The Trident Seafood plant in Kodiak/Trident

Alaska seafood processing fallout begins

Alaska’s largest seafood processor – Seattle-based Trident Seafoods –  has dropped another bomb on the 49th state fishing industry.

In the wake of a November warning that the entire industry is in trouble because of global market conditions, Trident Tuesday announced that it was launching a “comprehensive restructuring initiative” that called for “streamlining” and modernizing its 49th state operations.

Or, in other words, it is trying to offload a third of its 12 processing operations, including one of the biggest.

Industry insiders had been forecasting significant changes in one of the state’s main industries since processors paid high prices for a record run of Bristol Bay sockeye in 2022 only to be left holding the bag as both demand and prices dropped.

But major downsizing by Trident, which has long promoted itself as “Anchored in Alaska,” still caught many by surprise.

The biggest Trident assets now on the block are facilities on Kodiak Island said by the company to “employ about 250 local (year-round) and 300 seasonal employees.” The company has long been a key part of the Kodiak city economy.

Trident’s website brags that the city plant “together with Trident’s ‘Star of Kodiak’ plant and the ‘Pillar Mountain’ pier facility and freezer plant, the company presence has grown substantially in recent years, offering the local independent fleet and fishermen as far away as Prince William Sound new opportunities to deliver their catches quickly and keep their gear in the water.”

The plan now, the company said in its public statement, is “to seek buyers for its diverse operations in Kodiak…while operating a significantly scaled-back winter season. The Kodiak plants operate nearly year-round and support multiple species, primarily pollock, salmon, Pacific cod, and crab.”

The statement did not say what would happen if a buyer could not be found. Neither was it a great sales pitch given Trident’s statement that its goal going forward is to “focus operations and investments on assets that fuel the company’s shift” toward a more profitable future rather than staffing unprofitable operations.

“Bold action today is necessary to deliver fair value to (the) fleet, communities, and all stakeholders into the future,” said Trident Coe Bundrant was quoted saying.

The news comes at a time when the industry is in turmoil on several fronts with the situation looking to get worse rather than better. Congress is now contemplating a ban on seafood imports from China where a lot of Alaska seafood has been processed in recent years.

Offshore processing

“Growing number of US lawmakers demanding ban on seafood imports from China,” Intrasfish, an industry trade website headlined the day before Trident’s announcement.

Silver Bay Seafoods, a Sitka-based operation organized by Alaska commercial salmon fishermen in 2007, helped drive a revolution in the industry by shifting operations in Alaska to simple heading and gutting of salmon that were then frozen and shipped to China to be fileted and deboned before being shipped back to the U.S.

“Alaska processors have found a profitable partner in Chinese reprocessors,” the McDowell Group, a consultancy, declared in a 2011 reported prepared for the Prince William Sound Aquaculture Association. “This has allowed them to produce affordable, value-added products such as frozen portions and salmon burgers. A large percent of frozen pink salmon is now exported to China for further processing. Contracting with Chinese firms to affordably perform value-added processing on these frozen pink salmon has increased the ex-vessel price of the fish,” which is the price paid Alaska fishermen.

The reprocessing scheme was quick to expand to other species of Alaska salmon.

By 2017, Bristol Bay’s KDLG public radio was reporting that “Silver Bay Seafoods built (a)Naknek plant from the ground up to freeze huge volumes of salmon….As the company did with pink (salmon) in Southeast, SBS hoped to raise the value by sending head-and-gutted sockeye to Asian markets for reprocessing.”

By then nearly all processors had recognized the economic advantages of sending headed and gutted (HG) salmon to China. As the late Chuck Bundrant, the founder of Trident, explained to the Seattle Times, “there are 36 pin bones in a salmon and the best way to remove them is by hand. Something that would cost us $1 per pound labor here, they get it done for 20 cents in China.”

China’s cheap labor made it possible for the country to attract $1.3 billion worth of U.S. imported seafood in 2017, but China made a $1.5 billion profit on the deal by processing the fish and shipping most of the it back to the U.S. for sale.

Former President Donald Trump disrupted this business model good for Alaska, good for China, but not so good the U.S. economy by slapping tariffs on Chinese seafood imports in 2018. But Chinese processing of H&G salmon continued.

Pressure, however, has been mounting to stop the process.

Slave labor

The website Politico in cooperation with the  Outlaw Ocean Project, a journalism organization in Washington, last month charged that the costs of pin-bone removal and other processing in China is kept low by China’s use of conscripted labor.

“How Uyghur Forced Labor Makes Seafood That Ends Up in School Lunches,” Politico headlined last month above a story that reported “that more than $50 million worth of salmon was supplied to federally funded soup kitchens and programs to feed low-income elders by importers that source from plants using Uyghur labor.

“This wasn’t the only species produced by forced labor that ended up on plates in the U.S. Over $20 million worth of pollock, mostly as fish sticks, was shipped to the National School Lunch Program and other federal food assistance programs.”

As part of an effort to prop up the 49th state’s ailing commercial fishing industry, Alaska’s Congressional delegation lobbied had heavily for the government purchase of that seafood.

When the U.S. Department of Agriculture announced plans to purchase $119.5 million worth of Alaskan sockeye salmon and Pacific groundfish in May, Sen. Lisa Murkowski, R-Alaska, praised the deal as “great news for our fishing industry and all who depend on federal food assistance. Alaskan fishermen stand ready to help feed their communities, and these purchases provide them the perfect opportunity to bring healthy Alaskan seafood to the tables of families who need it most.”

“The U.S.,” according to Politico and the Outlaw Ocean Project, “is among the largest institutional buyers of seafood, purchasing more than $400 million in 2022. (Our) investigation found that a portion of this spending goes toward importers that source fish from processing plants using Uyghur labor, in violation of the Uyghur Forced Labor Prevention Act, which was passed almost unanimously in December 2021, and requires U.S. Customs and Border Protection to block the import of goods produced by Muslim Uyghurs and other ethnic minorities from Xinjiang province.

“The Chinese government has systematically subjected these groups in recent years to forced labor programs at factories across the country monitored by uniformed guards, in dorms surrounded by barbed wire.”

China has vigorously denied such accusations despite 2022 charges from a panel of United Nations investigators that China appears to be engaged in crimes against humanity.

“The report by the outgoing UN High Commissioner for Human Rights, Michelle Bachelet, contains victim accounts that substantiate mass arbitrary detention, torture, cultural persecution, forced labor, and other serious human rights violations, and recommends that states, businesses, and the international community take action with a view to ending the abuses, and advancing justice and accountability,” Human Rights Watch recorded in August of that year.”

Labor shortages

The growing China problem has forced Alaska processors to look for cheap, reprocessing labor elsewhere in Asia but this might be among the least of the industry’s problems. Processors increasingly find it hard to hire the cheap labor need to do the initial desliming, heading and gutting of high-value sockeye salmon in Alaska before shipping HG carcasses overseas.

And these salmon – once the most valuable fish in the state – have lost value because of competition from parasite-free, farmed salmon.

Parasite-free, farmed salmon radically altered the Japanese salmon market once so lucrative for Alaska processors.

Salmon, which had rarely been used in sushi in the island nation, is now the number one seafood featured here thanks to crafty marketing by Norwegian farmers who pioneered a seafood farming business that has since gone global and now provides about 75 percent of the salmon eaten around the world.

Along with being parasite-free, farmed salmon are available fresh year-round while wild salmon are highly seasonal. The vast majority of Alaska salmon are caught over the course of but two months in summer, and as a result, little of the catch is sold fresh.

Nearly all of it is frozen, and though most consumers would never recognize the difference between a fresh fish, and a properly handled and quickly frozen fish, “fresh” still carries a certain catchet.

Meanwhile, given the relentless march of technology, the farmers have over the years managed to make their operations more and more efficient while improvements in efficiency have lagged in Alaska and, in some cases, been saddled with government-mandated inefficiencies.

“Aquaculture will be more able to take advantage of technology than wild fisheries,” well-known Alaska fisheries economist Gunnar Knapp warned five years ago. 

“Can’t we think of a better way to catch Bristol Bay wild salmon than gillnets?” he asked. “Fish are bruised as they are caught in and removed from gillnets.”

Unfortunately, Alaska fisheries policy has been largely in the hands of the state’s commercial fishermen since Statehood, and most of them are extremely reluctant to embrace change of any sort.

At the time of Statehood, they convinced the Alaska Legislature to ban salmon traps, the most efficient means of harvesting salmon, and 30 years later, to ban farming in the state in the belief that a ban in Alaska would stop the development of the then-fledgling industry.

The ban helped do the opposite.

Salmon prices were then at record highs, and they stayed there long enough to make it possible for Norway’s economically struggling salmon farms to survive. Then they began to prosper, spread globally and now Alaska processors have to do battle in a very competitive, global market.

“We are modernizing and re-tooling the remaining Alaska plants to be more efficient, effective, and sustainable operations,” Jeff Welbourn, Senior Vice President of Alaska Operations at Trident Seafoods was quoted as saying in the company statement.

Such a shift was inevitable.

As Trident put it in the carefully crafted public statement, “Trident’s strategy reflects the realities facing U.S. seafood producers in global markets. Across many species, the combination of declining demand, excess supply, and foreign competition has driven prices down, squeezed margins, and displaced U.S. producers from markets that they developed over decades.

Russia’s role

“‘We are competing against producers in other countries that do not share our commitment to or investments in environmental sustainability, social responsibility, and product quality,” said Bundrant. ‘Many of our foreign competitors operate with minimal regulatory costs and oversight, inexpensive infrastructure, and exploitive labor practices.’

“In this global business environment, Trident is betting that it can remain competitive by
attracting customers who value the sustainability, quality, and integrity of wild Alaska seafood – while also aggressively reducing costs and improving productivity.”

Bundrant’s reference to “minimal regulatory costs and oversight, inexpensive infrastructure, and exploitive labor practices” was a poke at the Russians, whose salmon production has boomed as the Bering Sea has warmed. They are Alaska’s main competition for sales of “wild caught” salmon, although wild-caught salmon are now only a small part of the market.

And, of course, not all of those wild-caught fish are wild. Pen-less farming – or “ranching” of hatchery spawned and reared salmon as its proponents prefer to call their fish – has boomed in both Russia and Alaska.

“Prior to PWSAC’s first return of (hatchery) pink salmon in 1977, the Prince William Sound region produced a relatively minor share of Alaska’s total pink salmon harvest,” the McDowell report noted in 2011. “The region has since become a major source of pink salmon. Wild and enhanced pink harvest in the PWS region has accounted for 43
percent of the statewide total since 2006, and Prince William Sound has been Alaska’s top-producing pink salmon region in three of the last five years.

“PWSAC operations produce one in four pink salmon caught in Alaska’s commercial fisheries. During the past five years, PWSAC-reared pinks have accounted for 26 percent of the statewide commercial pink salmon harvest and 61 percent of pinks harvested in the Prince William Sound region.

Alaska almost singlehandedly pushed the U.S. into the position of the world’s biggest producer of open-ocean farmed salmon. Up to a third of the Alaska harvest is of made up of hatchery fish in some years.

Nearly all are smallish, short-lived pinks that have historically gone cans, the lowest-valued salmon product, although there was great hope for new products at the start of the decade of the 2010s.

“It was not within the scope of this project to compile specific sales data on salmon burgers or other value-added salmon entrees,” McDowell reported to PWSAC in 2011. “However, the increase in wholesale both prices and volume for frozen pink salmon is a clear indication that demand for value-added pink products is high.”

There was then much hope the salmon burger would become a U.S. mainstay. McDonald’s, the largest fast-food restaurant chain in the U.S., has more than once test-marketed salmon burgers, but they’ve never caught on in the U.S.

The company did, however, begin selling a Hokkaido Salmon Burger, made from ocean-ranched salmon from Japan, in Singapore in 2022, and it is reported to be such a hit that it is often sold out there.

McDonald’s main competitor, Burger King, sells a “Supreme Salmon” sandwich with a salmon patty, but it appears to be available only in Malaysia. Most U.S. retailers sell salmon burgers, including those produced by Trident, in their frozen food sections, but the item does not appear to be a huge hit.

Tastewise, a market-tracking website, reports that only 1 percent of U.S. restaurants have a salmon burger on their menu and that the items is most popular among vegans. Only about 3 percent of Americans consider themselves vegans, according to the Cook Unity website. 

Tastewise also reports that “social conversations about salmon burger have declined by 63.25 percent over the past year,” which doesn’t do much to help sales.

Skinless, boneless pink salmon filets appear to have sold better than salmon patties, but given the small size of pink salmon, many of the fish are too small to produce saleable filets.