May Build Own Fleet of Boats, Sell to Foreign Markets : Firm Plans $12-Million Automated Cannery

In an era when cannery closings have been the rule rather than the exception, officials at the Port of Los Angeles are negotiating with a company that proposes to build a $12-million, state-of-the-art fish processing plant on Terminal Island.

The highly automated operation would be the most modern in Los Angeles and among the most sophisticated on the West Coast, according to Graeme McIsaac of Los Angeles Harbor Fisheries Inc., which plans to begin construction next month and to begin processing fish in about a year.

McIsaac said that because automation would cut labor costs his company would be able to compete against foreign exporters in overseas markets, something other American fish canning companies have been unable to do.

Company-Owned Fleet

In addition, McIsaac said his company is talking about having its own small fleet of boats to supply the plant, which could put the firm in competition with San Pedro fishermen who own their own cannery.

Los Angeles Harbor Fisheries, which is owned by investors McIsaac declined to name, is seeking to lease port property at Berth 265 in Fish Harbor for its operation. Star-Kist Foods, which operates one of the three remaining canneries on Terminal Island, recently demolished a warehouse at that site.

McIsaac and Phil Tondreault, real estate officer for the Los Angeles Harbor Department, said they hope to iron out details within the next several weeks so that harbor commissioners can vote on the lease agreement on May 25.

The cannery proposal calls for a 72,000-square-foot, two-story facility that would process and package mostly mackerel, as well as squid, bonito and sardines, for human consumption overseas, primarily in the Philippines and the South Pacific, including Australia, New Zealand and Papua New Guinea. Those markets are now being supplied mainly by canneries in Japan, Korea and Thailand, where labor is less expensive.

McIsaac said that depending on the season, the Los Angeles Harbor Fisheries cannery would employ between 50 and 150 workers, about half the work force that a less modern cannery of the same size would require. The plant would use machinery to decapitate, gut and fillet fish--jobs performed by hand at other canneries.

Willing Buyers

The cannery would be capable of processing between 300 and 400 tons of fish a day, and McIsaac said his company has willing buyers.

“We’ve looked at it and gone through a feasibility study and secured the business,” McIsaac said.

Despite his rosy outlook, these have been hard times for the fish canning industry, and some familiar with it are not optimistic about Los Angeles Harbor Fisheries’ plans.

“They’re going to have to compete with the Japanese, principally, and that’s going to be tough competition,” said Charles Fullerton, regional director for the National Marine Fisheries Service. “By the time you try to compete with the cost of shipping and everything else, it makes it a very competitive market.”

A spokesman for Star-Kist said that although the Philippines, Papua New Guinea and other South Pacific countries have “very substantial markets in canned mackerel,” Star-Kist has never tried to break in and take some of that business from the Japanese.

Unable to Compete

“We were never able to compete with them costwise,” said Ed Ryan, vice president for business development. “The Japanese have a tremendous mackerel catch every year. . . . The boats land an awful lot of fish at very low prices, and, of course, the freight isn’t too much.”

Such stiff competition from lower-cost canneries overseas has been a major factor in the decline in the fish processing business on Terminal Island, which once had more than a dozen canneries.

Only three remain--Pan Pacific Fisheries, which is the only tuna cannery in the continental United States, Star-Kist Foods and United Food Processors, both of which process mackerel for human consumption and pet food.

United Food Processors is owned by the Fishermen’s Cooperative Assn., which has represented the San Pedro fishing fleet for 61 years. The 22-member cooperative purchased the cannery from Star-Kist last year, just as Star-Kist was about to close it.

Because the cannery is owned by the fishermen themselves, it gives the San Pedro fishing industry an immediate market for its mackerel catch. Star-Kist also buys mackerel from the local fishing fleet.

That arrangement could pose a problem for a new cannery, said Fullerton, noting that the mackerel fishery is limited and the current catch is just enough to supply Star-Kist and United Foods.

Limited Resource

“There is only so much resource out there to share,” Fullerton said.

John Vilicich, a director of United Foods, agrees, saying that the San Pedro fishermen have little incentive to stop supplying their own cannery, which is just beginning to flourish after a year in operation.

“We don’t think it will ever come to be,” he said of the Los Angeles Harbor Fisheries proposal. “They’d have to build a whole fleet to supply them, and that’s costly.”

If it has to, McIsaac said his company intends to do just that--build a fleet of four fishing boats and bring fishermen to San Pedro to operate them.

“There are a ton of fishermen around, and if we can’t get them here, we’ll train them,” he said. “We have no fear of being cut out.”

McIsaac said he does not envision his cannery posing any competition for United Foods. But if Fullerton is correct about the limited availability of mackerel, there could be competition for the fishery between co-op fishermen who supply their own cannery and Star-Kist and other boats that work for the new cannery.

Fullerton said he would be sorry to see that happen, especially if it threatened the co-op, which has worked hard to establish United Food Processors to keep local fishing boats in business.

“I would not want to see anything that would destroy the present local industry,” he said.