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Native corp., Yakutat go head-to-head in fish business

Company president resigns over battle to dominate fish processing market

Posted: Sunday, August 15, 2004

The president of a Yakutat Native corporation resigned Thursday, and the company may lose its fish processing plant to a competitor.

For about 18 months, Shari Jensen of Yak-Tat Kwaan has been in a fight with city of Yakutat officials over whose fish processing plant will dominate the market.

Jensen, president and general manager of the YKI Fisheries plant, went head-to-head with a city-owned plant in 2003. This year the city has leased its plant to a Seattle-based company, Select Fish, continuing the competition. Select Fish is owned by Whole Foods Market of Austin, Texas.

Jensen contends the city is not taking care of its own people. An Outside company does not have the fishermen's' best interests at heart, she said.

"Our ability to stay in business ensures a better price for the fishermen," Jensen said.

City officials say they leased the city's plant because of YKI's troubled financial history.

The battle culminated Thursday when Jensen resigned as president of Yak-Tat Kwaan Inc., effective Sept. 3. Whole Foods Market has since contacted some Yak-Tat Kwaan board members to lease the Native-owned plant as well.

The city for years has owned the Ocean Cape Facility, a fish processing plant it once leased to Sitka Sound Seafoods. YKI opened a plant in 1996, but has been about $900,000 in debt each year because it was competing against Sitka Sound, Jensen said. It stayed in business to avoid losing its $5 million investment, she said

Not enough product exists to support two plants, she said. Yakutat, located 225 miles northwest of Juneau along the Gulf of Alaska, has a population of about 700 in the winter and 1,200 in the summer. In January 2003, Jensen became president of Yak-Tat Kwaan, an investment company formed under the 1971 Alaska Native Claims Settlement Act. Yak-Tat Kwaan has been subsidizing YKI. Yak-Tat Kwaan also owns Malaspina Investments, a construction company.

Sitka Sound decided not to renew its lease for the 2003 fishing season. Jensen saw the opportunity to be the only fish processor in town and finally operate in the black.

"We were so excited we'd be the only plant," Jensen said. "It was so near, but the city kept it out of our grasp."

Instead, the city operated its own plant for the 2003 season, and lost $550,000 to $750,000, City Manager Steve Henry said Friday. YKI broke even, minus depreciation, Jensen said, and would have profited if the city had not competed.

City leaders said they decided to run the plant because YKI had shut down. Jensen was not giving clear answers whether she would re-open, and the fishing season had started, they said.

"We had to do something and we were running up against a timeline," Mayor Victoria Demmert said.

Henry said Jensen was present at every Assembly meeting, and if she had told the city YKI was going to open, the city "would have likely" backed off.

Henry, who used to manage Sitka Sound Seafoods before becoming city manager in 2003, said the city didn't want to operate the plant, but had no choice because fishermen needed a buyer.

"The Assembly is not after YKI Fisheries," Henry said. "It's out to protect the community."

The city already had lost out on buying halibut and black cod in March because neither plant was open, Henry said. The city lost fish tax revenue and the ability to employ local workers, he said. The city receives $100,000 to $200,000 annually in fish taxes and employed 35 people at its plant.

Jensen reopened the Native plant in May 2003. Select Fish bought 85 percent to 90 percent of YKI's product for the 2003 season. Select worked in YKI's plant for 30 days and learned how the operation worked and became acquainted with employees it would later lure, Jensen said.

"It was like having a family member betray you," she said.

Eydfinn Tausen, general manager for Select's Yakutat plant, declined comment Friday. He referred questions to Whole Foods, but a company spokeswomen did not return calls by press time.

By late 2003 or early 2004, the city wanted to partner with YKI by sharing expenses and profits, Jensen said. She declined the offer, saying it was too risky because not enough product existed to support two plants. Jensen wanted to run YKI and lease the city's plant, using it when YKI had an oversupply of fish, she said.

By the end of January 2004, the city was willing to lease YKI its plant, Jensen says.

One of the city's stipulations, however, was that Whole Foods back YKI financially because of its troubled history. But when the time came to sign an agreement, Whole Foods did not back YKI for the necessary amount, Jensen said.

On Feb. 24, 2004, the Assembly decided to lease the city plant to Whole Foods for $35,000 from April 1 to Nov. 1, 2004. Whole Foods has the option to renew for four nine-month terms.

Demmert said came down on the side of Whole Foods because of YKI's previous financial problems, she said. Demmert did not want to risk taxpayer money by leasing the city's plant to YKI, she said.

"I honestly don't understand what's going on," Demmert said. "This is a person who is mad because things are not going her way."

On June 1 this year YKI closed because it was afraid it could not compete with Whole Foods, Jensen said. It re-opened July 3 under pressure from fishermen, most of whom are Yak-Tat Kwaan shareholders.

• Tara Sidor can be reached at tara.sidor@juneauempire.com.



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