Transcript
Page 1: BC Seafood Sector SWOT Analysis Industry Perspective Stuart Nelson Nelson Bros Fisheries Ltd

BC Seafood Sector SWOT Analysis

Industry Perspective

Stuart NelsonNelson Bros Fisheries Ltd

Page 2: BC Seafood Sector SWOT Analysis Industry Perspective Stuart Nelson Nelson Bros Fisheries Ltd

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SWOT Analysis

Large scale project A qualified team of consultants

commissioned by Province to report on the state of the BC seafood industry in 2003

Insights to form the basis for subsequent strategic planning… how to renew the BC seafood sector?

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Industry Perspective

Stu asked to provide industry perspective on the SWOT Analysis

Not knowing what “industry perspective” means, Stu retreated to the Nelbro archives

Maybe it would be interesting to review what industry has expressed to government over the years re: the state of the BC seafood industry?

This approach could lead to insights…if not… this presentation is in serious trouble.

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Presentation Outline

The more things change, the more they stay the same…

Profound BC seafood industry change Current state of industry Monty Python analogy Summary

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The More Things Change…

Need to be Market Driven

Managing to the market is required if industry is to be globally competitive and economically viable

Presentation to “Ottawa”, FCBC, March 1998

Focus must be on customer’s needs first… BCP Strategic Plan, 1995

Industry must retain the ability to be reactive to changing conditions from the retail market level right back…

A Status Report on the Commercial Fishing Industry of BCFABC, 1983

It all begins with a housewife asking her local grocer, “a can of BC salmon, please!”

Nelson Bros educational materials, 1959

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The More Things Change…

Recognition that Volume is not The Answer

The problem is exacerbated by reduced salmon abundance, however reduced abundance is not the cause…

Presentation to “Ottawa”, FCBC, March 1998

Fluctuations in wild salmon supply are overshadowed by increases in total salmon supply squeezing prices and margins

BCP Strategic Plan, 1995

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The More Things Change…

Industry Financial Performance

Financial performance of the the BC fish processing sector has been inadequate for close to a decade…

Gislason et al, 2003

Industry is in financial crisis Fisheries Management: The Bottom Line

The Business of Fishing in BC, FCBC, 1993

The commercial fishery is experiencing severe economic difficulties

A Status Report on the Commercial Fishing Industry of BCFABC, 1983

In 1969 the industry was insolvent… A Status Report on the Commercial Fishing Industry of BC

FABC, 1983

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The More Things Change…

Need Secure Access to Raw Material

Industry requirements: One fishery, one manager Secure access to raw material with clear

allocation rules Presentation to “Ottawa”, FCBC, March 1998

Business Requires: Access to high quality raw material at reasonable

prices Fisheries Management: The Bottom Line

The Business of Fishing in BC, FCBC, 1993

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The More Things Change…

Supplement BC-caught Fish with Outside Resources

To ensure adequate volumes, BC processors are increasingly sourcing raw material from outside the province

Gislason et al 2003

We get our fair share of fish from the Fraser River, but we also pack in fish from the outside… we even carry cohos from Ketchikan, Alaska… the price is cheaper there than in BC

Ritchie Nelson, Nelson Bros, 1930

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The More Things Change…

Need for Industry-Government Cooperation

What is needed is coordination between government and industry alike to follow through with present initiatives (fleet rationalization, SEP)

Unknown is whether or not gov’t and industry alike will have the perseverance to resolve our problems and design our future…

A Status Report on the Commercial Fishing Industry of BCFABC, 1983

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The More Things Change…

The World is Changing…

Historically, the performance of the industry fluctuated as a reflection of year-to-year variances in catch levels and levels of market demand… in more recent times, performance has been affected by numerous other factors…

A Status Report on the Commercial Fishing Industry of BCFABC, 1983

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Longstanding/Recurring Messages

Industry has expressed over and over: Need to be market driven, abandoning mere

volume orientation Need to access high quality raw material on

reasonable terms Need for government support/cooperation That the world is changing… more variables

and complexity Difficulty earning satisfactory financial returns

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So What’s the Point?

With so many consistent themes, it’s tempting to think: Industry is crying wolf… Industry is not changing & adapting – same

problems, different decade Industry lacks imagination

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Industry Change Has Been Profound

The BC seafood industry in 2003 scarcely resembles that of only a decade ago

Don’t be fooled because many of the faces are same…

Industry strategy, philosophy, and structures have been substantially transformed

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Signs of a Transformation

Harvester group hosting Seafood Summit… not processor group (there isn’t one)

Largest salmon brand in Canada doesn’t produce a scale (Cloverleaf)

Fishermen’s Union is involved in allocating quota to vessels (Groundfish Development Authority)

Groundfish processors share their business plans with Union, Communities, and each other! (Groundfish Development Authority)

Salmon processing – the only thing worse than not enough salmon is… enough salmon!

“too many boats chasing too few fish” is not on the list of industry challenges in a SWOT study

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More Signs of a Transformation

Women in top posts! Albion Fisheries. The Seafood Alliance. The BCSFA. SOKOA.

mid-40’s, thinning hair, thickening waist = young whipper-snapper!

Dogfish and pilchards are back… what’s next? whales and seals?

Halibut fisherman cuts-short the fishing trip… to effect repairs… to the satellite dish

Zero-martini lunches Fisherman writes a letter to the Minister… and knows what font

he used Rob Morley not a “suit”, but a “sweater”…

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BC Seafood Industry Adaptation

Although well-aware of challenges, industry has been unable to reverse a marked decline in revenues

Given lower revenues, there is no choice but to adapt

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Revenue-Earnings Pattern

Preferred – “Real Businesses”

Revenue & Earnings - Desired Pattern

Revenue Earnings Linear (Revenue) Linear (Earnings)

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Revenue-Earnings Pattern

Typical Seafood

Revenue & Earnings - Seafood Pattern

Revenue Earnings Linear (Revenue)

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Revenue-Earnings Pattern

BC Seafood in Recent Years

Revenue & Earnings - Recent BC Pattern

Revenue Earnings Linear (Revenue) Linear (Earnings)

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How Has Industry Responded?

Strategically

1. Cut costs – same activities, lower budget

2. Rationalize – fewer activities

3. Specialize – get rid of unprofitable endeavors

4. Consolidate – more of profitable activities

5. Diversify/Shift – get into new/different activities

6. Exit - if 1.-5. fail… get the hell out!

Emphasis on defensive strategies… growth & investment on the sidelines.

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How Has Industry Responded?

Philosophically

From: We’ll do it ourselvesTo: We’ll do what we can and outsource the rest…From: Margin orientation (speculate)To: Cash flow orientation (low risk, low return)From: Processing as key competitive functionTo: Processing as service to be purchased/sold

From: We’ll achieve growing revenues and earnings, just like “real businesses”

To: We’ll exploit opportunities as they arise, and not make any big mistakes…

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How Has Industry Responded?

Structurally Historically, big companies had all the stuff

People Fixed assets Access to Capital

As companies have rationalized, they have: Reduced staffing & fishermen levels Closed facilities, sold assets Lessened ability/willingness to risk capital

People, facilities, and assets don’t disappear, they become: Fish brokerage firms, consultants, independent fishermen Custom unloading, custom processing service providers

As “big companies” shed structure and reduce risk tolerance, opportunities open-up for others…

The “stuff” in the industry is now much more spread around…

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What Does the Industry Look Like Now?

Given strategic and philosophic responses by industry to a changing business environment, and resulting structural changes, what does the industry look like today?

How is it equipped to deal with the challenges and opportunities as identified in the SWOT?

Are we in better shape now than we were in the good old days?

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“The World has changed, and the BC seafood sector needs to change with it…”

Successful businesses and industries are those that can adapt and reposition themselves when circumstances change…

By this measure, we’ve done a great job… lot’s of repositioning in light of changed circumstances…

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Industry-in-General Challenges in Adapting to Changing Business Conditions

A lack of leadership, cohesion, and the will to respond to change

Focus on the short term to the detriment of long term strategic planning

Production inefficiencies Neglect of research and development, product

development, and investing in human resources Lack of attention to changing consumer needs Inefficient and/or inflexible government regulation

Guilty on all counts…

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Compared to Past

BC Seafood Industry Today Is:

Nimble… able to respond to changing circumstances

Opportunistic… able to exploit emerging opportunities

A network of industrialists and service-providers

Collectively, serving customer needs

Small… more players, and the big ones aren’t as big

Positive cash flow vs. strong margins

Fractured Fragile – prosperity can

be easily undermined Undercapitalized – capital

on the sidelines…

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An Obvious Analogy:

Brave Knight as BC Seafood Industry

Brave Knight confronts & prevails over traditional seafood industry business environment…

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Brave Knight as BC Seafood Industry

Brave Knight confidently prepares to deal with a new, complex business and regulatory environment…

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Brave Knight as BC Seafood Industry

Brave Knight suffers a pretty nasty wound… but remains optimistic…

‘tis but a scratch!

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Brave Knight as BC Seafood Industry

Brave Knight is down to one digit… only one leg to stand on… but keeps fighting.

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Brave Knight as BC Seafood Industry

Brave Knight is but a trunk… defenseless… but his mouth still works!

Just a flesh wound…

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Making Sense of the Brave Knight Analogy

Different sectors of the BC seafood industry are at varying stages of health

The competitive environment grows increasingly complex

A supportive government/regulatory framework would be helpful… but an ambivalent or hostile one may prove fatal

Industry will invest to place itself on a firmer competitive footing… once the dismemberment has stopped…

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British Columbia Packers LimitedAnnual Report Highlights1977-1983

Year / $millions 1979 1980 1981 1982

Investment in Fixed Assets

12.6 28.5 9.4 16.8

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Government as Industry Supporter

From Western Grocer

magazine - 1961

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Summary

Many themes or challenges facing the BC seafood industry have been around for a long time, though the list grows ever-longer

The industry knows what it must do… Industry not crying-wolf when describing challenges… SWOT

Analysis has very effectively captured them After years of adaptation and rationalization the industry remains

vulnerable to a hostile operating and regulatory environment Industry needs the support of government to successfully confront

it’s challenges Do not underestimate the amount of change the BC seafood

industry has undertaken… or the scope of the challenge to “heal” certain sectors

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No Flesh Wound…


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