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One Man's Opinion: Canada's tough course in Fish Politics 101

February 2006 - One Mans Opinion - OneMansOpinion.jpg
By Redmayne
April 01, 2006

When Kevin Murphy took over the U.S. operations of Fishery Products International in 2002, he was a breath of fresh air, full of new ideas. A veteran of the cranberry business, Murphy’s mission was to convince Canada’s largest seafood company it wasn’t in the fish business.

“I view this business as the food business, not the fish business,” he told me a few months after he joined FPI. “I keep hearing from our people that fish is the last species that’s hunted, and it’s wild and so on. About the second week after I started, I pulled my staff together and said, ‘I am banning the phrase “That’s how we do it in the fish business.” The next guy that tells me that I’m throwing out the second floor window.’”

Well, Murphy didn’t throw anybody out the window, but he did bolt for the door last year. His boss, Derrick Rowe, the CEO who had visions of turning the Newfoundland-based company into a global seafood powerhouse, followed him a few months later. In announcing his resignation last November, Rowe explained, “The company faces some serious challenges, and it is time to switch gears.”

Easier said than done. FPI, one of two “super” companies created by the Canadian government in the early 1980s from the wreckage of Atlantic Canada’s bankrupt groundfish industry, lost $10 million (Canadian) on record sales of $833 million (Canadian) last year. It’s not that FPI can’t sell fish, it’s just that the company may never be able to make money selling fish.

The collapse of Canada’s northern cod stocks, which have shown no signs of recovery in spite of a 14-year moratorium, has been a big blow to FPI. But the biggest problem the company faces is that it is in the fish business, and the fish business is very, very political. So every time FPI wants to close a money-losing fish plant, it has to fight a firestorm of threats from the union representing the province’s fish-plant workers.

The latest fish flap on “The Rock” is over FPI’s decision to ship small yellowtail flounder, whose stocks have recovered, to China for processing.

“The government of Canada didn’t allocate generous resources to FPI so it could create jobs in China,” complained Earl McMurdy, president of the union, upon hearing the news.

The real problem is that FPI simply can’t compete with Chinese-processed fish marketed by its competitors, including Icelandic and American companies, which are shifting more and more value-added production to China.

“This is not FPI’s problem alone,” the company stated last month in an escalating flurry of competing press releases. “All around the world, the industry has had to adjust to new realities. It would be irresponsible to suggest that we can collectively bury our heads in the sand and pretend things will get better.

“A new approach based on reason and financial sustainability is the only possible alternative.”

In a political business, however, reason rarely prevails. In Alaska, where Seattle-based seafood companies have been very adept in playing politicians, the industry has been “rationalized” into a very profitable endeavor for all concerned.

Newfoundland, though, is another matter. And that’s not good news for FPI.

Contributing Editor Peter Redmayne lives in Seattle

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