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11 November 2022

Starkist faces uncertain future

Thursday 5 November 2015 | Published in Regional

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PAGO PAGO – American Samoa’s largest private sector employer, Starkist Samoa is to stop hiring new staff and is looking at shifting some of its production offshore.

RNZI’s correspondent in American Samoa, Monica Miller, says more than 80 per cent of the economy is dependent on the canneries, so any change will have a domino effect.

“The scariest part of all was when the CEO and president, Andrew Choe, said that they are now having to evaluate and looking at alternative locations.

“And he came right out and said that he has informed leaders in Washington DC that they might have to shift some of the production that’s now carried out at the American Samoa plant to Senegal.”

Miller says the territory is in a difficult situation as there’s not much available to offset any possible loss of jobs.

She says workers are worried as they wait to learn more about the company’s plans.

“More than 80 per cent of American Samoa’s economy is dependent on the canneries, we’ve got the businesses that supply the fishing boats, and we also have the fuel industry, we’ve got the American Samoa Power Authority, this is their biggest customer, and then the American Samoa government which depends on the taxes from the employees, definitely it is going to have a domino effect on the territory.”

Samoa is one of two canneries on American Samoa, and it employs about 2000 people.

The other cannery, Samoa Tuna Processors, employs about 1000 people.

According to Starkist’s representatives, one of the main issues affecting the business is the mandatory minimum wage increase of 40 cents an hour – representing a 57 per cent increase in the wages paid in American Samoa since 2007.

The firm said it is also undergoing difficulty having access to fishing grounds and disruptions to the supply of direct-delivered fish have forced the cannery to procure fish from distant water reefer ships, further increasing costs in the territory.

Adding to the costs is that the recently completed Trans Pacific Partnership multilateral trade agreement will soon open significant new competitive pressures from countries such as Vietnam.

Starkist is arguing that its competitiveness has also been affected by fishing restrictions on the high seas and in the US economic exclusive zone.

It has called on the US National Marine Fisheries Service (NMFS) to recognise the territory’s unique nature as a small and developing economy.

“The competitive position of American Samoa continues to be eroded day by day, and the decision by NMFS to forgo an emergency rule-making for our purse seine fleet is another example of a lack of urgency for how difficult it truly is to operate a business here,” Starkist’s representatives argued.

In statements to the media, CEO Choe explained they are now having to evaluate and look at alternative locations to shift some of the production that is now carried out at the American Samoa plant to Senegal.

The cannery is also looking at packaging facilities in the US mainland similar to those used by its competition.

Choe travelled to Washington DC last week to advise leaders and lawmakers about the difficult future of its long term operations in American Samoa.

The firm’s CEO summed up that because of the uncertainty of manufacturing costs in American Samoa, for example wage costs, energy costs, tax policy uncertainty and concerns about the volatility and supply of raw materials, and especially given what has happened in just the last six months, they would be “irresponsible” if they did not begun this process.

The cannery executive explained it’s extremely difficult for American Samoa to compete with other manufacturing locations where labour costs and other expenses are substantially lower.

Choe pointed out that StarKist’s competition is doing a bulk of its production in countries like China and Thailand and reaps the financial benefits of cheap labour and subsidised costs. - PNC sources