The recently expanded Dr. Oetker plant in London will add more than 100 workers and boost production to more than 40-million frozen pizzas a year, absorbing output from a factory the German food giant is shutting down in New Brunswick.

Boosting Southwestern Ontario’s status as a centre for the agri-food industry, Dr. Oetker is growing its London operation — a windfall not just for area employment, but also for Ontario cheese, vegetable, meat and flour suppliers.

“This is a big gain for London,” said Sylvain Charlebois, a professor of food distribution policy at Dalhousie University in Halifax.

“It makes sense from a business perspective. You have a modern plant in London with excess capacity, access to a lot of ingredients, and you want to be in southern Ontario where a lot of different ingredients are grown.”

Dr. Oetker announced Tuesday it’s closing its plant in Grand Falls, N.B., cutting 180 jobs there and shifting 70 per cent of its production of frozen pizzas to London and the rest to a plant in New Jersey.

Since London is a new, more efficient plant it will handle that production with fewer workers, adding about 100, and will increase its production by at least 40 per cent — “and that is a very conservative number,” said Charlebois.

The Dr. Oetker plant in London supplies Canada and the United States. London landed the work because it’s a “state of the art” plant, with available capacity, added Charlebois.

“You have a great market, a sizable city with talent and it’s a university town, too. It is really a good place to establish food processing,” he said.

Charlebois has toured the London plant and said there was room for at least one extra production line.

When it opened in 2014, the London plant made 27 million pizzas a year — a figure likely much higher now.

But even at 27 million pizzas, adding 40 per cent would mean about 11 million additional pies.

Food processing is a huge industry, with growing muscle in the London region.

“This is a sector that flies under the radar, but is the second-largest manufacturing sector in Canada behind automotive. It is a growth industry and should be a priority for us,” said Mike Moffatt, an economist with the Richard Ivey School of Business at Western University, who also works with Canada 2020, a progressive think tank.

“There is a local supply chain for the plant, it makes sense to get your tomatoes here and not from Mexico,” said Moffatt.

In 2011, when the plant was announced, it received funding through Ontario’s Ministry of Agriculture and Food to buy locally-sourced supplies. The company said at the time would buy about 25 million pounds of ingredients a year.

Dr. Oetker invested $50 million when it opened the plant, buying 60 acres in the Innovation Park for a 250,000-square-foot building, leaving it plenty of room to grow.

Last year, the freezer area was expanded.

“When Dr. Oetker invested in London we knew this was an investment for their long-term growth. London has certainly been focusing on the food and beverage processing industry,” said Kapil Lakhotia, chief executive of the London Economic Development Corp.

The London plant now has 120 workers. The shift in production will begin soon, with a goal it be completed by March.

In 2104 Dr. Oetker bought certain products from Canadian frozen food producer McCain and leased the New Brunswick plant, which needed significant investment to stay competitive, according to Dr. Oetker.

In New Brunswick, Dr. Oetker will establish a $4-million fund to help with job retraining and economic development in Grand Falls and will extend employees’ medical benefits to the end of the year.

“We care deeply about the people on our Grand Falls team and we will sit down individually with them to discuss their own specific path forward,” Cécile Van Zandijcke, the company’s executive vice president, said in a statement. “That will be our immediate focus now.”

The retail food climate has become increasingly challenging in recent years in price and cost, she added.

Dr. Oetker is the latest London food business to announce growth plans, with Nestle announcing a $20-million expansion to its London plant and Sikorski Sausage moving into a larger facility.

“Pizza has withstood the test of time, it continues to be very popular and that is good news for London. I don’t know in 10 years if we’ll be eating sushi, but we will be eating pizza,” said Charlebois.

Ontario’s agri-food sector is worth more than $37 billion and supports more than 800,000 jobs across the province, the agriculture ministry says.

In the London area, the industry’s products range from chocolate and beer and pastry, to poultry products and industrial sweeteners.

ndebono@postmedia.com

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