02/27/2014 08:31 EST | Updated 04/29/2014 05:59 EDT

Heinz signs deal with company to keep jobs in Leamington

H.J. Heinz Co. has signed a letter of intent with Highbury Canco Corp. to acquire the Heinz Leamington facility and become a contract packer for the food giant.

“We will continue to manufacture certain identified Heinz products and as well provide certain distribution and logistics services to Heinz in Canada,” Highbury’s Pradeed Sood said in a media release. “The Leamington plant has an excellent workforce and Ontario farmers are amongst the best in the world.”

Heinz slated the 105-year-old plant closure in June of this year.

CBC News was first to report an announcement was coming this week.

Leamington Mayor John Paterson has been in contact with an official at Heinz. Paterson said the official told him "it will be a good day in Leamington."

"There will be a press release from their company and the one they are working with, to let everyone know what's planned on happening," Paterson said before the announcement. "I'm not sure the agreement is totally finished yet, but he said it will be a good day in Leamington. There will be a lot of happy - happier - people."

Heinz announced last fall the plant would cease operations and nearly 800 people would be out of work in June.

CBC News sources say the company set to move into the plant will produce tomato juice for Heinz, in a deal that could save up to 40 per cent of the 800 jobs at the plant.

Sandra Pupatello, the CEO of the Windsor Essex Economic Development Corporation said everyone has been working together to help save jobs in Leamington.

"All levels of government have been very helpful. It is a matter of finding when and where they can be helpful. It's still very early days to be doing that, so at this point, our roles have been getting information," Pupatello said. "So we use all of those contacts to talk to people, get people into the funnel."

'Just the beginning'

Pupatello said Thursday's announcement is just a start, but it could lead to better news in the future.

Sources close to the negotiations tell CBC News a Canadian food processor will continue to make tomato juice for Heinz.

The company will then sell the juice in the Canadian market.

Locally grown tomatoes will be used to make the juice.

The Leamington plant was the last in the Heinz chain to process whole tomatoes. Tomato paste made in the U.S. is used at all its other U.S. plants. If Heinz wants to maintain a share of the Canadian tomato juice market, it cannot simply add a packaging line and make tomato juice from concentrate (paste) in the U.S. and ship it to the Canadian market.

According to the Canadian Agricultural Products Act, tomato juice sold in Canada must be made from whole tomatoes.
Patterson said that whoever takes over the processing needs to get up and running quickly.

"If it's going to be a success this year, I think it needs to happen pretty soon. Tomato farmers have to get underway right away. So I think if anybody is going to be successful … it has to be announced soon," Paterson said.

Chatham-Kent-Essex PC MPP Rick Nichols said Thursday's announcement "will be good news for the town of Leamington."

Nichols also told CBC News two other companies are interested in opening in Leamington and "offer jobs to workers displaced by Heinz."

"This is just the beginning. There is more good news down the road but I don't want to build up expectations," Nichols said.