State-subsidized fish plant accused of stealing work

Processors say ASI has unfair advantage, poses hardship on other plants

Posted: Friday, June 27, 2003

ANCHORAGE - Some small Anchorage and Kenai Peninsula fish processors say Alaska Seafood International is using state subsidies to unfairly compete for contracts to custom pack salmon.

The processors say ASI, which operates rent-free in a $50 million factory the state built and owns near the Anchorage international airport, is grabbing work on which their plants have long depended.

Such work - cutting and packaging salmon from the Yukon River, Bristol Bay and elsewhere according to the specifications of the fish's owner - is a far cry from the TV dinners ASI was intended to produce, said Jeff Berger, owner of Deep Creek Custom Packing Inc. of Ninilchik.

"Here we have a white elephant creating more burden on the existing packers," said Berger, who said Alaska fish processors are struggling to survive a chronic downturn in salmon prices on the world market.

The criticism is the latest in a string of troubles for ASI, launched in 1999 with an aim of creating hundreds of jobs and a sophisticated seafood manufacturing industry in Alaska. The company has had a rocky time ever since with financing, management and sales.

Recently, a cold-storage warehouse next to the fish factory told ASI executives to pay $671,000 in overdue rent or face a lockout and liquidation of its stored goods. In late May, the administration of Gov. Frank Murkowski rejected ASI requests to extend its rent-free status and to continue giving the company $100,000 a month for power and other expenses associated with upkeep of the building.

ASI's major owner is Sunrise Capital Partners, a New York City firm that specializes in turning around troubled companies. The state owns a minority share of ASI.

Chief operating officer Doug Bell said Wednesday that ASI has $1.6 million in new commitments from its investors, some exciting sales deals with national grocery chains and food distributors - and every right to compete for custom fish-packing jobs.

He disputed that ASI has any advantage over competing fish packers. In fact, he said, it is disadvantaged because of the high costs of operating in a 202,000-square-foot factory building that's far too large for ASI's current production.

"How do I win? If I don't compete I'm a loser sucking on the state. If I do compete, I'm this big monster taking everybody's business away," Bell said.

Skip Winfree, owner of 10th & M Seafoods of Anchorage, said ASI took a job to pack some Yukon king salmon earlier this year but 10th & M ultimately got the work back. He could not cite other specific examples of custom-packing jobs ASI had won, but said he was irked the company was even trying.

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