Industry Challenges …
& Potential Solutions
It’s not just about demographics!
Robert Verge, P.Eng., MBA, CA, CMC
Managing Director, CCFI
November 15, 2016
1
Fish – A High-Growth Industry
200-Mile Limit
Moratorium
SOURCE: UN FAO
2
Different Worlds
World Fish Supply
140,000
120,000
000 Tonnes
100,000
Growth in supply is from
aquaculture, developing countries
80,000
60,000
40,000
20,000
0
2000
2001
Capture Fisheries
2002
2003
Aquaculture
2004
2005
Year
2006
Developed Countries
2007
2008
2009
2010
Developing Countries
Developing countries now
represent 2/3 of global fish exports
3
Canada Not Participating in Growth
26%
Drop
Decreased landings
from capture; no
increase from
aquaculture
4
Currency Exchange
5
Diverse Species  Niche Markets
GROUNDFISH
PELAGICS
CRUSTACEANS
6
Variable Catches by Species
Shellfish
Climate
Change
Groundfish
& Pelagics
Rising
Prices,
Exchange
Rates
Increasing lobster catches offsetting
decreasing shrimp, crab catches
Rising
Prices,
Exchange
Rates
Dramatic changes in
catches, values
Groundfish
& Pelagics
Shellfish
Climate
Change
7
Variable Catches by Province
Shellfish
Climate
Change
Rising
Prices,
Exchange
Rates
Groundfish
& Pelagics
Dramatic variations in catches,
especially in NL, NS
Shellfish
Rising prices, exchange rates
now offsetting decreased
catches
Climate
Change
Rising
Prices,
Exchange
Rates
Groundfish
& Pelagics
8
Seasonality
Avg. No. Sea Days by Vessel Home Port, 2010
We need to make
better use of our
decreasing labour
force
9
Variable Prices
SOURCE: John Sackton
10
KPIs – Canada Not Doing Well
$000
ANNUAL REVENUE, $ PER EMPLOYEE
NL, 2015
Aquaculture
Fish Harvesting
Processing
$
366,743
79,066
38,985
ICELAND, 2013
Fish Harvesting
Processing
336,389
212,790
11
Low Returns on Capital
SOURCE: AAFC
12
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013P
Processing Plants, NL
200 Number
180
160
140
120
171
77
100
80
60
40
20
0
Source: DFA
13
Plant Worker Incomes, NL
(Inflation adjusted: Constant 2010$)
$30,000
$23,834
$26,840
$25,000
$13,474
$20,000
$15,000
$12,807
Wages
UI/EI
$10,000
Total Income
$8,451
$5,000
$0
$7,762
Special Taxfiler Tabulations from STC for NLSA, GovNL
14
Processing Employment, NL
Number
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Peak No. Plant Workers
18,070
8,038
Source: DFA
15
Not Enough People
► Owners of fishing enterprises and processing plants complain
 they can’t find enough people to run their operations
► CCFI is continually being asked to find ways to automate processes on
fishing vessels and in processing plants
► And the problem is expected to get worse!
16
Availability of People
Short-Term
Long-Term
How many want to go
into the fishery?
17
We Have a Labour Supply Problem
► Reasons






No growth in industry output
Seasonal employment
It’s not just about
demographics!
Low incomes
Dependence on EI
Smaller population cohort after baby boomers
More attractive opportunities elsewhere
► Automation can be only part of the solution – we must also
 Increase industry output value
 Provide better employment opportunities – longer periods of employment,
better incomes, less dependence on EI, career progression
18
NS: Ivany Report, 2014
► “ … it will not be possible to turn around our economic outlook
as a province unless we significantly improve productivity and
competitiveness in our traditional rural industry sectors.”
► “For many years the highest public policy priority for these
sectors has been simply to maintain jobs in rural communities.
But today we find that many business operators are insufficiently
profitable to support the investments in product quality, plant
productivity, worker training, and market expansion that are needed to
maintain and grow market share. In some sectors it is increasingly
difficult to find local workers to take the low-wage and seasonal jobs
many employers offer. As a result, young people are leaving rural
communities, other countries are out-competing us in the marketplace,
and the province is not realizing the full value of our asset base. These
business models need to be revised if the province and our
rural communities are to escape the current pattern of weak
economic growth and population decline.”
19
Technological Change
Amazon Fresh/Santa Monica Seafoods
Superchilling +
Controlled Atmosphere
Every link
of the
value chain
Craemer’s new Tracking &
Tracing Fish Box
20
Reasons to Automate
► Tasks that could not be done otherwise
 Unique capabilities
 Time
 Economics
► Process optimization (business processes + production processes)




Production planning
Assessing possibilities to identify best outcomes
Scheduling
Process coordination, monitoring, and control
•
•
•
•
•
Compliance with regulatory requirements
Quality consistency
Flow control/process reliability/error reduction
Energy efficiency
Safety
► Increase revenue/reduce costs
 Increase throughput, product yield, quality, output value
 Reduce labour, waste
21
Challenges
► It’s not just about reducing the need for labour
 We need capabilities that can only be provided through technology
► Automation will mean
 People will need more technical skills – which are also in demand elsewhere
 Higher incomes, better benefits, and good lifestyles will be needed to
attract them
 We transition from a labour-intensive industry to a capital-intensive industry
► Can the industry attract the capital?




Already struggling with profitability and low ROI
Variable raw material supply – species, quantity, size, quality, price
Uncertainty, due to resource regime shift
Longer operating seasons needed to justify the investment
► Can we change the business model?
 Long-term investments require greater stability and predictability
22