|  September 1, 2014  |  
Fair   41.0F  |  Forecast »
Bookmark and Share Email this page Email Print this page Print Feed Feed

Bristol Bay’s New Player

Silver Bay Seafoods opens major salmon processing plant

Most Bristol Bay processing plants are old and weathered.

Most Bristol Bay processing plants are old and weathered.

© US Coast Guard

Bristol Bay in Southwest Alaska is the state’s biggest and most valuable commercial salmon fishery, with millions of prime sockeye returning each summer to spawn.

The fishery, which lasts only a few intense weeks and peaks around the Fourth of July, attracts thousands of fishermen intent on scoring big catches. With so much money swimming in, it’s no wonder you see bay boats with names like Lucrative and Net Profit.

Supporting the fishery is a vital infrastructure of processing plants to clean and pack the catch. Like fishing, processing is a competitive and risky business. Over its epic history, the Bristol Bay fishery has seen plenty of processors both thrive and sink.

This year brings another upstart processor to the bay. And it might be one of the boldest launches ever.

The company is Silver Bay Seafoods LLC, based in Sitka. It’s a fast-rising, fishermen-owned outfit generating serious buzz, especially among gillnetters hoping Silver Bay’s entry will force all processors to pay higher dockside, or ex-vessel, prices for sockeye.

 

New Processing Plant

Silver Bay has built and opened a new processing plant on cannery row in the village of Naknek. The fifty-three thousand-square-foot facility is expected to employ up to 330 people at peak season. Silver Bay acted as its own general contractor on the plant, while local company Paug-Vik built two bunkhouses.

The project, including land and buildings, cost $37 million, says Rob Zuanich, a Silver Bay managing member.

Some say the new plant is the largest, by processing capacity, in Bristol Bay. Zuanich says he’s not sure about that. But it’s clear Silver Bay aims to make quite a splash.

The plant is designed to handle roughly four hundred thousand salmon per day and will produce mainly a frozen, headed-and-gutted product. The plant won’t can salmon, as some other processors do in addition to freezing.

The company will count on a loyal fleet of drift gillnetters to feed a plant they themselves own. Prior to construction, Silver Bay invited fishermen to invest in the Naknek venture at $25,000 per share. About two hundred permit holders bought in, Zuanich says.

Established processors aren’t keen on making room for newcomers. Although sockeye runs into Bristol Bay usually are prodigious, they’re limited. And markets in Japan, the United States, and Europe are tough.

How will Silver Bay fare against battle-tested processors such as Alaska General, Icicle, North Pacific, Ocean Beauty, Peter Pan, and Trident?

Zuanich isn’t inclined to talk smack. He says only: “Silver Bay is a vision of fishermen.”

 

Processor Relations

Bristol Bay fishermen have always had an uneasy relationship with processors. Many believe the companies underpay for salmon. In 2003, fishermen forced the processors into a lengthy civil trial on price-fixing allegations. The jury promptly rejected the claim.

Gunnar Knapp is a University of Alaska Anchorage fisheries economist and a longtime observer of Alaska fisheries and world salmon markets.

“Clearly a major new buyer will make fish buying in Bristol Bay more competitive, at least initially,” Knapp says.

“There is a very long history of processors entering and leaving Bristol Bay,” he adds. “Over the longer term, I’d be surprised if a new processor brought any fundamental changes to the Bristol Bay business. Regardless of how they started, people in the processing business tend to start thinking and acting like processors once they’re in the business. They face the same markets, costs, and risks.”

In recent years, Bristol Bay ex-vessel prices have surged, and talk is fishermen could go home this season with a base payment of $2 a pound. The last time prices topped $2 was in 1988.

The catch forecast is relatively small at 16.9 million sockeye. The record catch was 44.3 million in 1995.

Both these factors—high costs for raw fish and a weak sockeye run—could dampen Silver Bay’s debut.

Robin Samuelsen, a fisherman and Dillingham resident, heads the Bristol Bay Economic Development Corporation, which owns a 50 percent stake in Ocean Beauty. Even though Samuelsen is Ocean Beauty’s board chairman, he welcomes Silver Bay.

Speaking at an April fisheries workshop in Naknek, Samuelsen called Silver Bay a “very, very aggressive company” that will compete on prices and might recruit fishermen away from other processors.

“They stole some of our fishermen in Southeast Alaska,” he said.

 

Remote Challenges

Samuelsen noted Bristol Bay had many more processors before the industry, beginning in the 1990s, fell into depression because of the rise of foreign fish farms coupled with poor salmon runs.

“We definitely need more processors,” he said.

Silver Bay isn’t the first Alaska processor built with fishermen owners, but the company could be special in terms of its rapid growth. Silver Bay began in 2007 with one plant in Sitka. It has since established plants in Craig and Valdez and is planning a new plant to pack squid in Ventura, California.

Most of Bristol Bay’s fish plants are old and weathered. Defunct canneries decay into the tundra.

While the Alaska salmon industry has recovered nicely from its depression, processing at Bristol Bay remains challenging. It’s a remote location that demands careful logistics and a high risk tolerance.

Silver Bay’s gleaming new plant stands as perhaps the ultimate gamble for the young company.

 

Catching sockeye salmon on a Bristol Bay drift gillnet boat.

© Wesley Loy

Fishmeal Plant to Help Clean Up Bristol Bay

Bristol Bay processors work to safely convert scores of raw salmon into canned, frozen, and fresh products for consumption around the world.

That’s the bright side of the industry.

The ugly side is the millions of pounds of fish heads, fins, guts, and bones left over after the salmon go through the processing line.

Past practice has been to grind up the offal and then pipe it into waters away from the processing plant. Tides, to some degree, sweep it away.

Regulators, however, appear to be growing less tolerant of this dumping. They say it can result in ecologically harmful underwater waste piles.

Now the bay’s largest salmon processor, Trident Seafoods Corporation, is developing a new waste disposal system that promises to substantially reduce discharges. It’s a fishmeal plant to be built near the company’s cannery complex in Naknek.

Fishmeal is a commodity made from offal or low-value fish. It’s used as aquaculture and livestock feed and as fertilizer. Fishmeal plants also can render other products such as fish oil.

The Naknek plant will have the capacity to process more than 30 million pounds of waste annually. It will be operational by June 2015, Trident’s Joe Plesha told the US Environmental Protection Agency in March.

Trident is building the plant as part of a 2011 settlement with EPA resolving alleged Clean Water Act violations at company processing plants around the state. Trident agreed to pay a $2.5 million fine and spend more than $30 million to improve waste disposal.

The fishmeal plant is designed so it can be expanded to possibly accommodate waste from other processing companies, Plesha said.

“Meal plants are generally more economically efficient the greater the volume of product that is delivered to the plant,” he said.

Fishmeal plants exist elsewhere in Alaska. One has long operated at Kodiak, for example.

Salmon is the mainstay industry for the Bristol Bay Borough and Naknek. But even there, the idea of a fishmeal factory spawned significant opposition.

The main worry: noxious odors.

Some wanted Trident to build the plant out of town, but the company said that would be impractical.

Modern fishmeal plants can operate without creating a nuisance, Trident said. To verify, two people traveled on behalf of the borough’s planning and zoning commission to “sniff around” an operating fishmeal plant in Newport, Oregon. They came back with no significant odors to report.

The commission granted a permit for the Naknek plant, with certain stipulations attached. The plant will have air scrubbers to remove odors.

The fishmeal plant should yield multiple benefits, including a few jobs and tax revenue for the borough. Trident will have tons of salmon byproduct to sell, and the volume of waste going into the Naknek River will be much reduced.

Wesley Loy is an Anchorage-based journalist.

This first appeared in the July 2014 print edition of Alaska Business Monthly magazine.

Add your comment:
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement