Yanick Gervais became CEO of Olymel in October 2021, when Canada’s largest pork producer was going through a crisis due to the closure of the Chinese market and labour shortages. After a restructuring, which resulted in the closure of eight plants and the loss of 2,000 jobs in the country, the CEO believes that the company is out of the crisis and is better positioned for the future.
After years of strong growth, marked in particular by a succession of acquisitions between 2015 and 2020 and having taken on heavy debt, Olymel has hit a wall. Hard hit by the pandemic, the company has had to deal with a serious labor shortage with more than 3,000 vacant positions, while its exports to China have collapsed against a backdrop of trade tensions between the two countries.
In 2020, China absorbed 23% of Olymel’s total production; in 2021, this percentage fell to 13% and then to 10% in 2022. The same percentage is expected for 2024.
It is in this context that Yanick Gervais, who was the senior vice-president of Olymel, became the CEO to succeed Réjean Nadeau, who led the food processor for 25 years.
“It was a planned transition, but it was accelerated when Mr. Nadeau passed away. I was the owner of the family business La Fernandière, Olymel’s main competitor in sausage manufacturing, when, in 2016, Mr. Nadeau made us an offer that we accepted.
“From the first year, I had the mandate to double the production capacity of our Trois-Rivières plant to meet the needs of Olymel, which wanted to free up manufacturing capacity in another plant,” recalls the CEO.
The last three years have not been easy. Olymel has consolidated its operations by closing eight plants, including the one in Vallée-Jonction, which employed 1,000 people. In Quebec, nearly 1,700 people have lost their jobs, including 175 managers.
“We had excess capacity. We had to consolidate different sites that were too small to better automate our operations. We managed to reposition 330 of our employees in other factories and reduce the number of jobs that require repetitive gestures.”
While we were experiencing a serious labor shortage in 2021 with more than 3,000 positions to fill, today we are at 100% of the workforce for our factory needs.
Yanick Gervais, CEO of Olymel
The CEO agrees that the company had expanded aggressively through acquisitions, but the context was favorable at the time, he says. It was the closure of the Chinese market, which increased its production capacity, that hurt the group.
“We were too much in the commodity market. We were selling fresh pork that did not fully enhance the value of our production. It is by focusing on the transformation and enhancement of our products that we will be much more efficient,” insists the CEO.
Olymel recorded losses of $62 million in 2021 and $446 million in 2022. Last year, the group generated an operating profit of $138 million.
“We came back positive, but it is thanks to our activities in the processing of poultry and pork that we generated profits, this is not the case with fresh pork,” specifies the CEO.
Value-added production
In the spring of 2022, Olymel asked pork producers for a price reduction of $40 per 100 kg, a reduction that was subsequently transformed into a 15% discount compared to the American market price.
“We had to reduce pork production in Quebec by 9%. It’s a global phenomenon. Denmark, which processed 400,000 pigs per week, reduced that to 150,000 heads per week. We work closely with pig farmers. We are committed to sharing the added value with them,” explains Yanick Gervais.
Olymel, which processed up to 140,000 heads per week in its Quebec and Alberta plants, has reduced its production to 90,000 heads per week today.
The company is looking to extract more value by developing value-added products, such as pork flank steaks, shoulder steaks, more niche products that will sell at a fraction of the price of beef.
“We are going to launch a campaign in the spring where we want to encourage consumers to cook pork better and we are also going to consolidate our brands and keep only Olymel, Flamingo, Pinty’s, Lafleur and La Fernandière,” announces Yanick Gervais.
In the meantime, Olymel is continuing its consolidation work by soon moving its head office and its distribution warehouse for all of Canada to the former and immense warehouse of the Colabor company in Boucherville.
Its current distribution warehouse in Boucherville will become the distribution centre for its export markets. Olymel exports to 65 countries, including Japan, where it ships 60 containers of fresh produce each week.
As for China, which still represents a large export market, Olymel continues to sell what are called by-products that do not obtain any value here, such as pig heads, feet and ears.
“The consolidation movement has passed, it was necessary to restructure and the recovery was made possible because each of the teams participated actively by arriving with solutions in their sector. It was a team effort,” underlines Yanick Gervais.