U.S. TUNA CANNERY LAYS OFF 700 WORKERS IN FIJI

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Bumble Bee Foods hit by regulatory violations

LONDON (Intrafish, Nov. 20, 2011) - Canned seafood giant Bumble Bee Foods, which has sales of around US$1 billion, has run into some trouble at its plant in Fiji, which has been closed since July after falling foul of the U.S. Food and Drug Administration (FDA), which imposed import restrictions on the company.

According to a story in The Fiji Times, the company – owned by London-based private equity group Lion Capital – has had to lay off 700 staff because of the plant closure.

Bumble Bee CEO Chris Lischewski downplayed the story.

"We are working on some issues with the FDA, but that is part of the overall modernization project that is ongoing. We expect to recommence operations in the near future," he told IntraFish.

Lischewski declined to comment further.

A tuna industry source told IntraFish the closure is due to issues with hazard analysis critical control point (HACCP) procedures at the plant.

"The FDA is tightening up on enforcing these procedures and has given all the big U.S. canners a hard time in the recent past on HACCP and documentation," the source said. "I hear that one area of problems was in fish thawing. Possibly other things as well, but of course these were kept pretty quiet by all concerned."

Bumble Bee looks to have been hit very hard financially by the closure, he said.

The closure means the company has had to buy fish ex-vessel and then pay for freight to Bangkok for other tuna processing hubs for processing, instead of being able to process in Fiji.

In addition, Dongwon Industries-owned StarKist and Thai Union Frozen Products’ Chicken of the Sea business are competing hard on prices in the market, the source said. "If that wasn’t enough, raw material prices are also rocketing."

Not only that, Dongwon is reportedly competing with Lion Capital to acquire Icelandic USA.

If Bumble Bee’s private equity owner can pull off this deal, it could be a turnaround moment in its forays into the U.S. seafood sector.

However, if it goes to Dongwon, it will mean an expanding and tough competitor gets even more of a market advantage in the race to expand out of canned brands into other seafood products.

Even losing out on Icelandic USA to High Liner Foods – of course not a competitor in the canned seafood sector – would probably be preferable to this.

Intrafish

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