Martin Shields, Brooks Mayor, Says Beef Recall Leaves Town In Crisis

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BROOKS BEEF RECALL
Martin Shields, Brooks mayor, says his town is in crisis mode as it attempts to deal with hundreds of newly laid off foreign workers. (CP) | CP

Weeks of worry and uncertainty in a southern Alberta community turned in a single moment to a wave of optimism with word that a U.S. company is taking over the plant at the heart of the recent beef recall.

JBS USA, a subsidiary of Brazilian-based JBS S.A., surprised almost everyone Wednesday with a late afternoon news release announcing it had assumed management of XL Foods in Brooks, Alta.

From its headquarters in Greeley, Colo., JBS also said its agreement with XL provides it with an exclusive option to buy the Canadian and U.S. operations of the company.

"We know full well the commitment it takes to manage world-class operations that produce safe and nutritious products for consumers around the world," said Bill Rupp, president and chief operating officer of JBS USA.

"We believe our experienced team will prove an invaluable asset in the management of XL Lakeside and we look forward to exploring our options to purchase XL assets in the near future."

Brian Nilsson, co-CEO of XL Foods, issued only a brief news release.

"This action is another positive step to relicensing the XL Lakeside beef plant in Brooks, Alta.," he said. "We welcome the assistance of JBS and their resources."

JBS calls its Brazilian-based parent company the world's largest animal protein processor; the American subsidiary has operations in both the U.S. and Australia.

It was an unexpected development in a dramatic saga that began last month when the Brooks plant — one of Canada's largest beef processors — was closed over E. coli contamination.

Earlier Wednesday, Brooks Mayor Martin Shields said the community has been in turmoil over the troubles at XL Foods. By suppertime, he was elated.

"That's positive news," he said, adding it was already spreading throughout the community. "This means the plant is going to be back in operation."

Shields said he had not been personally contact by JBS officials, but would welcome their arrival.

"They really are big," he said. "Obviously they're coming in to manage a plant with the option to purchase and what you would hope is they actually do purchase it, that it just isn't a drive-by happening."

The 2,200 people who work at XL were laid off last week. About 800 were recalled temporarily Tuesday to finish processing beef carcasses as part of a Canadian Food Inspection Agency assessment of the plant.

It had been a frustration for the United Food and Commercial Workers, the union that represents the workers.

Local 401 president Doug O'Halloran was tempered in his enthusiasm for the JBS announcement, but said it was good news.

"We've been calling for new management or new ownership since this took place and on first blush we certainly see this as a positive move."

The plant is still not out of the woods. The CFIA is expected to complete a report and make a recommendation to the federal government about the plant before the beginning of next week.

The CFIA said its review in the coming days will include how well XL Foods is handling E. coli controls, meat hygiene, sampling techniques and overall sanitation.

The federal agency does not spell out what those next steps could be or how soon the plant might be able to resume slaughtering cattle or sending beef products to market.

Cameron Bruett, JBS's head of corporate communications, did not want to comment on any interactions the company might have had with the government agency.

But he said the takeover will be swift.

"Immediately we'll be sending teams up to Canada ... to see how to proceed with that one facility," he said. "We're well aware of the present situation."

He said discussions between the two companies began in the last month, though he didn't want to say who approached who first.

"We think XL is an excellent company with an excellent operation," he said.

"Unfortunately, in this business at times food safety issues can arise. We think we're well positioned to assist in those matters."

He said JBS is approaching the Lakeside plant with a positive attitude.

"Our intent is to keep the plant running and utilize the available workforce, but of course we're going to have to review the labour situation there," he said. "Hopefully it will be a seamless transition — that is our goal."

On Tuesday night, the food agency announced yet another recall of beef from the plant, this time involving brands sold under different product names in British Columbia and Alberta.

The recall of more than 1,800 products now involves 33 retail chains across Canada. A list of retailers can be found at: www.inspection.gc.ca/food/consumer-centre/food-safety-investigations/xl-foods/recalled-products/eng/1347948154750/1347948313776.

The meat packer, the second-largest in Canada, has not been allowed to export beef products into the United States since Sept. 13.

Fifteen people in four provinces have become ill from a strain of E. coli linked to the XL plant.

Some people have filed lawsuits against the company, including 15-year-old Cody Farmer of Nanaimo, B.C. In his statement of claim Farmer said that he required surgery after he was exposed to E. coli.

Erin Thornton of Vancouver has filed a statement of claim proposing a class-action lawsuit for people who fell ill from E. coli and those who had to throw out recalled beef. Other lawsuits have been filed in Ontario, Alberta, Saskatchewan and Quebec.

Statements of claim contain allegations that have not been proven in court.

JBS USA employs more than 60,000 employees in the U.S. It processes, prepares, packages and delivers fresh, further processed and value-added beef and pork products for sale to customers in more than 60 countries on five continents.

It is also a majority shareholder of Pilgrim's Pride Corp., the second largest poultry company in the U.S.

"Upon exercising the exclusive option to purchase the above assets, JBS USA agrees to pay USD $50 million in cash and USD $50 million in JBS S.A. shares," said the company's news release.

"Under no scenario will JBS USA assume any of XL Foods' debt or liabilities."

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