Thursday, April 24, 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.
Maine Coast Shellfish in York also processes lobster. Two other plants closed earlier this year: Live Lobster in Gouldsboro and Portland Shellfish Co., which was closed by federal regulators in April for "numerous violations" of federal laws and health regulations.
Though doubters contend that Murdock will have a tough time getting enough lobsters to keep his plant running, or enough connections among dealers and buyers, Murdock said he's got contracts and plenty of suppliers.
"Having grown up in the area and the industry, I have a lot of connections with dealers and lobstermen," he said.
Still, he has had his challenges.
Finding workers continues to be a challenge, with the plant due to open in less than a week. He needs at least 35 to 40 workers to get the plant going. As of Monday, he had about half that many.
Eventually, the plant could have more than 100 workers. But getting to that level will be tough.
Murdock will pay $8 an hour to start, with shifts running eight to 10 hours a day, six days a week. Minimum wage in Maine is $7.50 an hour.
"Finding employees has turned into a little bit of a problem," Murdock admitted. "We've got some good people, people who can work and learn. Nobody in this area has done processing before -- everyone has to be trained."
Murdock will employ some inmates from the state's Bolduc Correctional Facility in nearby Warren, and workers from an employment firm.
The unemployment rate in Knox County was 6.4 percent in June, below Maine's overall rate of 7.5 percent.
"We've had quite a few applicants, but we need people who are willing to work six days a week," Murdock said.
Linda Bean made similar comments last week, saying it's difficult to find people to work for $8 or $9 an hour processing lobster.
"We need all kinds of processors in Maine," Bean said, when asked about the pending opening of Sea Hag Seafood. "We need more plants but we can't sell the product for enough to get incentivized to spend $2 million on a plant, compliance and labor."
"It does speak to a broken welfare system," Murdock said. "A lot of Americans are not willing to work for minimum wage."
Regardless of low lobster prices, the expectation of another round or two of shedding -- and therefore more soft-shelled lobsters -- and the cost of finding workers, Murdock thinks Sea Hag Seafood can make a go of it.
He said, "It's all lobstermen have been talking about for years: 'We need more processing here in the state where we catch.' "
Staff Writer Jessica Hall can be contacted at 791-6316 or at:
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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