Nova Scotia lobster industry facing headwinds after Clearwater exit from live shipping
Processors, shippers say they need to figure out how to reduce risks, including stiff price competition
Those who work in the seafood processing and shipping industry in Nova Scotia say they were surprised by Clearwater Seafoods' decision to exit the live lobster business.
But they also say it's a sign from a giant that those remaining in the industry need to figure out how to stabilize the economics of it.
"It's a bit of a wake-up call for arguably the leading company to exit lobster, but it will also mean we can individually look at things and tweak many aspects of our business model," said Stewart Lamont, managing director of Tangier Lobster Company, a competitor to Clearwater.
"Fortunately, we still have a captive international audience. Clients in Europe and Asia and the Middle East want to buy our lobster."
Clearwater is widely considered a pioneer in the overseas live lobster market and employs about 1,100 people in Nova Scotia on fishing boats and in four holding and processing facilities.
On Wednesday, the company shut down its holding plant in Arichat, Cape Breton, and eliminated the lobster processing line at its processing plant in Lockeport in southwestern Nova Scotia.
That resulted in layoffs for an estimated 150 workers.
The company says it intends to focus its efforts on processing and freezing shellfish and other seafood on ships at sea.
The live lobster business is facing strong headwinds, including lower-quality catches, logistical challenges with keeping the shellfish alive during transatlantic flights and stiff price competition among processors and shippers, Lamont said.
He said while Clearwater's decision came out of the blue, it's understandable.
"In one respect it surprises me, but in many other respects it's not surprising at all," he said.
"[Live lobster] has been an excruciatingly difficult part of the seafood sector to achieve return on investment in the last few years."
Lower-quality lobsters have a higher mortality rate, making them risky to ship around the world, Lamont said.
And the industry itself has driven down margins.
Margins 'not a Clearwater issue'
"We're paying prices due to extreme competition that don't reflect the marketplace and fishermen are receiving $15 a pound all in at the moment, when the marketplace really doesn't permit or allow that," Lamont said.
"So this is not a Clearwater issue. This is an industry-wide issue in the lobster sector and on top of everything else, of course, we have the risk and the threat of tariffs in the weeks or months ahead."
Allan MacLean, chief operating officer for Louisbourg Seafoods and president of the Nova Scotia Seafood Alliance, said world markets are uncertain and the possibility of tariffs is not helping.
But he said price is one of the biggest factors affecting the industry and it's not up to government to fix it.
"You may buy a lobster today and two days later that lobster is worth $2 less," MacLean said.
"The industry has to be much better organized to deal with this and the industry's got to get together and figure out how we can reduce some of this risk.
"It's the backbone of many of the coastal communities here in Nova Scotia and it's a key economic driver, but I think we as an industry, we've got to get a lot smarter."
Clearwater has said it is in the process of selling its Arichat holding facility to an unidentified experienced local operator.
MacLean said just because Clearwater couldn't make a go of it in the live lobster business doesn't mean no one can.
"People will make these business decisions based on the markets that they have," he said.
"But it's going to be a big investment and in this kind of shaky economy, it's one that presents, I'm sure, a lot of risk."
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With files from Kyle Moore
