Southern Ontario may be hollowing out as a manufacturing destination of choice with the decline of the auto industry and the relatively high dollar, but some companies are still setting up shop in Canada’s most populous province.
Spanish-based cocoa and chocolate products maker Natra recently settled upon London, Ont., as its North American base of operations, agreeing to set up shop in an existing 100,000 square foot facility. The multinational will also open a sales office in Toronto.
The new manufacturing plant, which will go into operation in 2014, will complement existing multi-product factories in Spain, France and Belgium.
The Natra move was something of a coup for the GTA West office of Newmark Knight Frank Devencore. The corporate real estate adviser and brokerage provided a range of services such as site selection, severance issues, enlisting municipal support, negotiating multiple conditions and property rezoning.
Finding Natra its North American home took about six months, said Marc Dexter, associate vice-president and sales representative at NKF Devencore.
While it may be the precursor of a manufacturing renaissance for the province, Devencore has been busy finding homes for manufacturers in Ontario, said Dexter.
“This year we have been fortunate enough to have worked with a few different organizations, manufacturing based, that are based in Canada or coming to Canada. Natra is a client that is really exciting because it is new to North America and they are going to do all of their production” for the continent from one location.
Given the province’s challenges retaining its manufacturing base, its bureaucrats should be heartened to learn that Devencore advised Natra to settle in southwestern Ontario.
“We we finalized all of the site selection (variables) and going through all the factors, Ontario was the place in North America for them to be,” said Dexter.
Considerations included tariffs and input costs as well as taxes and the cost of labour.
“It is important to not only look at simple factors such as how much is your rent, can we get you some inducements, but it also ongoing staff costs, costs for materials and where are you shipping to. Quite often, when you look at it you are better off to pay a bit more on real estate to save somewhere else.”
Devencore has had other clients similar to Natra recently.
“I have seen more manufacturing deals recently than I have in the past four or five years,” Dexter said. “But in each case they are very specialized, specifically, targeted. They need to be here for a reason as opposed to a generic, we like Ontario for any kind of manufacturing (reasoning).”
The 100,000-square-foot building located at 2800 Roxborough Rd. (picture above) that Natra is moving into was built just prior to the market downtown of 2007-08, said Dexter. Owned by KingSett, which purchased it as part of the ING property portfolio, it has never been fully occupied. It is now being retrofitted for its new use as food manufacturing facility.
Citing confidentiality concerns, Dexter was not able to divulge details of the arrangement with Natra. “We were able to put together a very creative deal that was able to help them, like with any start-up, managing cash flows in the first few years.”
On its website, Natra said the new development in Canada will involve an investment of 12 million euro, which Natra is to finance with 40 per cent company equity and 60 per cent local government grants and credit lines from Canadian banks. Natra’s consumer goods division currently produces 77,000 tonnes of chocolate products (chocolate bars, chocolate spreads, countlines, Belgian chocolates and specialties) .
The new Canadian plant will produce an addition 12,000 tonnes over the next three years.
It will also replace Smiths Falls as the “Chocolate Capital of Ontario.” The Eastern Ontario town lost that designation when Hershey Chocolate shuttered its plant in 2008 after 45 years.