Good afternoon, Mr. Chair and members.
My name is Rob Morley. I am vice-president of production and corporate development with the Canadian Fishing Company.
I'm an economist by training and began my career in 1974 with the Department of Fisheries and Oceans. I left the federal government after 13 years and spent 10 years with the Fisheries Council of British Columbia, a trade association representing all the major fish processing companies in B.C. I've been employed by the Canadian Fishing Company for the past 20 years.
I have been active in various industry associations and advisory boards for many years. I'm the immediate past chairman of the Fisheries Council of Canada and currently a member of the Fraser panel of the Pacific Salmon Commission.
The Canadian Fishing Company, or Canfisco, is the largest fishing and fish-processing company in western Canada. We also own subsidiary companies in the United States: Alaska General Seafoods and Leader Creek Fisheries. We purchase fish from a fleet of 860 vessels and have eight processing facilities. We participate primarily in the wild salmon, herring, groundfish, hake, and halibut fisheries.
In our fishing and processing operations, we employ approximately 5,500 people, from Seattle, Washington, through British Columbia, to western Alaska. We market fresh, frozen, canned, smoked, and value-added seafood products domestically and in 25 export markets. Canfisco is 100% Canadian owned, and 2016 is our 110th year in the wild Pacific seafood business.
Your committee's study was initiated by a motion worded as follows:
That the Standing Committee on Fisheries and Oceans hear from witnesses on the issue of adjacency and the policies regarding owner operator and fleet separation specifically as it relates to the impact of the Canfisco plant closure in Prince Rupert.
You may have read media reports and heard testimony regarding Canfisco's size, ownership of licences, share of industry, and our operations. Much of what you have heard is based on misinformation, hearsay or speculation. In other cases, it's simply a fabrication to support a point of view. I appreciate the opportunity to give you the facts about the company and its operations. I will also give you a perspective on the economic realities of the fish-processing business in British Columbia, which actively competes within B.C. for fish supplies from fishermen, and in the marketplace for customers, both domestic and international, with an Alaskan fishery whose production vastly exceeds B.C.'s.
Some people have claimed that Canfisco controls 80% of the herring business and 70% of the salmon business in B.C. Here are the facts.
Canfisco owns 32% of the 275 salmon seine licences. We own 3 of the 1,379 salmon gillnet licences, or 0.2% of the total. We do not own any of the 440 salmon troll licences. Overall, Canfisco owns 4% of all salmon licences in B.C.
Over the last six years, Canfisco has purchased between 29% and 48% of the total salmon catch in B.C., for an average share of about 37% of the total landings. In the B.C. herring fishery, Canfisco owns 30% of the roe herring seine licences and 12% of the roe herring gillnet licences. Canfisco buys and processes about 30% of B.C.'s total roe herring landings.
In the fisheries managed by individual shares or individual transferable quotas, Canfisco's share is much smaller. We own 21% of the groundfish quota, 15% of the Pacific hake quota, 3% of the halibut quota, and 2% of the sablefish quota. We own virtually nothing in any of the other fisheries.
Thus, contrary to misinformed reports, the licensing policies in B.C. have not resulted in increasing concentration or control by Canfisco and the companies with which we have merged.
While Canfisco may be considered a large company in B.C., we should put that in context with our competition: Alaska. Over the last decade, B.C. salmon landings have averaged about 48 million pounds per year, down from the 150 million pounds per year in the 1980s and the 1990s. Alaska's landings in the last decade have been 823 million pounds annually. B.C.'s total catch is 5% of the North American wild salmon supply. Alaska produces the same quality products and sells to the same customers in Canada, the United States, and overseas. On the world scale in which we compete, Canfisco is a very small player.
Let me turn to the issue that spawned this study: the closure of our Prince Rupert canning operations. First, let me clarify that we have not closed either of our plants in Prince Rupert. We will be operating and landing as much fish as our fleet can catch this summer and beyond. We've simply changed product forms from canned salmon to fresh and frozen salmon products. We have made this business decision for several reasons: changing market and consumer preferences, inconsistent fish supply, and high costs.
The salmon cannery in Prince Rupert was built and expanded in the 1980s with the capacity to produce 500,000 cases of salmon per year. The intent was to process a combination of salmon caught in both northern B.C. and southeast Alaska. The actual production volume achieved that 500,000-case target only three times in its history, the last time in 1995. In the past 10 years, due to declining salmon landings in B.C., less imported fish from Alaska, and changing markets for salmon products, the cannery has produced 200,000 cases only once and has averaged 116,000 cases per year in that time.
In 2015, we canned only 42,000 cases. Seventy per cent of that was Alaskan-caught salmon, mostly diverted from our cannery in Ketchikan, Alaska, just to provide some employment to the Prince Rupert plant—so much for the adjacency principle.
Maintaining a large plant with many canning lines for limited production was not viable. Worldwide consumption of canned salmon has been declining by about 1% per year for several decades. Over the last 15 years, eight other major canneries in B.C. have ceased operations. World demand for canned salmon can be satisfied from Alaskan canneries—including ours—which are more productive, with a more consistent supply of salmon available and unit labour costs per case significantly lower than those in Prince Rupert.
While Canfisco does obtain about half its salmon supplies from fishing vessels in which we have an ownership interest, we need to compete in B.C. with other buyers, none of whom are canning. They are putting salmon into higher-valued fresh and frozen markets. In order to attract independent fishermen and pay our skippers and crews a competitive price for the fish, we must do the same.
Canfisco processes 100% of the salmon and all the other species purchased in B.C. in facilities within the province. For all salmon landed in Prince Rupert, we are doing all the primary processing and processing of the roe in one of our two plants there. Fish we cannot sell fresh we are freezing at existing facilities in the Lower Mainland of British Columbia.
In terms of employment impact from this business decision, various numbers have been claimed by others and reported in the media, ranging from 300 workers losing their jobs to 500. Here are the facts. In 2015 there was a total of 411 workers employed in our Prince Rupert operations. On average, for the entire year, each worker worked 302 hours. It is a very seasonal job for a large proportion of the workforce, who work for a matter of a few weeks.
The usual turnover of workers is high. We normally hire 200 to 300 new workers each year. In fact, it's a challenge each season to find enough workers for our Prince Rupert salmon operation to run at full capacity. We cannot know for certain, because it depends on unpredictable fish landings, but we expect there to be well over 200 workers in our operations this summer. Other than about 15 specific tradespersons who have been laid off with compensation packages, we expect that all the senior workers in the operation will be provided with as much work as they have been previously.
The union has spoken about doing further value-added salmon processing in Prince Rupert. The first issue is a requirement for access to freezing and cold storage capacity. Since the closure of the J.S. McMillan cold storage facility, there is nowhere in Prince Rupert to hold the frozen salmon for further processing.
Moreover, of the bulk of the salmon landed, about 80% is pink salmon. In order to produce marketable pink salmon fillets or portions, the pin bones need to be removed. There is no machine technology available to do this effectively, and hand pin-boning can be profitably done only in very low-labour-cost jurisdictions.
It does not make economic sense to invest in new single-purpose freezing and cold storage facilities in Prince Rupert when there is significant underutilized capacity elsewhere in B.C.
In summary, Mr. Chair and members of the committee, I submit that in the absence of any application of the principle of adjacency, owner-operator, or fleet separation, the B.C. industry is a productive, competitive business that processes Pacific fishery resources in British Columbia, produces highly valued quality products, and returns good prices to fishermen.
Thank you.