Thank you, sir, and ladies and gentlemen.
I've left a copy of my presentation, so you're welcome to distribute it and read it. I think the points I make are salient to the issue.
Thank you for the opportunity to present my views on the Canadian lobster fishery.
I've been in the lobster fishery as a buyer and an exporter of lobsters for 32 years. In that time, I've been accused of being plain-spoken and frank and a holder of unpopular views in the industry. Obviously, nothing I will say today will dissuade anybody from that perspective.
I also agree that the problems facing the industry are complex in nature, and my solutions are not meant to over-simplify the complexity of the problems. But I believe the problems the industry is facing have their roots in the very history and structure of the industry. It's my strongly held belief that the challenges we are confronting today go much deeper than just price. They go right to the core of the industry structure. They have been exacerbated and made more apparent by the global economic crisis. However, even in the face of the enormity of these challenges, we have an unprecedented opportunity to offer a new and more sustainable future for the Canadian lobster industry.
Whether you are a fisherman, a buyer, a shipper, a retailer, a restaurateur, or a provincial or federal member of the government bureaucracy, the very first issue we should all think about when we discuss the lobster business is, who is our customer and what is our customer's experience with the product? When you think of the customer, it is important that you consider two broad levels: the distribution system—which is how we get the product to the ultimate consumer—and the consumer.
The lobster industry needs to promise and deliver two things to be successful, first and foremost: an incredible eating experience each and every time; and secondly, and as important, a reasonable profit to the distribution network. Otherwise, neither the consumer nor the distribution system has a reason to buy, handle, or eat lobsters. The industry has failed to do either of these consistently. Proof is seen in how quickly the market deserted the product. As I stated, the current economic crisis only exacerbates and accentuates the industry's failed structure.
Our biggest single failure is that our customers do not profit from the experience of buying or trading in lobsters. The industry forgets that although lobsters may carry the prestige and lure of caviar and champagne, just like the latter, they are not a necessity and can be quickly replaced in our customers' purchasing priority list by other more necessary products in times of economic upheaval, or by other luxury products, should we fail to deliver on our promise. Ask GM or Chrysler.
It is my contention that in December, when there was abundant supply, we felt the perfect storm of both events. We were replaced on the priority list by necessities; and where a treat was desired and purchased, we were replaced by other more reliable luxury products. The industry has disappointed far too many of our customers far too often and has made the lobster business unprofitable for our distribution network, because we have failed to deliver on our promise of consistent quality, consistent supply, consistent and predictable pricing, and outstanding service. It is a sad statement to make, but we abused our reputation and our customers far too long.
It is my contention that the industry is the author of its own misfortune. Actually, the 100-year-old structure of the industry is the cause of all of our problems. It does not encourage or even allow investment in either technology, market development, or profitability, other than at the most rudimentary level above the level of the harvester. Doing so immediately encumbers you with an overhead structure that makes you uncompetitive in a market where the chief marketing tool of your competitor is, “We are cheaper than the next guy”.
I have often described the lobster industry as one of desperation—again above the primary harvester's level. Desperate men and women are trying to buy a stake in the industry by competing for the precious cargo of lobsters, and then are doubly desperate to sell it into the market before the product dies, or the best before date expires, or the market collapses under the weight of actual supply, or even pending supply, or the banks simply ask for their money back. The harvesters are the only participants with a short access to supply, so they are the only ones who are sure they will have a product to sell.
In this scenario, you have to be as crazy as a company called Clearwater to invest in technologies to overcome the industry's problems and to risk being held hostage by an industry that rewards a low-investment competitor. As a now bankrupt competitor once proudly proclaimed to me, “Colin, I can pay more and sell for less than you every day of the week because I don't have your overhead burden.”
His was a winning formula, as he quickly went bankrupt, taking several million hard-earned dollars out of the industry and distributing it around the world, along with the lobsters he either didn't protect well enough or sold unwisely to less than creditworthy customers. However, I hardly had time to blink before he was back in business, with a new company name, buying against me on the shore and paying more. And as his price so proudly proclaims, “We are cheaper than Clearwater.”
What is the solution? The solution isn't for the government to bail out the industry. The solution is for the industry to deliver on the promise. To do that, we need the government, because the government controls the structure of the industry. It controls the game. It makes the rules and it has the power to enforce them.
However, the industry does not need government money. To do that would be a huge mistake, as industry must start paying its own way. For far too long, the industry has long abdicated responsibility for self-management.
I won't tell you about Clearwater.