Much has been reported over the past couple of months about the dire circumstances surrounding the Maine lobster industry. Boats prices are at record lows, the demand for both live and processed lobster is soft, and expenses relative to the harvesting and transportation of product are up.
While the state’s action to acknowledge the current conditions and create a forum for discussion is admirable, we need to be sensitive to the fact that this is an economic and market crisis, not a resource issue. The state is correct in taking action to provide support and leadership during these times, but they are not equipped or experienced enough in the nuances of the industry to be setting policy and making decisions that may or may not affect the economic status of this industry in a positive manner. Clearly these discussions need to continue, but the one voice that has been conspicuously absent from the table are the major buyers of our resource: the brokers, the domestic and overseas shippers, and the Canadian processors. We need to hear from the businesses that purchase and handle the bulk of this State’s lobster harvest and ask them what, if anything, we can do to improve the boat price and margins that support the lobster industry. Who buys our product? What are its limitations? Who are we competing against? Where are the biggest markets? Where are the emerging markets?
Where do we go from here? One of the key ingredients to improving the future of this industry is leadership. It has been suggested that the old model is broken, and if we continue to operate under that old standard we will continue to be impacted by the whims of the market. Yet in order to steer a new course, we need a new captain. Whether new leadership takes the form of one individual or a group, whether it come from within the industry or from the outside, it needs to have a strong voice, a clear sense of purpose and the ability to communicate that purpose to the entire industry in a clear and concise fashion. Above all, for new leadership to succeed, they need to be trusted.
There have been many suggestions offered for a new direction forward and many will be forthcoming. Some have suggested more processing within Maine would be beneficial. Given the current price of fuel, there would certainly be savings in transporting product to Canada for production and back to the US for sales. Ultimately, though, this might amount to a 20-cents-per-lb. gain that may or may not be reflected in the boat price (and the domestic processor may use this savings as a price advantage in the market as opposed to returning it back to the shore).
While there are elements that are attractive to having more domestic processing, there are three major hurdles that need to be examined before any new plants are up and running. The first is cost: it requires literally millions of dollars to build, equip, and support a new processing facility. In an industry where margins are well below 10 percent, we need to find investors who are willing to take big risks and forego big gains all in the name of supporting a regional industry. The second hurdle is labor: do we have enough of a workforce in Maine that is willing to do the labor intensive work associated with seafood processing for wages that would be slightly above minimum wage? As a former processor in Portland, I know the challenges we faced building and retaining a workforce. These days, some Canadian processors are even resorting to importing labor from as far away as Russia and China because the local workforce is unwilling to do this type of work. So when we talk about building a processing facility here in Maine we also need to consider where the workforce will come from to staff that facility. The third challenge is seasonality: how do you support a multi-million dollar facility along with a trained workforce for 12 months of the year? Fish cutting, shrimp processing, and crabmeat picking will not pick up the slack during the six months of downtime. And it is unreasonable, not to mention inefficient, to consider laying off workers for six months and expecting them to return next season or retain new employees. Yet done on the right scale, with the proper marketing and product development, regional processing can succeed. Keep in mind, though, those two key phrases: marketing and product development.
The days of the consumer purchasing live lobster for consumption at home are disappearing. Regionally this tradition may be strong, but outside of New England things are changing. Another challenge we face as an industry is the physical distance our product can travel in the live state. During the early part of the shedder season, the Maine lobster is dying from the dock to the truck, not to mention from the truck to the customer. What does this say about our practices and how we view our product? Also, given the fragile nature and weakened state of the new shell lobster, it becomes almost necessary to increase the size of the supply chain in order to get the product to market-many hands touch the product before it reaches the market, in part because the lobster can only travel short distances before it needs to “get a drink” in a tank system or holding facility. Why is it that we can ship millions of 10-cent eggs across the country and have so few broken, but we can’t ship a $4 lobster from Stonington to Spruce Head without killing or damaging 3-5 percent of the harvest? By improving the quality of product that is caught and minimizing the amount of handling that happens, the industry will see improvements in the return on the product.
Many ideas will be batted around over the next few months. Hopefully multiple suggestions will rise to the top that will steer us in a new, more profitable direction. Ultimately, though, for change to occur the many layers of the supply chain (harvesters, dealers, truckers, traders and processors) are all going to have to band together, create efficiencies in the supply chain and improve marketing to derive a better price in the market. But as we do move forward, it will be important to keep one thing in mind: this “problem” is still rooted in a global economic crisis. So until the overall economy improves and the global consumer gets back on its feet, we still have a long way to go before we see improvement in our bottom line. In short, we’ve got to see companies like Ford, GM and Dell bounce back before the lobster industry can even think about turning the corner. I can only hope that when that time comes, the industry will be ready to take full advantage of the opportunity.
Tim Harkins is president of Rocky Coast Lobster Company.