Monday, April 21, 2014
TENANTS HARBOR - At a time when most Maine lobster is processed in Canada, a young entrepreneur wants to turn the tide of the industry back toward the state with a new processing plant here.
Kyle Murdock, president and CEO of Sea Hag Seafood, left, and Ryan Jackson of Rockport Mechanical Inc. walk back to the processing plant after discussing the repairs needed to the pump house on Long Cove in Tenants Harbor on Monday. The pump house provides seawater for the plant to process lobster.
Photos by Tim Greenway/Staff Photographer
Kyle Murdock stands in front of lobster crates at the new plant.
Kyle Murdock, 23, who grew up on Monhegan Island, plans to have the Sea Hag Seafood plant running by Monday in the former home of Great Eastern Mussel Farms.
At first, Sea Hag Seafood will process as much as 20,000 pounds of lobster a day. The plant has the capacity to process 40,000 pounds per day -- 4.8 million pounds in a five-month season.
In comparison, Linda Bean's Maine Lobster in Rockland, the state's third-largest processor, handles roughly 4 million to 6 million pounds a year.
Despite his youth, Murdock is all business. He knows, down to the penny, what he can pay for lobster to keep the plant profitable, and knows that his profit margin depends on the one-quarter to one-half gram of lobster meat on the end of the tail.
"Mishandling the product in the slightest can eliminate profits," he said. "This business is all about the margins."
With his father, brother and uncles all working as lobstermen, Murdock grew up in the industry and worked as a sternman.
So starting a lobster processing plant -- and ditching his studies of physics and differential mathematics at Worcester Polytechnic Institute -- felt like the right thing to do for the industry and Maine.
"Maine has a processing problem," Murdock said. "I realized how much help the industry needed."
Sea Hag, which uses the name of Murdock's father's boat and a restaurant that his parents once owned, is on seven acres of waterfront on Long Cove in Tenants Harbor.
Murdock said he paid $455,000 for the property and spent another $350,000 renovating the long-vacant facility and installing equipment.
He assembled financing from private investors, a bank loan and Community Development Block Grant funds, got a grant from Efficiency Maine to install energy-efficient equipment, and got tax credits through the state's Seed Capital Tax Credit program.
Sea Hag Seafood is due to open in the wake of a battle over prices that Canadian processing plants pay for lobster, and as lobstermen get nearly historic low prices for their catch.
Earlier this month, angry Canadian fishermen blocked trucks carrying Maine lobsters to Canadian processing plants, saying the price was too low. The protests shut down several lobster processors for days, until the processors won a 10-day injunction against the protesters.
Late last week, the Maritime Fishermen's Union, which represents New Brunswick's lobstermen, reached a deal to ensure that Canadian lobstermen will receive $3.50 per pound for lobster from New Brunswick's processors.
"Canada always has a lot of drama. The lobstermen always strike before the season starts," Murdock said. "It's a publicity stunt."
Seventy-five percent of the lobster catch in the United States and Canada gets processed, rather than sold live, and Canada controls more than 90 percent of the processing market, according to the Lobster Institute at the University of Maine.
Murdock wants to ease Maine's dependence on Canada by adding capacity in the state. "The buying stations and fishermen are desperate for a place to sell," he said.
He says Sea Hag Seafood can compete against Canada's 32 processing plants, which receive government subsidies, because the Maine lobster season is longer and he will have lower trucking costs because he's closer to the Maine catch.
If the plant gets started next week as scheduled, Sea Hag Seafood will break even this year, "and maybe turn some form of profit," Murdock said.
Sea Hag Seafood will rank behind Maine's three largest processing plants: Cozy Harbor Seafood in Portland, Shucks Maine Lobster in Richmond, and Maine Lobster in Rockland.
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Kyle Murdock, president and CEO of Sea Hag Seafood, walks to the pump house on Long Cove in Tenants Harbor on Monday. Behind Murdock is the Sea Hag Seafood processing plant.
Tim Greenway/Staff Photographer