April 26, 2004
A fresh start | A Canadian aquaculture firm hopes to turn around Atlantic Salmon of Maine
By Sara Donnelly
Maine's salmon industry, once a beacon of hope for the downeast economy and now largely operated by out-of-state interests, can welcome another international corporation to the ownership mix. On April 1, Cooke Aquaculture Inc. of Canada announced it had purchased Atlantic Salmon of Maine, one of the two largest salmon farming operations in the state and a company that over the past couple of years has weathered a significant amount of fish-related controversy.
In 2003, a U.S. District Court judge imposed a $50,000 fine and a two- to three-year fallowing (or fish-free) period in all of Atlantic Salmon's pens following violations of the Clean Water Act. That same year, a devastating fire destroyed three million fish in one of the company's hatcheries in Embden, and a nasty infectious salmon anemia, or ISA, outbreak wiped out much of the remainder of the company's stock. The number of employees at Atlantic Salmon, which had been owned by Norwegian company Fjord Seafood USA, dropped from a high of about 200 to the current count of about 70. Only one of its three hatcheries is currently operating.
Sound like a good buy? Cooke Aquaculture thinks so.
"Both systems are highly similar," says Ross Butler, vice president of Cooke, referring to the way Cooke and Atlantic Salmon do business. "We're looking to take advantage of the synergies on both sides of the border."
With annual revenues of $100 million Canadian (about $74 million American), Cooke is the largest independent aquaculture company on Canada's east coast; it's a significant player in an industry that enjoys continued success in the country, thanks in part to a supportive regulatory environment and financial assistance from the Canadian government.
That's a far cry from the situation in Maine ˆ- the value of the industry here has declined from a high in the late 1990s of between $75 million and $78 million to a 2002 estimate of $57 million, according to a state report released in January ˆ- and at Atlantic Salmon in particular. According to district court documents, the company has not made a profit since 1999.
Butler declines to go into detail on how Cooke plans to turn the company around. Instead, he stresses the quality of the workers at the company and the natural relationship he believes Cooke and Atlantic Salmon share. "It's an opportunity for growth," he says of the deal. "[Atlantic Salmon] has some very good people and some very good assets."
Sebastian Belle, executive director of the Maine Aquaculture Association, believes the deal is nothing but positive for Atlantic Salmon workers and the statewide aquaculture industry. "Perhaps the most important reason," he says, "is Cooke as a company has proven to be very entrepreneurial and innovative on the Canadian side."
An industry in decline?
In Maine, industry proponents like Belle hope a recent report by the governor's aquaculture task force and a related bill passed on April 13 will help the industry, including its newest player, grow in both economically and environmentally positive ways. L.D. 1827, the task force bill, clarifies the rules for granting marine leases and includes provisions to allow individual towns authority to grant an aquaculture lease. It also gives the commissioner of the Department of Marine Resources authority to hold a public hearing on lease renewal or transfer. Belle believes the bill is one important step in defining the state's aquaculture regulations, a clarity that he thinks is crucial for investor confidence in the state's industry.
Butler is already confident that Cooke has an advantage in its new Maine operations with its use of salmon with North American genetics, rather than the European-strain fish that triggered the court ruling against Atlantic Salmon. "What we bring to the table is the right structure to deal with fish in Maine," he says. "Cooke has the right marketing approach and the right genetics to avoid some of the pitfalls previous owners [of Atlantic Salmon] have fallen into."
As part of the deal, Cooke, a privately held, family-run corporation based in St. George, New Brunswick, purchased all of Atlantic Salmon's water operations, one hatchery at Oquosoc and one in Solon, and the $2 million, 28,000-square-foot Machiasport processing plant. (Ducktrap River Fish Farm in Belfast was not included in the sale.) The Machiasport plant, where future Atlantic Salmon operations will be based, is only a two-hour drive from Cooke's Canadian headquarters in St. George. Atlantic Salmon's location in downeast Maine also will help Cooke access the segment of the U.S. market that, according to Butler, "likes to buy American."
For now, Butler's biggest concern is finding a way to put more fish in his hatcheries. Because Cooke purchased the business of Atlantic Salmon rather than its holdings, it must abide by the court rulings imposing fallowing periods of up to three years, most of which will end in 2006. Today, Butler says about 170,000 young salmon, or smolts, are ready to go into the ocean hatcheries where they will mature to market size. (By way of comparison, Atlantic Salmon officials had 1.2 million young fish ready to put into the water in 2003.) Butler predicts all of this year's stock will be harvested by July or August. "What we're trying to do is get more fish into the water," he says.
Despite those efforts, some Atlantic Salmon workers are reportedly worried Cooke's neighborly instincts might mean the end of the company's Machiasport fish processing plant. Butler estimates that about 20 of the 70 jobs at Atlantic Salmon are in processing. Drops in Maine's salmon production from restrictions, cold temperatures and ISA scares mean most companies no longer produce enough fish to justify their own multi-million dollar processing facility. According to the recent report by the governor's task force, a severe winter in 2002 closed two of the four processing plants in the state and "greatly reduced production" at the remaining two.
Robert Peacock, a Lubec plant owner who lost his business when Stolt Sea Farm of New Brunswick moved processing operations to Canada, says while the industry remains alive in the state, the number of Maine-based fish farming jobs has dwindled in part because of the lack of processing plants. According to the task force report, direct employment in salmon aquaculture has decreased from roughly 1,000 jobs in the late 1990s to 330 today.
"There are no processing jobs left in Washington County," says Peacock. He says some of his neighbors and friends who are employed by Atlantic Salmon are bracing for the closure of the Machiasport processing plant because of the slim harvest. "They all think that they're done," he says.
Butler says Cooke Aquaculture is looking at all options and has not made any decisions to eliminate jobs at Atlantic Salmon. "At this point, it's business as usual," says Butler. "We've told employees we're working on a game plan to sustain the Maine operation." He adds that Cooke will "live up to its commitment" to inform employees first of any changes at Atlantic Salmon.
In 2003, a U.S. District Court judge imposed a $50,000 fine and a two- to three-year fallowing (or fish-free) period in all of Atlantic Salmon's pens following violations of the Clean Water Act. That same year, a devastating fire destroyed three million fish in one of the company's hatcheries in Embden, and a nasty infectious salmon anemia, or ISA, outbreak wiped out much of the remainder of the company's stock. The number of employees at Atlantic Salmon, which had been owned by Norwegian company Fjord Seafood USA, dropped from a high of about 200 to the current count of about 70. Only one of its three hatcheries is currently operating.
Sound like a good buy? Cooke Aquaculture thinks so.
"Both systems are highly similar," says Ross Butler, vice president of Cooke, referring to the way Cooke and Atlantic Salmon do business. "We're looking to take advantage of the synergies on both sides of the border."
With annual revenues of $100 million Canadian (about $74 million American), Cooke is the largest independent aquaculture company on Canada's east coast; it's a significant player in an industry that enjoys continued success in the country, thanks in part to a supportive regulatory environment and financial assistance from the Canadian government.
That's a far cry from the situation in Maine ˆ- the value of the industry here has declined from a high in the late 1990s of between $75 million and $78 million to a 2002 estimate of $57 million, according to a state report released in January ˆ- and at Atlantic Salmon in particular. According to district court documents, the company has not made a profit since 1999.
Butler declines to go into detail on how Cooke plans to turn the company around. Instead, he stresses the quality of the workers at the company and the natural relationship he believes Cooke and Atlantic Salmon share. "It's an opportunity for growth," he says of the deal. "[Atlantic Salmon] has some very good people and some very good assets."
Sebastian Belle, executive director of the Maine Aquaculture Association, believes the deal is nothing but positive for Atlantic Salmon workers and the statewide aquaculture industry. "Perhaps the most important reason," he says, "is Cooke as a company has proven to be very entrepreneurial and innovative on the Canadian side."
An industry in decline?
In Maine, industry proponents like Belle hope a recent report by the governor's aquaculture task force and a related bill passed on April 13 will help the industry, including its newest player, grow in both economically and environmentally positive ways. L.D. 1827, the task force bill, clarifies the rules for granting marine leases and includes provisions to allow individual towns authority to grant an aquaculture lease. It also gives the commissioner of the Department of Marine Resources authority to hold a public hearing on lease renewal or transfer. Belle believes the bill is one important step in defining the state's aquaculture regulations, a clarity that he thinks is crucial for investor confidence in the state's industry.
Butler is already confident that Cooke has an advantage in its new Maine operations with its use of salmon with North American genetics, rather than the European-strain fish that triggered the court ruling against Atlantic Salmon. "What we bring to the table is the right structure to deal with fish in Maine," he says. "Cooke has the right marketing approach and the right genetics to avoid some of the pitfalls previous owners [of Atlantic Salmon] have fallen into."
As part of the deal, Cooke, a privately held, family-run corporation based in St. George, New Brunswick, purchased all of Atlantic Salmon's water operations, one hatchery at Oquosoc and one in Solon, and the $2 million, 28,000-square-foot Machiasport processing plant. (Ducktrap River Fish Farm in Belfast was not included in the sale.) The Machiasport plant, where future Atlantic Salmon operations will be based, is only a two-hour drive from Cooke's Canadian headquarters in St. George. Atlantic Salmon's location in downeast Maine also will help Cooke access the segment of the U.S. market that, according to Butler, "likes to buy American."
For now, Butler's biggest concern is finding a way to put more fish in his hatcheries. Because Cooke purchased the business of Atlantic Salmon rather than its holdings, it must abide by the court rulings imposing fallowing periods of up to three years, most of which will end in 2006. Today, Butler says about 170,000 young salmon, or smolts, are ready to go into the ocean hatcheries where they will mature to market size. (By way of comparison, Atlantic Salmon officials had 1.2 million young fish ready to put into the water in 2003.) Butler predicts all of this year's stock will be harvested by July or August. "What we're trying to do is get more fish into the water," he says.
Despite those efforts, some Atlantic Salmon workers are reportedly worried Cooke's neighborly instincts might mean the end of the company's Machiasport fish processing plant. Butler estimates that about 20 of the 70 jobs at Atlantic Salmon are in processing. Drops in Maine's salmon production from restrictions, cold temperatures and ISA scares mean most companies no longer produce enough fish to justify their own multi-million dollar processing facility. According to the recent report by the governor's task force, a severe winter in 2002 closed two of the four processing plants in the state and "greatly reduced production" at the remaining two.
Robert Peacock, a Lubec plant owner who lost his business when Stolt Sea Farm of New Brunswick moved processing operations to Canada, says while the industry remains alive in the state, the number of Maine-based fish farming jobs has dwindled in part because of the lack of processing plants. According to the task force report, direct employment in salmon aquaculture has decreased from roughly 1,000 jobs in the late 1990s to 330 today.
"There are no processing jobs left in Washington County," says Peacock. He says some of his neighbors and friends who are employed by Atlantic Salmon are bracing for the closure of the Machiasport processing plant because of the slim harvest. "They all think that they're done," he says.
Butler says Cooke Aquaculture is looking at all options and has not made any decisions to eliminate jobs at Atlantic Salmon. "At this point, it's business as usual," says Butler. "We've told employees we're working on a game plan to sustain the Maine operation." He adds that Cooke will "live up to its commitment" to inform employees first of any changes at Atlantic Salmon.
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