, it’s certainly a success story. Good for you and the area for the investment and what it’s resulted in. I guess one question I would ask is, how important was that $3-million investment in terms of your actual development and the business plan? If that wasn’t there—and I know you’re kind of having to guess at that if that wasn’t available—
Ms. Bernia Wheaton: I know exactly. I remember the conversation specifically with the management. I was the EDO at the time, sitting down with the management of Erie Meats and saying, “If we could find investment, how quickly could you move into production as opposed to at a much later future date?” It was the catalyst, it was the tipping point, that had us sit down and write that plan and recommission that shuttered facility.
Mrs. Teresa Piruzza: Okay, thank you. I appreciate your comments too, in terms of the tool like this in their tool box that economic development officers need as well. It’s evident that you’ve lived it and you’ve seen it successful. Perfect. Thank you.
The Chair (Mr. David Orazietti): Thank you.
Mrs. Donna H. Cansfield: If I may, again, I’d like to thank you for your presentation. I think what you’ve tried to present is a balanced approach to that—in fact, investment does accomplish the goals that have been set out and that it is a catalyst to job creation, and I appreciate that. I just wanted to let you know I’m a self-confessed hot dog person, so good for you.
The Chair (Mr. David Orazietti): We need to move on. Mr. Clark, go ahead.
Mr. Steve Clark: Thanks for your presentation. It was a refreshing success story, showing what you can do with a decommissioned plant. In fact, my constituency is very similar. We had a plant in Brockville that at one point had 1,000 employees. The plant closed. The person who purchased the building—a great entrepreneur—in his case, he did it all with his own money, but he managed to sever the building and have some public sector-private sector. So there are lots of success stories. I know that in your presentation you talked about a $3-million investment by OMAFRA under the RED program. Typically, the way the eastern Ontario development program existed to date, its maximum was $1.5 million. You heard the presentation earlier that talked about changing the criteria to make it more loan-based. I think they used 80% being loan, in contrast to a grant. Any feeling on that? I know you received significantly more money than our program, but I’d like to hear your thoughts.
Ms. Bernia Wheaton: The $3 million in our case was desperate measures for desperate times, and it was certainly the investment that our community needed to make this project happen. There was actually also a $3-million FedDev loan that was part of this spend and so leveraged funding loans. I do believe that there is tremendous merit in a blended mixture of loans and grant, and I would go as far as to say that it should be a graduated scale, depending on job creation.
Mr. Steve Clark: Yeah, and I know that in the east there’s no stacking right now. We’ve got the eastern Ontario program and fund, and there’s sort of a mixture, because one is done by the ministry and the other is done by a more community-based board. So you found the fact that you could stack was pretty crucial to your program, wouldn’t you say?
Ms. Bernia Wheaton: It was administratively challenging, but it was crucial.
Mr. Steve Clark: Thank you.
The Chair (Mr. David Orazietti): Mr. Marchese.
Mr. Rosario Marchese: Thank you, Bernia, for the presentation as well. Steve made reference to the Southwest Economic Alliance. I agree with the blended formula as well. They strongly agreed on loans as well, particularly that grants—and I suspect he might have said “loans” as well—should be limited to lower levels of funding so that you could generate more and help more people. So I’m assuming that you agree with that too: a blend of lower loans or big grants and small grants—I’m assuming you agree with that. Right?
Ms. Bernia Wheaton: I believe that there should be a direct correlation to job creation. When you look at this formula, the job creation was the equivalent of $15,000 per person—that’s not even a year’s wage—from the granting portion. So I believe that there needs to be some sort of formula put in place that measures the value of a job and its immediate return.
Mr. Rosario Marchese: They did say that the money from the fund is released only when jobs are proven to have been created. Do you agree with that?
Ms. Bernia Wheaton: I believe that in some sectors, that might work. In the food sector and certainly with this type of build, it was 10 months from concept to the first hot dog running off the line. It certainly would have been a long process before we would have seen any funding, and yet we would have found a way to make it work. I think the hope of funding is always more valuable than a lack of funding.
Mr. Rosario Marchese: Thank you.
The Chair (Mr. David Orazietti): Thank you very much for your presentation. It’s time.
Ms. Bernia Wheaton: My pleasure.