A labour study of Ontario’s food processing industry
April 17, 2008 By Karen Dallimore
If you have ever had to wait in
the lobby of a food processing company, you have probably seen a large
sign on the wall declaring the company’s mission statement.
A labour study of Ontario’s food processing industry
If you have ever had to wait in the lobby of a food processing company, you have probably seen a large sign on the wall declaring the company’s mission statement. Usually, the first declaration is something about the customer being king. That’s great. The second declaration may say something about the company people and how the company strives to create a good environment for their workers. Excellent.
“Unfortunately,” continued James Farrar, president of the agri-food management consulting firm Jayeff Partners, “in reality the noble ideals on the wall are disconnected to what actually happens on the company floor.”
Farrar was presenting the findings of a 10-year study called Workforce Ahead – A Labour Study of Ontario’s Food Processing Industry to delegates at the annual general meeting of the Guelph Food Technology Centre. The landmark study was commissioned by the Alliance of Ontario Food Processors (AOFP), and funded by Human Resources and Skills Development Canada and the Ontario Ministry of Agriculture and Food.
“Today we’re going to talk about people,” said Farrar.
According to Farrar, the reality is that if you can’t produce the products, you are not going to meet your customers’ needs. You can’t do that without people, and according to the study, good people are going to become a scarce resource.
With $24.5 billion in shipments in 2001, excluding beverage and tobacco, the food processing industry accounts for 8.6 per cent of the total manufacturing activity in Ontario.
The four major sub-sectors are grain and oilseed milling, sugar and confectionery, fruit and vegetable processing and baking. Ontario dominates the food processing industry in Canada with more than half of the food shipments by value, with the greatest concentration of activity in the Greater Toronto area, stretching from Burlington to Oshawa.
An industry of such magnitude needs a lot of workers – approximately 100,000 of them in over 2,300 food companies with full-time employees in Ontario.
Who will these people be? Where will they come from? Why will they want to work in food processing? What will they need?
The study itself was comprised of three objectives: the first was to obtain an understanding of where food processing stood relative to other industrial sectors in the province; the second was to look at employer human resource practices in hiring, training and retaining workers, and the third objective was to look at the whole dynamics of the labour force in terms of supply and demand as we forecast trends for the future, and project how will these trends impact on the province’s food processing workforce.
Over the last 20 years, the labour force in food processing has almost doubled, but that trend will not continue. Farrar says the report forecasts that the numbers will remain static over the next 20 years as many retire and birth rates remain unchanged.
“Labour force growth is projected to come to a halt by 2016 in some regions of Ontario … and continue to decline every year thereafter through to the end of the forecast period in 2026,” states the report summary. Only the Toronto perimeter will experience growth, mainly due to immigration but also through migration from other parts of Canada.
Many workers will be lured away from the food industry by higher wages in other manufacturing sectors. In 1992, food processing wages were 90 per cent of the average industrial wage for manufacturing, and have been losing ground since then, says Farrar. This will work against food processing as the labour market gets tighter.
As an overall picture of the workforce, “process labourers are the largest group, followed by machine operators. One-third of the industry’s workforce performs management, supervision, administrative, sales or service functions,” states the report summary.
The report also states that the first group of workers to feel the pressure will be those segments where the majority of the workers are over 45 years of age. This includes many of the skilled trades. According to the study results, “six key and highly-skilled occupations in food processing, led by Stationary Engineers, have 50 per cent or more of their workers aged 45 years of age or older.” Farrar points out that training their replacements is a long-term problem that needs to begin now.
So what will be the source for future workers?
The labour pool will come from any one of four areas. One indigenous source will be homegrown talent – recruiting students as they choose their careers. Unfortunately, from Farrar’s observation, “most students don’t have the food industry on their radar screen.”
Immigrants will continue to be an important source of labour, as well as migrants from within Canada. Another source will be to hang on to what the industry already has by increasing labour participation rates: requiring workers to work longer. “The paradigms will change,” explained Farrar, and instead of offering early retirement, company’s may be begging for a few extra years.
As far as automation goes, it isn’t going to provide the whole answer. New technology does replace workers but it needs a whole new set of skills to run. “You can’t automate your way out of a labour shortage,” warns Farrar. Automation also requires capital, and that money is just not as readily available as margins are squeezed.
What does the food processing industry need to do to ensure a good supply of workers in the future?
In the short-term, firms may be able to cannibalize their workforce from within the industry, but this is not a long-term solution.
This study provides all of the information that is needed to develop a plan for the future, and it is Farrar’s hope that everyone takes this issue seriously. He understands that it is easy to put off if it doesn’t affect the next quarter’s bottom line. He also understands that managers may say they will be retired by the time 2010’s labour problems come around, but Farrar respectfully suggests that is not a responsible approach.
The industry is at a fork in the road for labour supply and Farrar’s message is that it needs to move away from the commodity-based world in terms of its workers. The industry has to focus on its people, and it is up to the industry to mobilize this change, says Farrar. The AOFP is in a good position to take a lead role to develop a strategy.
As well, the food processing industry needs to re-examine the importance of their human resources functions. The human resource department should be viewed as a strategic resource, not just what Farrar describes as “a nuisance position to deal with grievances.” It needs to be elevated to the same status as the market research department – firms will spend huge amounts of money to study the demographics of their customers, but what about the people within?
Management also needs to understand who their workers are and what they need to want to stay. This includes looking at internal workings of the team and making sure they are working well together. Conflicts can arise from a variety of sources. For example, when supervisors are scooped away from entry-level positions and given their new responsibilities, they are often not equipped to do their job. They will need training in people skills, conflict resolution and often need help with a variety of ethnic issues. There may also be a generational issue, where older supervisors don’t understand that younger generations have different expectations from their jobs. Such issues need to be identified and addressed.
The government needs to get in step as well. Their job can be to provide infrastructure and public transportation to get people to work, provide funds for teaching English and math skills to immigrants so they are better able to do their jobs. It could also include providing financial incentives for training, provide capital to reduce unskilled positions, and provide a public relations push that will reposition the image of blue-collar trades to show the promise of a career in the food processing industry.
How will all of this affect the grower? In the worst case scenario, says Farrar, a shortage of workers could lead to plant closings as companies consolidate their workforce. For the growers, this may mean greater shipping distances or lost contracts. It could also mean the shift of primary processing to the field level, particularly if that labour is seasonal in nature and largely unskilled.
At this stage, the information in the report could be put to good use through pilot studies at individual firms. If anyone wants to step up to the plate and participate, please contact James Farrar at 905-945-5767 or by e-mail at email@example.com.
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