Alaska Seafood Processors Affected by COVID-19 Costs

Overcoming serious doubts, Alaskan salmon processors managed to seize a season this summer, but it came at a cost.

According to a McDowell Group report, processors spent up to $ 50 million (€ 42.4 million) complying with the COVID-19 protocol, which included moving workers to Alaska early for quarantine, accommodating them in hotels during their quarantine period and take them by plane. chartered planes, food costs and payment for major coronavirus tests and personal protective equipment, as well as security to ensure closed campuses. In some cases, companies had on-site medical professionals in remote locations to ensure care for their employees (and limit any potential spread of the coronavirus that would have crippled the facility’s functionality).

“Our biggest challenge in 2020 was safely staffing our plants,” OBI Seafoods Public Affairs Manager Julianne Curry told Alaska Public Media. “It was a huge boost to have all employees tested, transported, quarantined and fully integrated into each of our plants, all while observing a closed campus and all protocols related to COVID and doing it all with very little time to planning and preparing for the summer salmon season.

Pacific Seafood Processors Association VP of Alaska Operations Nicole Kimball said several of her members, a group that includes Trident, Peter Pan and Alaska General Seafoods, spent at least $ 10 million (EUR 8.5 million) each in costs related to COVID-19. .

“As we learned new information about the virus, we had to change the protocols (constantly evolving status, protocols and information) to stay up to date on how it is transmitted, the scale of asymptomatic cases, how long someone will test positive even after they they are no longer contagious, ”Kimball said. “All those things were constantly changing.”

While there were 13 percent fewer employees needed to fill slots at Alaska’s processing facilities this summer due to social distancing requirements imposed on processing lines, the total was still considerable. Testifying before the US Senate Commerce Committee on July 29, Silver Bay Seafoods CEO Cora Campbell estimated the number of seasonal employees this year at 18,000.

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If the first goal of the season was to minimize the spread of the coronavirus, Alaskan seafood processors largely succeeded. While there were several outbreaks among seasonal employees (OBI Seafoods, Copper River Seafoods, American Seafoods, Alaska Glacier Seafoods, and Kwik’Pak were among the companies that experienced cases, sometimes dozens), overall the precautions taken by the industry They paid off as the disease remained confined to the workforce and did not spread to local communities.

But some processors may be questioning whether all the trouble and expense was worth it, as lower prices combined with a struggling global economy and supply chain issues to reduce profits.

While the McDowell Group report found that Alaska’s harvest volume was not significantly affected by the pandemic, smaller salmon runs and lower prices dealt a double blow to processors who were already recovering from expenses. additional items that the coronavirus added to their final results. Add in the disruptions to foreign trade due to global lockdowns and fewer international flights, and lower demand in the domestic market for fresh fish, and the result was that sockeye salmon prices fell about 50 percent this year in Bristol Bay. Harvest values ​​for halibut and Pacific cod also declined, according to the McDowell report, while prices for haddock remained stable. And the companies weren’t able to add as much value as usual, which took another blow to their product mix and bottom line.

One company that was lucky this season was Silver Bay Seafoods, as a long-term commitment to automation and maximizing plant efficiency likely saved the company millions of dollars this year in COVID-19 compliance expenses. .

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“Silver Bay greatly harnessed the new potential of technology to achieve higher levels of automation, reducing labor costs by 50 percent compared to competitors [precoronavirus]”Larsen Mettler, who served as Silver Bay Seafoods CFO from 2016 to August 2020, told SeafoodSource. “This allowed us to create new product shapes and be much faster than our competitors.”

Some of the best moves made by Silver Bay, which Mettler says helped make the company a powerhouse in Alaska’s hyper-competitive and supersaturated seafood processing scene, included the introduction of high-quality tunnel freezing technology and a change from overdependence on canning. Higher-efficiency cutting machines also helped deliver significantly higher product recovery, Mettler said.

“Our competitors used 75 to 80 percent of their fish, while Silver Bay used 90 to 95 percent,” he said. “This helped us find and create new markets, both for traditional products and for products such as oil and animal feed.”

That preemptive investment in technology, achieved over the past four years, positioned Silver Bay well for the extreme shocks the seafood market has experienced since the coronavirus reached pandemic level.

“The technology we introduced lifted the industry as a whole and forced competitors to step up and at least pay fishermen more at the margins,” Mettler said. “But it came from looking for areas where the technology could be applied, and specifically from looking at our big costs and pain points, carefully looking at how we could improve.”

While COVID-19 brought some pain to all of Alaska’s seafood companies, it also provided a huge advantage, Mettler noted, as the flood of retail products allowed companies to go through a backlog of inventory, including stable products. like cans and bags and frozen portions, which were “completely out of stock.”

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“That demand across the retail market, particularly on the front end of COVID, meant that the inventory that was there was phased out,” he said. “That was important, as many products had been backed up over the past few years. And it was particularly important for companies that were dedicated to serving fresh food and, it is no secret that companies that made deliveries in those markets had to find alternatives.

Businesses that were able to move quickly into retail and online sales fared better, Mettler said.

“I don’t think it’s just a coronavirus issue,” he added. “I think we will continue to see that happen.”

The competitive advantage gained through innovation will likely extend to COVID-19 security protocols. While most companies improvised and managed this summer, if the coronavirus crisis extends into next year, companies best able to contain their COVID-related costs will be better positioned to succeed.

Curry said that OBI Seafoods is already preparing for additional COVID-19 state and federal safety requirements and more comprehensive best practices in 2021. He told Alaska Public Media that the current mandate issued by the state to the fishing industry is 10 pages. , but as the updated draft not yet published has 29 pages.

“It’s safe to say that the processing sector will see an increase in protocols in 2021 and that COVID is far from over for our industry. We anticipate that our COVID-related costs will be as high, if not higher, than last year, ”he said.

Source: Sea Food Source

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