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Kake hopes to get its fish plant going

Troubled Kake Tribal Corp. operation gets backing from Sealaska

Posted: July 2, 2011 - 9:51pm

The troubled Kake Seafoods plant, owned by Kake Tribal Corp., is getting a new lease on life, and will be once again providing jobs in the struggling village.

A newly formed company, Western Pacific Seafoods, will be operating the plant with the support of the local village corporation as well as Sealaska, the Regional Native Corporation for Southeast Alaska.

It will be difficult to make a go of the aging plant, acknowledged Russell Dick, CEO of Haa Anni, the Sealaska subsidiary charged with developing new business opportunities in the communities in which its shareholders live.

“Anything we do in Southeast is going to face challenges, but there are opportunities for the region as well,” Dick said.

Sealaska and Kake Tribal have brought in a third-party plant operator, Prince Rupert fisheries executive Bob Jongewaard, to run the operation. He’s created a new company, Western Pacific Seafood, and is expected to hire 30-35 employees for the plant.

Among the plant’s biggest challenged will be its cost of operation, as Kake gets its electrical power from expensive diesel-powered generators.

Kake Tribal’s last attempt to run the plant was a financial disaster, leaving a trail of lawsuits, liens and unpaid bills by the third-party operator.

“They were using our power and we did not get paid,” said Jodi Mitchell, president of Inside Passage Electric Cooperative, which provides power for Kake.

Kake had also bought and attempted to operate Pelican Seafoods, before a different third-party operator abandoned the plant with a more lawsuits. Kake Tribal eventually lost the Pelican operation to foreclosure.

Kake Tribal officials declined to respond to multiple phone calls over the last two weeks.

What’s got some hoping that the new operator can make a go of Kake Seafoods is a new business strategy that takes into consideration the cost of power in Kake, as well as Sealaska’s backing.

The key to operating a fish plant in a community powered by diesel is to do minimal processing locally and don’t try to power huge and costly freezers.

Only plants in places with cheap hydroelectric power can run huge and costly freezers.

That streamlined operation has worked at Hoonah Cold Storage, a successful plant in another IPEC diesel-powered community, and can work in Kake, said Sealaska’s Dick.

“The operation can’t hold a lot of product in freezers,” he said. “Get it processed, flash frozen and out the door as soon as possible,” he said.

IPEC’s Mitchell said commercial power in Kake cost more than 55 cents per kilowatt-hour recently, and may go up if diesel costs continue to rise.

The industrial power rate for Kake Seafoods, however, is about 38 cents per kilowatt-hour, she said. That’s for interruptible power, though, so the plant has to be able to quickly shift to its own generation.

“The plan of action, I believe, could be successful,” she said. “It’s not doing the same thing that was done before,” she said.

Mitchell said Jongewaard is well thought of in the industry, and she is cautiously optimistic that the Kake plan can succeed.

“I think the new strategy of minimally process the fish in Kake is more like a fish buying station” than a traditional plant, she said.

Kake’s population was 557 in the 2010 U.S. Census. That year Kake schools had 89 students, according the Alaska school officials, down from 200 in 1997.

Mitchell said the utility’s longer term plan for Kake’s power needs is for it to connect it by electrical intertie to Petersburg, where surplus power is available from the state-funded power projects that serve Ketchikan, Wrangell and Petersburg.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.

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