Fish plant shutdown creates ripple effect in Southeast

Jobs just the beginning; slashed tax revenues, cuts to fishing supply, fuel businesses are predicted

Posted: Thursday, January 02, 2003

JUNEAU -- The closing of Wards Cove Packing Co.'s Excursion Inlet fish processing plant, announced this month, did more than leave northern Southeast with 460 fewer seasonal jobs and hundreds of local fishers without a buyer for next year's catch.

It also left the Haines Borough, home to a fleet of more than 40 commercial salmon boats, with $160,000 less per year from fisheries business tax revenue, said Robert Venables, economic development director for the borough. The borough also will lose about $32,000 a year in property taxes from the plant, which is about 40 miles west of Juneau. That's out of a borough budget of about $6 million a year, officials said.

The closure left shipping company Alaska Marine Lines without a "very major account," said Vice President of Operations

Don Reid.

If the Excursion Inlet plant remains closed in the 2003 season, the company will compensate by buying less refrigeration equipment in the upcoming season.

The lack of a plant at Excursion Inlet also could leave fishing supply and fuel businesses in Juneau and Haines with significantly fewer customers this year, affecting many sectors of northern Southeast's economy, observers said.

"Fishing is a part of the economy in terms of diversification," said Lance Miller, executive director of the Juneau Economic Development Council. "All of these things affect the cost of milk in Juneau. As things contract, the consumers are going to have to bear the brunt of those costs."

Wards Cove Chair Alec W. Brindle, in announcing Dec. 12 the closing of all nine of its Alaska salmon processing plants, said it couldn't compete with farmed salmon and was hurt by weak U.S. and foreign markets for its products.

" ... (W)e have suffered sustained, significant and accelerating losses in our salmon operations in recent years and as a result the company is unable to secure bank financing for next year's salmon operations," Brindle said.

If someone is willing to risk buying the Excursion Inlet plant, though, the new owners could breath some life into the ailing salmon industry in Southeast.

"I suppose in one light this could be seen as creating opportunities for businesses that wanted to get more fish," said Greg Fisk, state Department of Community and Economic Development fisheries specialist.

He is not the only person in Southeast hoping the Wards Cove plants are bought by the beginning of the 2003 summer salmon harvest.

Ron Sparks, a gillnetter in Haines who sold salmon to Wards Cove for the past 12 years, said he's counting on somebody buying the Excursion Inlet facility.

"I'm hoping somebody like NorQuest or Icicle or Trident, Taku Smokeries -- at this point I don't really care," Sparks said, listing several area salmon processors. "Name it, put it on the table, and we'll be very happy.

"I've been at this game a long time, and I can take the hit. But I think of my two sons who are involved in it, and they can't afford to take the hit," Sparks said. "They have to find someone to sell the product to."

The Wards Cove Excursion Inlet plant was constructed in 1918, served as a prisoner-of-war camp during World War II, and was acquired by Wards Cove in 50 percent increments in 1962 and 1983. It employed 460 people at the peak of its season, which ran from late June to mid-September.

The plant processed fresh, frozen and canned salmon as well as salmon roe, salmon caviar, halibut and sablefish. It had a four-line cannery operation and high-capacity freezing and salmon roe operations. The plant also operated buying stations in Elfin Cove and Haines and a fisher's support facility in Hoonah.

The Excursion Inlet plant processed mostly pink and chum salmon. Although those fish do not have a high flesh value, the market for roe, or fish eggs, from pinks and chums is strong, said Chris McDowell, a seafood industry analyst with the McDowell Group, a Juneau-based consulting company.

In mid-December, Wards Cove hired the Seattle investment banking firm of Zachary Scott & Co. to orchestrate the sale of its Alaska salmon plants. Rumors abound about several processors in Southeast buying some of them, but no price has been set and no offers made for any of the operations, Brindle said.

"By all accounts (Excursion Inlet) is quite a good plant," said McDowell.

Although Wards Cove said it could not profitably operate its nine fish processing facilities in Alaska, another processor might earn a profit by buying individual Wards Cove plants, McDowell said.

"We don't know what the individual profitability of those plants was," he said. "But we do know that they paid a lot of attention to (the Excursion Inlet) plant. It's a remote plant but they kept it up well, the equipment was good and they had roe production facility. The pink (salmon) roe market is doing very well right now."

Although some bright spots do exist in the salmon industry, such as the strong roe market, many processors and fishers worry about the future of salmon fishing in Alaska.

"The Wards Cove closures are a statement about the condition of the salmon industry," said John Woodruff, vice president in charge of production for Icicle Seafoods, a major salmon processor in Southeast. "It's horrible. It's a very tough business right now for harvesters, processors, marketers; it's very tough for everyone.

"It's a sad deal because those guys have been in business for a long time, they're good guys, they're a good operation, they just can't make any money," he said.

Icicle Seafoods, which has a plant in Petersburg, is one of several processors in Southeast that could move into the Excursion Inlet market by purchasing the Wards Cove facilities or transporting fish from northern Southeast to its cannery.

"We have no firm plans at this point," Woodruff said. "We're considering all the options."

NorQuest Seafoods, a salmon processor in Southeast Alaska with a plant in Ketchikan, two in Petersburg and two floating processors, also is looking for ways to make a profit in the Alaska salmon industry.

"Our industry's got to make a lot of changes if we want to survive," said NorQuest president Terry Gardiner. "The way our industry is working isn't going to work. We're not cost-competitive."

NorQuest is considering buying some Wards Cove facilities, Gardiner said.

"It's still in the early stages," he said. "Sometime in January the process will start."

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