When St. George Realty agent Peggy Crockett was contacted by Kyle Murdock this spring about buying a seafood processing plant, she felt she had found a client who knew what he wanted. Murdock wanted to buy the foreclosed Great Eastern Mussel Farm plant in Tenants Harbor for his new lobster processing company, Sea Hag Seafoods.
As a realtor, Crockett is used to clients with clear business vision, but never had she encountered one so young. Murdock is just 21 years old.
Murdock is used to his age being an issue. When he began to talk to investors about his seafood business, he assumed he would get a strong reaction, be it positive or negative.
“This was a problem I was aware of from the get-go,” Murdock said.
But many investors were encouraged by his age. Maybe they saw the same determination as Crockett.
Entrepreneurship has always been in Murdock’s blood. Growing up on Monhegan Island, he ran a wildly successful lemonade stand and conducted tours to where a mummified cat could be found.
Growing up in a family of fishermen, Murdock was surrounded by talk of the need to change Maine’s lobster business model during the recent lobster price meltdown. Many said more Maine lobster needed to be processed in Maine, rather than trucked to Canada, but few did anything about it.
Not Murdock. Although he was studying math and physics at Worcester Polytechnic Institute in Massachusetts, Murdock also began to study how to open a Maine lobster processing plant in the Midcoast region. When Murdock’s father saw he was determined, he told his son about the Great Eastern
Mussel Farm foreclosure.
Murdock used connections to line up investors. He said his investors were interested in either putting money into ventures to keep Maine’s working waterfront viable, or to generate jobs in the region.
Recently, his venture received a shot in the arm, as St. George residents overwhelmingly voted for the town to endorse Sea Hag Seafoods’ application for a federal Community Development Block Grant of $200,000. The money will be used for equipment and other startup costs and be administered by the town.
The company plans to convert the facility to process lobster in time for this year’s August lobster catch. Murdock hopes to create 10 year-round jobs and some 40 seasonal jobs with the venture.
Until recently, lobster-processing infrastructure has languished in Maine, as Canadian processors had taken the lead role in processing lobster in the northeast region in the nineties. A few processors remained in the Portland region, but many others closed their doors.
But since the price meltdown, there’s been renewed interest in reinvigorating the processing industry, said Dr. Bob Bayer, executive director the UMaine Lobster Institute.
The most high-profile example is L.L.Bean heiress Linda Bean’s entry into processing. Bean is attempting to create a vertically integrated lobster company by creating infrastructure to get lobster from boat to plant to store or to her own Linda Bean’s Perfect Maine restaurants.
The new processors seem to have entered the field as a labor of love, rather than to make a quick buck, Bayer said. They want to help their communities. “It’s a philosophical thing more than anything else,” he said.
Murdock seems to have cleared the first hurdle by finding start-up capital, said Dane Somers, executive director of the Maine Lobster Promotion Council. Creating a lobster plant requires hundreds of thousands of dollars in initial investment in equipment, he said.
“You need to spend money before you start making it,” Somers said.
Then comes the tricky part of making money processing lobster, he said. Large processors dominate the field, and Canadian lobster processors enjoy some advantages over their U.S. counterparts, including state-run health care, generous unemployment insurance and tens of millions of dollars in grants by the Canadian federal and provincial governments to the lobster industry in recent years.
U.S. processors must be innovative because it’s difficult to compete directly with these larger processors in the market place, Somers said.
“What can you hope to put in the marketplace that isn’t already there unless you are going to offer a lower price?” Somers asked rhetorically. “But if you offer a lower price, how will you afford to do business?”
Somers believes it’s important to differentiate your product in the marketplace, either by offering a new product or by being aggressive in branding your product. Bean has done both things with her lobster claw products and with her push for name recognition, said Somers.
Another tactic is to find underserved or emerging markets that large processors can’t easily access, said Somers. Here, there is hope for new processors. The international market is increasingly hungry for lobster meat and Maine lobster meat in particular, lobster industry observers say. Also, there is more of a market within the U.S. for processed lobster meat than before.
“We get calls from places for Phoenix, Arizona, Tucson, Arizona, Dallas, Texas, saying, ‘Where can we get some lobster meat?”‘ said Somers.
The current plan for Sea Hag Seafoods is to sell wholesale frozen and cooked lobster meat directly to food service outlets, restaurants and cruise ships, said Murdock.
“We’re not reinventing the wheel here,” Murdock said.
But Murdock believes he has an advantage over Canadian processors because he will be processing lobster caught near his future plant. This will cut hauling costs, which seems like a smart business move given the recent spike in gas prices.
As for branding, Murdock believes geography will help his product speak for itself.
“Our product is already branded: the Maine lobster,” Murdock said.
Craig Idlebrook is a freelance writer living in Somerville, Mass.