Fishermen's News - The Advocate for the Commercial Fisherman

Oregon Surimi Plant Gets Reprieve

Pacific Seafood to take over Trident facility on Newport’s Bayfront

 

July 1, 2017



A confluence of support kept a surimi plant on Newport, Oregon’s working waterfront from being shuttered just in time for Pacific whiting season.

Officials for Trident Seafoods Corporation, which owns and operates onshore processing facilities in Oregon, Washington and Alaska, announced in April that they were selling the surimi plant and a nearby fish meal plant, and had selected Pacific Seafood Group as the preferred buyer. Trident operated the plant since buying it from Tyson Foods in 1999, but CEO Joe Bundrant said it has been “unprofitable” since 2011, when the whiting fishery adopted a quota system. Pacific hake, known regionally as Pacific whiting, is a vital commercial species – the largest fishery in terms of sheer volume in the Pacific Northwest. Commercial fishermen traditionally harvest whiting using midwater trawl gear between May and September along northern California, Oregon, and Washington. Harvest levels of coastal Pacific whiting are set via a treaty agreement between the United States and Canada, and a catch shares (quota) system initiated in 2011. Catch shares divvy up the total allowable catch into specific allocations – or shares – for fishermen, cooperatives, communities, processors, and others, who can only fish until they reach their assigned limit. Once they reach the limit, they must stop fishing.

Fishermen say quotas only enhance the need for viable market sources. Without a buyer, Trident officials intended to simply close the last remaining onshore surimi processor along the Pacific Coast.

The sale announcement noted that Pacific had “the best chance” to successfully operate the surimi plant because of its extensive presence in Newport, along with the company’s experience marketing products processed from Pacific whiting.

“We wanted to do everything possible to make sure that the people who worked at the plant have stable employment, and our fishermen continue to have good markets for their catches,” said Bundrant, noting that Pacific agreed to offer jobs to all of Trident’s current employees, and to buy whiting from “all of our fishermen who want a market with them.”

Pacific agreed to acquire, retrofit, and operate the facility in time for the 2017 season, but only if fishermen, community leaders and members, and especially Oregon’s Department of Justice (DOJ) agreed.

Oregon’s justice department has had concerns about past acquisitions by Pacific, and anti-trust lawsuits have been filed against the massive processing company. Knowing this, community leaders, fishermen and others quickly rallied to encourage state legislators to lobby state officials to approve the deal before whiting season began May 15.

In an April letter to the DOJ, Heather Mann, executive director of the Midwater Trawlers Cooperative, noted that the pending plant closure surprised and disappointed the fishermen, but they were “cautiously optimistic” about Pacific’s willingness to step up and buy the surimi plant. The Newport-based non-profit trade association represents 24 trawl catcher-vessels that participate mainly in the shoreside and at-sea whiting fisheries on the Pacific Coast, and the Pollock and cod fisheries in the Bering Sea and Gulf of Alaska.

“We believe this purchase supports the community by retaining the processing plant jobs, as well as a market for several fishing vessels that would be lost if the plant were to close,” Mann stated, noting that no other buyers expressed an interest in keeping the surimi plant going long-term. “We expect Pacific to not only continue existing surimi operations, but to grow the market to complement other hake and groundfish operations to the benefit of the industry and the community.”

Lori Steele, executive director of the Portland, Oregon-based West Coast Seafood Processors Association, also weighed in. The association represents seven primary shore-based seafood processing companies and several smaller processors, related businesses and support services in Oregon, Washington and California. They participate in numerous fisheries and provide most of the shore-based processing capacity along the West Coast.

Steele noted that a poll of its members indicated no one else willing to acquire and operate the surimi plant, and no objections to Pacific doing so. While the association doesn’t take positions supporting acquisitions by members, Steele nonetheless emphasized how vital the Newport facility is, being the last shore-based surimi plant along the Pacific Coast.

Fishery managers say most surimi is now processed on offshore motherships or offshore catcher-processor vessels.

“The offshore sectors of the fishing industry already have a significant competitive advantage over shore-based processors, so maintaining this opportunity is especially critical to the shore-based sector,” Steele stated. “The loss of the last remaining shore-based surimi plant would be detrimental to our industry, to the community of Newport, and the shore-side commercial fishing fleet on the West Coast.”

Despite down-to-the-wire haggling over Pacific’s proposal and DOJ concerns, Governor Kate Brown, Attorney General Ellen Rosenblum, and the state legislature’s Coastal Caucus (Senator Arnie Roblan, Senator Betsy Johnson, and Representative David Gomberg) acted quickly to expedite the review. And despite the DOJ’s rejection of its request for immunity from anti-trust litigation related to this acquisition, Pacific agreed to other department stipulations and opted to take over and operate the plant, beginning with the 2017 season.

Whiting is considered one of the most sustainable fisheries because surimi is made using both whole fish and by-products. A major international commodity with global production of 1.1 billion pounds per year, surimi is a processed fish protein that is flavored, colored and shaped to resemble crab, shrimp, scallops, and other products sold primarily to Asian markets.

The Trident plant operated from June through October and during peak season employed up to 150 people. Economic activity from the plant generated more than $300,000 in annual revenue for local and state governments. But for the past six seasons, it failed to generate profits for Trident, a trend Pacific officials say they aim to reverse.

The DOJ almost scuttled the takeover.

DOJ officials initially threatened to take enforcement action unless the company agreed to put the Trident plant on the market for a year and, if it failed to sell, operate it for at least three years. They also said the company had concealed an earlier purchase of another Trident facility (Pacific bought Trident’s nearby fish meal plant in April), misrepresented the department’s position in its talks with lawmakers, and made an “unprecedented” request for a guarantee the department simply couldn’t provide. As part of the negotiation process, Pacific essentially sought immunity from anti-trust litigation. The DOJ’s initial denial letter called the request “extraordinary,” citing no basis for such a determination in Oregon’s antitrust act.

Pacific conceded that point in ultimately accepting most of the department’s stipulations for taking over the facility.

Pacific attorney Daniel Occhipinti pointed out that the company did not request a review of the former meal plant purchase, which was done to “support our existing Newport operations.” Pacific invested $7 million to expand the meal plant’s capacity, add jobs, and produce more and higher quality ice for the local fleet. Now called Pacific Bio Products, the meal plant is “contractually obligated” to take seafood scraps from the former Trident surimi plant “no matter who owns it.” The company’s lease with the Port of Newport also requires the plant to accept scraps from any other seafood processor in Newport.

“While we bought Pacific Bio to support our operations, it is ready and able to accommodate the needs of all in our Newport community,” Occhipinit noted.

As for the surimi plant, he stated that Pacific “is taking significant risk” with the acquisition, because of extensive deferred maintenance, failure to meet its regulatory permit requirements, and “has been losing money for years.”

The company agreed to reengineer the plant’s manufacturing technology, fix its wastewater treatment system, and replace the accounting and production computer systems. Under the terms, Pacific must openly market the plant to other viable buyers for six months. If no buyer emerges, Pacific must operate the plant at existing production levels for at least three years, and continue Trident’s practices regarding ice sales, dock access, and off-loading by independent commercial fishermen selling to other processors for at least five years.

“The shoreside surimi business is difficult,” Occhipinti concluded. “Nonetheless, Pacific is committed to make a go of it, and we think we will succeed.”

Although Pacific touted “unanimous” support from commercial fishermen for the acquisition, many fishermen are wary, because they say unlike Trident, which sold ice or bait to anyone, Pacific generally caters to the fishermen who sell to them. Being the independent cusses they are, fishermen prefer choices. Trident offered a choice, and emerging monopolies like the one they see Pacific creating goes against the grain of their independent spirits.

Pacific is the dominant processor in every commercial fishing port in Oregon and Washington, and the Trident acquisition leaves only two major seafood processors in Oregon’s busiest commercial fishing port. Some commercial fishermen say Newport is in danger of becoming a “company town.”

Legislators and fishery managers said they know it’s best for fishermen to have options, but the need to preserve jobs and protect the local economy took precedence. Market analysts consider the West Coast processing industry “fragile,” because they say it’s difficult for processors to turn a profit. Making money requires volume, which leads to consolidation to reach that volume.

Commercial fishermen and processors say they realize they need each other. And for now, at least, Newport’s onshore surimi plant – the last of its kind - remains up and running.

 
 

Powered by ROAR Online Publication Software from Lions Light Corporation
© Copyright 2017