Wednesday, July 27, 2005

Where do cold storages go from here?

Now that I've laid out all the pitfalls of cold storages, I'm obliged to say a good word about them and their potential future in the mix of infrastructure in the seafood industry. There has been some shining examples of cold storage operations in Alaska and some of the brightest have been operated or owned by Tom Thompson.

Tom grew up in Petersburg, the son of a fish buyer at the Petersburg Cold Storage, Knut Thompson. I have some fond memories of Knut and Tom from growing up with Tom's boys, Harold and Mark. Harold eventually became the manager of the Thompson family operation, Sitka Sound Seafoods. But Tom started working in the Petersburg public ccold storage when he was a young man and continued when the buying operation became Knut Thompson and Son.

Tom became manager of the entire cold storage after his father died and then it was merged with Petersburg Fisheries. That was some real hard-ball with the stockholders, but that's not relevant here. The big cannery in Petersburg needed a cold storage to freeze the cohos and chums it's seiners were bringing in. Under Tom's leadership, the cold storage extended it's buying reach out with the placement of self-contained buying stations for troll fish and halibut.

He was one in a hundred. A guy you just know is in his niche in life. It's a rough and tumble game and Tom was a master at it. He ablsolutely loved the business. He could talk recovery rates and handling costs per pound for all the steps in the process for any specie, materials costs per pound, and overhead costs per pound, etc. That was his language. The language of cold storages.

He knew and was well liked by everyone in the industry. And he was innovative and had a grasp of all facets of the industry. He fit in with the old school operators but he also had an eye on the future, a future with value adding. He started doing some value adding in a new public facility in Sitka he helped get a grant for. Then he started having health problems and sold the Sitka and Yakutat operations to a big Canadian east coast company.

Where am I going with this? The cold storages Tom ran were successful because they were run by Tom Thompson. The cold storage in Sitka didn't run for years until Tom bought it. Nothing much was going on in Yakutat either until Tom went there. At the end of his career he was getting into smoking fish and making infomercials and flying fresh fish to Seattle, where he had a sales office. That should tell you something about where he saw things going.

Now companies like Norquest in Ketchikan and the Metlakatla cold storage are picking up the ball. Not that there hasn't been a lot of small scale smokers and salmon sausage makers in Alaska. But among the larger cold storages, there hasn't been much innovation until now.

Norquest doesn't can fish in it's cold storage plant in Ketchikan, they are looking to expand capacity and profit margins by teaming up with Chicken of the Sea. Notice that the brand name is all that is used in public by Chicken of the Sea. Do consumers care where their product comes from? Peter Pan, is another and even their plants have always been known by that brand name. And the list goes on, until you get to the smaller cold storages. Why is that? Branding is king in the food business. To compete without one is russian roulette any more.

Cold storages have a lot of opportunities, but without being associated with a brand, it like going backward thirty years. The Regional Seafood Development Associations hold a lot of promise for small cold storages looking to associate themselves with a large brand. Keeping in mind that a cold storage is just an instrument to process fish, period.

Small public cold storages, especially, can kill two birds with one gaff hook by associating themselves with the Regional Association. The fishermen that wanted the cold storage in the first place will join the association for brand identity, and the association of fishermen in the region get another piece of infrastructure to diversify operations. Several small cold storages operated by one association can do one type of product in one and another product in another to better expand into niche markets.

Ocean Beauty has cold storages throughout Alaska and is working hard to capture the Military market and more. This technology they are utilizing has more promise than you can shake a stick at. It offers a solution for cold storages to make a finished product from their pinks, which has always been a bugagoo for them. Their fishermen need to bring them in because they dominate the catch in mid July to mid August. A plant has to be able to take everything a fisherman can catch. You start to break away from a relationship with an established buyer and they will likely say, "You don't sell your sockeye and coho to us, so don't bother bringing your pinks and chums around."

Quick cooking salmon by powerful microwaves in plastic trays is a wonderful idea. With Senator Murkowski behind it, it's bound to go. With her, you get the whole Alaska delegation and of course, Governor Murkowski. This technology is a no brainer and will be great for mom and pop canneries, cold storages of all stripes and large canneries. The Fisheries Industrial Technology Center in Kodiak has the capability to do this kind of process but I found out in the late 80s that their Risk Manager in Fairbanks won't let them certify a process. We might have been cooking pinks this way, or at least in the 28 different kinds of aluminum cans the Scandinavian seamer will do, for the last ten years or twenty years.


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