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Fish processing making a comeback in struggling Alaska community of Adak

Jim PaulinDutch Harbor Fisherman

It looks like fish processing will return to Adak.

 Trident Seafoods want to process fish in the plant vacated earlier this year by Icicle Seafoods. And so does another company. The city is delighted to have two bidders, although Adak city manager Layton Lockett said the final say is up to the Aleut Corporation, which owns the building.

“A deal should be in the works,” Lockett said Monday.

Trident made an offer to buy the processing equipment that the city bought for $2 million to keep it from leaving the island which the Aleut Corporation has been struggling to convert into a viable civilian community at the former Naval Air Station.

“We are diligently working to get that plant open as soon as possible,” Lockett said. He described Trident’s proposal as a “lease-purchase” with a partial purchase up front, but declined to provide further details because a deal has not yet been reached.

Lockett said he had been in negotiations with Trident, but finally had enough information to present to the Adak City Council on Aug. 21. Lockett declined to identify the other potential buyer.

However, Aleut Corporation lobbyist Clem Tillion said the other prospect is a former Bristol Bay salmon buyer, who he doubts can match the financial power of Trident.

“There will be somebody there this winter,” Tillion said this week. “I’d bet on Trident.”

Tillion said the presence of competition has caused Trident to soften its stance some, saying its first offer was rejected. He said the huge Seattle-based processor wanted The Aleut Corporation to eliminate a quota for small fishing boats under 60 feet long, so that Trident’s bigger boats could catch all the fish.

“The Aleuts aren’t really too happy about that,” Tillion said, since the corporation wants Adak to provide opportunity for small boats from King Cove and Sand Point.

Aleut Enterprise Corporation executive Rudy Tsukada could not be reached for comment, despite numerous requests left on his voicemail.

Lockett said the plant’s shutdown has cost the city money in tax revenues, though he said the environmental cleanup work by Navy contractors has somewhat offset the effect of the loss of the plant. Earlier he estimated that the Navy cleanup was employing about 100 workers on the island.

The Icicle shutdown, while a blow to the community, fortunately happened during a time of normally slow fishing activity. “We’re tightening our belt and riding it out,” Lockett said. And small-scale fish buying continues, with fresh halibut flown out on Alaska Airlines, he said.

Meanwhile, Lockett will be happy when a deal is finalized, reporting “a lot of tension” in the meantime.

“We’re hoping something can be worked out very soon, so we don’t have to worry about it,” Lockett said.

While $2 million is a lot of money for a small local government to cough up, Lockett said he did what he had to do to save the community when the seafood processing equipment was auctioned off in Anchorage in June.

“It would be like what would happen if Unisea pulled out of Unalaska, and a month later they pulled out all the equipment,” Lockett said.

The crisis started early this year when Icicle Seafoods announced its permanent closure of the plant that employed around 100 workers and was a major source of local revenues. Icicle operated in a huge military surplus waterfront building called the Blue Shed, owned by the regional Native corporation, The Aleut Corp., with equipment leased from a Rhode Island bank that had taken possession from a bankrupt former owner.

Tillion said Lockett made the right move in saving Adak from “cannibals” who would buy and relocate the machinery, sinking Adak’s economy. “He chose to save Adak,” Tillion said.

Tillion said Adak’s big attraction to seafood companies is the prospect of a pollock fishery next year. While The Aleut Corporation owns millions of tons of pollock quota, it’s never been able to harvest the groundfish because of rules aimed at protecting the endangered Steller sea lion. But now it appears federal regulators may relax those rules and allow pollock fishing on the Aleutian Islands quota. Half the quota is reserved for small boats with a maximum length of 60 feet, he said. 

Tillion said the Aleutian Islands pollock quota came with the condition that the The Aleut Corp. spend the profits developing Adak, instead of exporting the funds to Anchorage. He recommended upgrading aging docks left behind when the Navy pulled out around 15 years ago, though he added that a fuel barge is another potential development project.

Tillion said the equipment is worth $12 million, including freezer plates that were never installed, which he said were very attractive to buyers who could use them in fishing vessels. The equipment’s former owner had paid off $6 million, leaving Independence Bank of Rhode Island stuck with an equal amount unpaid, he said.

The majority of the $2 million came from the city, with a smaller portion loaned by the Adak Community Development Corporation, Lockett said, and that’s money that the city could otherwise spend on other needs. Ultimately, the city manager said, his goal is for the purchase to cost the community “zero” in the end.

“We literally pulled it out of our reserves,” Lockett said. “It has budgetary impacts, obviously.”

Tillion said the Icicle plant’s closure was dictated by the culture of Wall Street with greater expertise in finance than fisheries, referring to the private equity firm that owns what he said was once a “fishermen’s company” founded by fishermen in Petersburg in response to a processing plant closure in the Southeast Alaska community.

“Then it became a Seattle company, then it belonged to a holding company that has no home,” Tillion said, noting that the Adak shutdown was part of a larger corporate shakeup that came around the same time as the sudden sacking of the company’s former president.

Icicle, headquartered in Seattle, is owned by the private equity firm Paine and Partners, with offices in New York, Washington, D.C., and San Francisco, and specializes in buying major corporations. Icicle remains active in the seafood processing business in Bristol Bay and Unalaska and elsewhere in the state.

Icicle decided to close its operation in Adak, citing concerns about the short- and long-term health of the region’s Pacific cod resource and increased regulatory uncertainty, the company’ new top official Amy Humphreys said in a press release in April.

Humphreys was appointed to the board of the Alaska Seafood Marketing Institute this month by Gov. Sean Parnell. In another political appointment of local note this month, Parnell appointed Dillingham fisherman Frederick Thane “Fritz” Johnson to the Alaska Board of Fisheries.

 Jim Paulin can be reached at paulinjim(at)yahoo.com