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Construction site pause means layoffs at Grieg Seafood's land-based salmon facility

Perry Power, manager of human resources and media relations for Grieg Seafood Newfoundland.
Perry Power, manager of human resources and media relations for Grieg Seafood Newfoundland. - Barb Dean-Simmons

Laid off construction workers put down their tools on Wednesday at the Grieg Seafoods NL site in Marystown.

They were put out of work when the company announced it was pausing building activity at the land-based salmon aquaculture site, citing market uncertainty because of COVID-19.

Perry Power, Human Resources Manager at the Marystown site, told SaltWire the workers who were laid off Wednesday are employed by Grieg NL Development, the company overseeing construction of the land-based salmon hatchery and growing facility.

Power couldn’t say exactly how many people would be laid off.

There were 193 people employed in the build process.

Power said some workers will remain on site to complete the smoltification building, which is nearly finished.

But the next building on the ‘to do’ list, the 10,000-square-feet post-smolt building, is being delayed.

In a press release Oct. 21, Grieg Seafood NL said resumption of construction at the land-based site will depend on global salmon markets.

The construction site at Marystown, NL, where work has been underway this year to build a salmon hatchery and nursery for Grieg Seafoods NL salmon farming operation. - Submitted
The construction site at Marystown, NL, where work has been underway this year to build a salmon hatchery and nursery for Grieg Seafoods NL salmon farming operation. - Submitted

Knut Skeidsvoll, Regional Director of Grieg Seafood Newfoundland, said, “The covid-19 pandemic has affected the entire global economy in a way that nobody could foresee. The salmon markets are heavily impacted, causing lower prices across the board. As a responsible company, we see no other choice but to reduce the pace of investment, and as a result we have taken the difficult decision of postponing the construction of the post-smolt building.”

Skeidsvoll said other components of the Grieg Seafood NL farming project will continue on schedule.

Installation of marine sites has started and will continue as scheduled for 2020 and 2021.

And the first harvest of salmon will occur in 2022-2023, as planned.

“Healthy fish are growing in our tanks in the land-based facility and we will stock the first marine sites in 2021.” said Skeidsvoll.

The first harvest will occur in 2022/2023, where salmon will go to market according to our plans.

Power added there are 53 people employed with Grieg Seafood NL, working specifically with the aquaculture operation.

“We anticipate the requirement for long-term employees will continue,” he said.

These include biologists who will monitor the fish in the nursery and at sea, mariners who will tend to the sea sites and others involved in the process of growing and harvesting the salmon.

VOLATILE YEAR

This year has been volatile for seafood markets, according to seafood industry analyst John Sackton.

In a presentation to the Fisheries Council of Canada (FCC) annual general meeting on Tuesday, the analyst said the market for Canadian seafood could be uncertain in the months to come, depending on the outcome of the US election.

In the case of salmon, he said, pricing has been volatile due to shutdowns in the food service industry.

Most salmon exported to the US is shipped as whole fish, the preference for chefs in middle to high-end restaurants.

“That market collapsed due to the collapse of food service demand,” said Sackton.

The market price of whole salmon in the US also declined this year, although there were price spikes in July and September.

A couple of factors aided Canadian salmon exporters in 2020, added Sackton.

Producers in Norway and the UK were not able to get their products into the US because of COVID-related transportation and air cargo restrictions, and in September a strike by truckers in Chile halted salmon exports from that country.

Political uncertainty in the United States, particularly about the lack of agreement to extend a pandemic-related economic stimulus package, is also creating worry.

Out-of-work Americans have so far been able to get $600 a week, enabling them to maintain spending. Retail sales of seafood have held steady, providing a market for Canadian producers when COVID eliminated the restaurant trade.

If the unemployment benefits are cut, however, seafood consumption could take a hit.

“If Trump is re-elected to the White House and fails to produce a stimulus package or enact measures to reduce the spread of COVID, the economic downturn could be serious," Sackton predicted.

In Sackton’s opinion, stability in the US economy depends on a decisive win for Democratic presidential candidate Joe Biden, who has said he will provide a stimulus package to help the country deals with COVID-19.

POOR QUARTER

Greig’s Skeidsvoll said the US market is important to the company.

And the lower prices for salmon in 2020, and ongoing uncertainty, means the company has to make difficult decisions for the immediate future.

“We deeply regret that this decision will cause the loss of local construction jobs, especially as we know many families are already struggling due to the pandemic.

“We hope for a quick recovery of the economy both in Newfoundland and abroad,” said Skeidsvoll.

He added while the pause on construction will mean completion of the land-based components will take more time than originally planned, “it will not impact the final result.

“Grieg Seafood Newfoundland is here to stay and will contribute to jobs and economic development locally, as planned, over the years to come,” said Skeidsvoll.

“We want to thank the authorities, local suppliers, the local communities in the Marystown area and not least our fantastic employees, for the support and cooperation we have experienced during the pandemic.”

Skeisdvoll added the company will provide more updates as the project continues.

Grieg Seafood, a publicly-traded company on the Oslo Stock exchange, says it expects a third-quarter loss of about $20 million (US).

According to seafood industry publication Intrafish Greig’s share value is down about 18 percent, and the company recently halted trading on its shares.

In September the company decided to shut down its operations on the Isle of Skye, Scotland.

According to a press release from the company, 1,500 tonnes of salmon died at two sites in Skye, casualties of a jelly fish incident, causing an $8.5 million (British pounds) loss for the company.

The remaining three sites will be shut down after the salmon are harvested and Grieg plans to sell the Skye sites.

The company is also looking to reduce costs through the rest of 2020 and beyond.

The company indicated, however, it is still focused on its long-term objective to have an annual harvest to at least 150,000 tonnes of salmon from its operations by 2025.

And the aquaculture operation in Newfoundland plays an important role in that goal.

“With the acquisition of Grieg Newfoundland AS, we took an important step towards realization of the 2025 objectives,” the company said in its quarterly report. “The investment has a long-term harvest potential of 30-45,000 tonnes Atlantic salmon and includes long-term exclusive farming rights in Placentia Bay, a farmable area larger than the Faroe Islands. With proximity to the US East Coast, the acquisition reinforces our US market exposure and underpins the 2025 strategy to strengthen our position as a global leader in sustainable salmon farming.”

PROVINCE REACTS

Earlier this year the government of Newfoundland and Labrador announced it would provide a $30 million repayable loan to Grieg for the $250-million project.

Fisheries minister Elvis Loveless was not available for an interview on Wednesday morning, but provided SaltWire with a statement.

He said the department is assessing the situation to determine what the construction delay will mean.

“No money has flowed to the company at this stage, and it will only flow if and when milestones are reached,” said Loveless. At this point, there is no reason to think that money will not flow as this is a delay, not a cancellation. Grieg Seafood Newfoundland has assured me this is a painful decision based purely on global circumstances.”

Newfoundland and Labrador's Fisheries, Forestry and Agriculture Minister Elvis Loveless - File
Newfoundland and Labrador's Fisheries, Forestry and Agriculture Minister Elvis Loveless - File

He said he has been in constant contact with Grieg Seafood Newfoundland, and has been told the delay in construction will not impact core operations.

“While the post-smolt facility is intended to enable fish to grow bigger and have a shorter production time at sea, it is not critical infrastructure. Grieg Seafood Newfoundland assures us healthy fish are growing in their land-based facility and the first marine sites will be stocked in 2021 as scheduled, with first harvest in 2022/2023 and salmon going to market according to the company’s plans.”

The minister expressed optimism for the company’s Placentia Bay operation. 

“I am confident Grieg Seafood Newfoundland is here to stay and will remain true to its commitment to contribute to jobs and economic development locally for years to come.”

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