Canada cut foreign workers and hobbled its meat industry

Bloomberg

For a glimpse at how Donald Trump’s “America first” approach to immigrants may affect the meat industry in the U.S. — the world’s largest beef producer — look no further than across the northern border to Canada.

Three years after former Prime Minister Stephen Harper tightened restrictions on foreign workers to force employers to hire more Canadians, processors from British Columbia to Nova Scotia say the move compounded a labor shortage from which they have not recovered. The Canadian Meat Council estimates the industry has 1,650 vacancies at 19 rural abattoirs, or 9 percent of total employment at those facilities.

Carving up carcasses and packaging meat is messy, physically demanding work. And while workers get health and other benefits, the starting pay is below the national average. That’s why the $18.4 billion Canadian industry — like its neighbor in the U.S. — has grown increasingly dependent on foreign labor. Maple Leaf Foods said last year it was seeking to hire Syrian refugees to fill job shortages.

“We’ll take anybody that is willing to work,” said Ron Davidson, director of government and media relations at the Ottawa-based meat council, which represents about 50 companies including Maple Leaf, Olymel SEC and the Canadian units of Cargill and JBS. “We’re being suffocated. If you can’t get workers at the front end of the system, everybody pays the price.”

More severe measures proposed by Trump to limit foreign workers might be just as disruptive. U.S. plants, including pork and poultry facilities, already face labor shortages. Immigrant workers account for 35 percent of the 441,000 animal slaughtering and processing jobs, according to 2015 data from the U.S. Census Bureau.

Trump has pledged to protect manufacturing jobs by ditching what he considers unfair trade deals, pressuring companies not to make products outside the U.S., and building a wall on the Mexican border to keep out undocumented workers. Citing a terror risk, he banned visitors from Syria, Iran, Iraq, Sudan, Somalia, Libya and Yemen. The restriction was overturned by an appellate court panel last week, but the president vowed to impose a new ban and make good on his promises to limit foreign workers.

Such moves aren’t likely to create more jobs for Americans in U.S. meat plants, according to David Swenson, an economist at Iowa State University in Ames. He estimates three-quarters of the workers at processing plants in Iowa, the largest pork-producing state, are immigrants, mostly from Mexico. Domestic workers probably won’t take those jobs, he said.

“It’s damn hard work,” Swenson said. “Historically, they have depended on those folks.”

That was the experience in Canada, which is also a major meat exporter and employs about 66,000 people. Processing plants offer full health and dental benefits, but hourly wages start at $9.90-$14.50, below the national average for natural-resource and agricultural workers of about C$25.75, government data show. That’s made it difficult to use only Canadian workers.

“We are really concerned going forward how we’re going to be able to fill our positions,” said Claude Vielfaure, president of HyLife Ltd., a Manitoba-based pork processor that exports C$650 million of meat annually to countries including the U.S., China and Mexico. “If we don’t have the people, we’re just not going to grow, and we’re going to fall behind.”

Under a Canadian government program, employers can hire foreign nationals to fill jobs not being taken by citizens or immigrants.

HyLife obtained a permit to bring workers to its processing plant in Neepawa, Manitoba, before the government overhauled its temporary foreign workers program and has worked aggressively to recruit and retain staff, Vielfaure said. The company still may face limits on growth because it can’t produce specialty or higher-value cuts without enough employees, he said.

The new Liberal government in Canada, led by Prime Minister Justin Trudeau, said it may drop some of the restrictions and create a path to permanent residency, which should ease the shortages for the meat industry. A new federal budget is due in coming weeks.

“We know that the previous government’s approach to the program wasn’t working, and we’ve already begun rolling out a plan to make this program work for workers, for businesses, and for the Canadian economy,” said Jean-Bruno Villeneuve, the press secretary for the Office of the Minister of Employment, Workforce Development and Labour.

For now, Canada’s meat industry says its labor shortage will get even worse if its competitors in the U.S. are hit with more restrictive rules on using foreign workers, as Trump has proposed. American companies that can’t hire Somalis or Mexicans may try to move some processing capacity to Canada.

“They will be forced to go where they can find workers,” the meat council’s Davidson said, adding that animal welfare could be at risk if Canadian plants can’t handle the overflow.

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