Pulling the plug on catfish?
Published 12:00 am Tuesday, November 2, 2004
GREENSBORO – The fate of Southern Pride Catfish isn’t certain, company officials said.
Amid rumors that the plant would cease operations Jan. 1 due to an anti-business political climate in the county, American Pride Seafood CEO Jeff Davis said that changes at the plant could come based on economic and market conditions, but not from fear of excessive lawsuits.
American Pride Seafood operates processing and freezing operations in Greensboro, and a processing plant in Demopolis employing collectively about 900 people.
Email newsletter signup
“I want to clearly state – and I don’t know where the rumor came from as far as closing operations in Greensboro or Demopolis – [it’s] certainly not true at this point,” Davis said.
“The biggest concern we have are in terms of the catfish industry and looking at the [industry] economics,” he said. “We’re evaluating all of our options with regard to our businesses in West Alabama and we’ll exclusively deal with the base economics of the industry.”
Seattle-based American Seafoods Group, LLC purchased the then $100 million per year Southern Pride for about $40 million plus the assumptions of some liabilities in late 2002, according reports in the Pugent Sound Business Journal.
The company operates plants in Massachusetts, Washington and 10 processing ships.
“Some influences are based on what happens locally,” Davis said, pointing to employee attitudes, work ethic and whether or not they are prone to litigate.
“The attitude of the employees are not an issue. We have very good employees who are loyal to Southern Pride and have been for years and we respect many employees who have been there 15 or 20 years,” he said.
Davis, however, said although the company has a responsibility to its employees, shareholder value also had to be protected and that its West Alabama plants had to remain productive to be left intact.
“We came in two years ago on the basis that we’d love to see [the Greensboro plant] grow and maintain operations. We’ll continue in that direction to do everything we can to maintain the plant, but we’ll remain prudent and keep the business healthy.
“We care about our employees and we are concerned about he economics of the industry and some of the outside influences like other species of fish that have capped [catfish] prices and capped volumes as well. Those are creating changes,” Davis said.
Those “outside” influences are looming large in an industry American Seafood public relations representative Bob Silver terms “intensively local.”
“It’s intensively local but at the same time very international as an industry,” he said.
What has happened in the catfish industry, Davis said, was that species such as tallapia and fish from South America and China and other areas abroad are edging into the U.S. Farm-raised catfish market, and consumers – mainly restaurants outside the 14 southern states that claim catfish as a staple – can easily integrate the other, less expensive fish into menus.
“In the next 12 months, the volumes and the shortage of fish will automatically affect the amount of fish we’re going to process. We intend to maintain our market share, but overall the industry will see a drop in fish production and that will have an effect on the processing plants,” Davis said.
“The industry will be dealing very much with imports,” he said.
For those reasons – a greater amount of imported fish and a shortage of farm-raised domestic catfish – the company has instituted “efficiencies” in its operations.
“The message we’ve been trying to get across is … to continuously look at how we can improve our operations. Can we come up with better feed, better production processes, come up with fish that meets the market need?,” he said.
In that endeavor, Davis said the move would require broad-based cooperation among catfish growers, processors and marketing organizations.
“The processing side is too small to brand [U.S. Farm-raised Catfish], the industry must brand it,” he said.
There the industry looks to the catfish associations, not only for promotion but for the creation of standards, setting market prices and branding.
Marketing associations may not be enough to reverse a downward trend in the catfish industry.
“We’ll see this year the costs increase,” said Davis, indicating catfish costs have already risen 33 percent while the market price has increased only 25 percent.
“We see that continuing and with the shortage, raw materials continuing to climb,” he said.
Cost cutting and leaning the processing side of the equation in Greensboro and Demopolis – and in American Prides other plants – have helped some.
“With the shortages, those things aren’t going to keep us going. The cuts have absorbed some of the costs but not enough. There’s no way efficiencies will pick those up in the plant at all,” Davis said.