L'Oréal Group Injects Another $24 Minto Québec
When French multinational L'Oréal Group received a worldwide production mandate for SoftSheen-Carson hair products in 2007, it selected its Canadian plant, located in the Saint- Laurent Borough of Montreal, for the job. As a result, $24 million was invested into the plant to increase its production capacity. This brings L'Oréal Group's total investment in the Saint-Laurent plant to $120 million over the last decade.
Montréal's qualified workforce
L'Oréal Canada, the wholly-owned subsidiary of L'Oréal Group, employs more than 1,200 Canadians, almost entirely in the Montréal area. At the Saint-Laurent plant alone, 200 employees have full- time work with one of Canada's top 100 employers, as recognized by Mediacorp Canada and Maclean's magazine.
"L'Oréal chose a Montréal-area plant for expansion, when it had over 40 other manufacturing plants worldwide to choose from," says André Gamache, President and CEO of Montreal International, a private-public partnership that contributes to the economic development of greater Montréal. "But this isn't surprising when you consider the high quality of greater Montréal's labor force, its competitive operating costs, as well as the many governmental support measures. The metropolitan region also benefits from the excellence of its training institutions."
Jean-Victor Pycke, L'Oréal Vice-President Manufacturing, agrees: "From a human capital standpoint, the Saint-Laurent plant can count on a wealth of technical and technological expertise. Montréal offers an exceptional pool of candidates, and this has been a decisive factor in the choice of an appropriate location to fulfill this new industrial mandate." For Gamache, "L'Oréal's decision to expand its activities in Montréal is an excellent illustration of the benefits of a close collaboration between the private sector, the different levels of governments, the local economic development organizations and Montréal International."
Québec's winning conditions
In addition to accessing an expert labor pool, L'Oréal Group can take advantage of Québec's low operating costs. In a KPMG analysis of business costs in North America, Europe, and Japan, Canada emerged as the overall cost leader, with Québec cited for its advantages in labour, land acquisition, construction costs, office leasing, and electricity rates.
Québec's low operating costs are paired with low taxes since its taxation system favours companies like L'Oréal that invest in job creation and production capacity. "Through a number of extension and modernization phases, our Saint-Laurent production space now stands at 242,000 square feet, which is 12 times larger than when it was originally built in 1968," says Pycke. Specializing in the production of professional hair products, the Saint-Laurent plant produces 170 million units annually, which is one of the highest rates of productivity across the L'Oréal Group. To complement its production plant, L'Oréal Canada established a distribution centre in Saint-Laurent in 2002. To keep up with demand, the centre ships 4.5 million packages across Canada each year, using a state of the art supply chain management system.
In addition to Canadian distribution, L'Oréal Canada's products are exported widely. A Québec location offers a number of advantages since the province is situated within a 600 mile radius of approximately 120 million consumers, and is easily accessible to numerous nearby economic centers including Boston, Philadelphia, New York City, Washington, D.C., Detroit, and Toronto.
"We'll continue to expand in Quebec, in part because the Québec Government is so supportive," says Pycke. For this particular $24 million plant-expansion in 2007, the Québec Government provided L'Oréal with a $2 million interest-free loan. This loan is from a program called PASI, or Strategic Support for Investment Program, offered by the Québec Department of Economic Development, Innovation and Export Trade. Investment and product development projects of over $5 million are eligible for PASI loans.
To learn more about investment opportunities in Canada, consult: www.investincanada.com
Prepared by the Invest in Canada Bureau, Spring 2009
