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For Generations of Alaskans, a Livelihood Is Under Threat

Something is broken in the economics of the state’s fishing industry and the communities that have long depended upon it. Can Washington come to the rescue?

Trenton Clark, captain of the F/V Liberty, fishes outside Metlakatla, a community that revitalized its fish processing plant this year with help from a startup company. Credit...

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By Lydia DePillis

Photographs and Video by Ash Adams

Reporting from Petersburg and Metlakatla, Alaska

• Aug. 31, 2024

Petersburg, Alaska, is as pretty a seaside town as any you’ll find across the filigree of fjords and foggy islands that make up the state’s maritime coast. Statuary and floral designs evidence its proud Scandinavian heritage, and bald eagles soar across the narrow strait that separates it from a national forest. It doesn’t have room for the giant cruise ships that disgorge thousands of passengers into Ketchikan and Juneau, but it is perfectly situated for its sustaining industry: fishing.

Norwegian fishermen settled in Petersburg in the 1800s, finding it an ideal jumping off point to pursue salmon, crab and halibut. Hundreds of vessels now dock in there and sell their catch to the two major processors, which head and gut the fish before either canning or freezing it on its eventual path to the dinner table. One of the plants was built more than a century ago, and its owner is the town’s largest private employer.

Few people know the business better than Glorianne Wollen, a fisherman’s daughter who operates a large crab boat in a partnership and also serves as harbor master, working from a tiny desk tucked into a bustling office with a little dog at her feet. A Petersburg native, she’s seen a lot of change.

“In the good old days, the town was very alive with discussion, everybody was involved so everybody had a stake, everybody knew what was going on, things happened in real time,” Ms. Wollen recalled. That buzz receded as boats got bigger and more efficient, pursued more species and stayed on the water for more of the year to maximize their investment.

“It takes two guys to do what 20 used to,” she said. “There’s just fewer of us.”

Last year, however, the local industry faced as deep a crisis as anyone could remember — even those who had seen the ups and downs of fishing for generations.

It wasn’t a lack of fish. With a few exceptions, the runs were nearly as good as they’ve ever been. But toward the end of last summer, nobody wanted to buy them. Processors, having already slashed by half the prices they paid fishermen for salmon, started turning them away entirely.

The reasons are complex. Over the last few years, the $6 billion Alaskan wild seafood market has been mired in a mix of geopolitics, macroeconomics, changing ocean temperatures and post-Covid whiplash that piled on top of long-building vulnerabilities in the business model.

Inflation-weary consumers turned from fish to less expensive protein sources like chicken. The strong dollar and the collapse of the yen made it difficult to sell to Japanese consumers, who have been eating less fish and high-value roe than generations past. And Russia — straining under sanctions to finance its war in Ukraine — began dumping salmon and pollock, the white fish used in fish sticks and filet-of-fish sandwiches, into the U.S. market.

Even for an inherently cyclical industry, the convergence of problems — decreasing industry revenues by $1.8 billion and state and local tax collections by $269 million, according to the Commerce Department — has no historical parallel.

The Ranks of Alaska Fishermen Are Thinning

Across all fisheries, the number of people holding permits who harvest fish commercially each year has fallen precipitously since the 1980s.

“We’ve never seen everything bottom out at the same time,” said Jeremy Woodrow, chief executive of the Alaska Seafood Marketing Institute, a state agency that operates with public and private funding. “Because of all these different economic factors coming together, all the levers have been pulled down.”

Prices rebounded slightly this year, but the economic pressure remains on everyone from the single-handed gillnet fishing boats to the ships that scoop pollock from the Bering Sea. In the past year, some of the processors sold or idled their plants; another entered receivership.

Now the industry and the communities throughout Alaska that depend on it are trying to figure out a path forward. Fish processors are facing a globalization shock not unlike the one that began to decimate American manufacturing in the 1980s, and they want help to avoid a similar fate.

The federal government has come to their aid in some ways, such as blocking Russian seafood and backing new processors that propose to operate more efficiently. In March, the Alaska Legislature formed a commission to propose ways to rescue the seafood industry, with recommendations due by next year.

In Petersburg, the upheaval has even shifted the historically contentious relationship between independent fishermen and the larger corporations that decide what they are paid.

“It really sends shock waves through the harvesting sector when you see processors go under,” said Nels Evens, the director of the Petersburg Vessel Owner’s Association. “In the last year there’s been a lot of coming into the middle, everyone realizing we all need to survive in order for the industry to survive.”

A Slow-Building Storm

The state of Alaska was founded, in part, on the question of who should profit from the region’s watery bounty.

At the turn of the 20th century, fish processors put traps at the mouths of rivers to catch fish as they returned to their spawning grounds. Canneries were built to feed war efforts and a baby boom. But this indiscriminate harvesting method depleted fish stocks, depriving Alaskans of both their food supply and their livelihoods.

The state’s 1959 Constitution outlawed fish traps after advocacy from Alaska’s fishing communities, who revolted against the Seattle- and San Francisco-based companies that controlled the processors. Alaska’s salmon would instead be harvested by a fleet of yeoman skippers, their boats restricted in size and sophistication.

That purposeful inefficiency spread the wealth that came from the ocean. In the 1970s and ’80s, as a result of careful management and new, state-sanctioned hatcheries, stocks rebounded enough to allow fishermen a decent living.

Salmon Prices Have Been Mostly Flat for Decades

Adjusted for inflation, prices that fishermen are paid per pound of salmon they deliver to processors rose slightly in the 2010s and took a big hit in 2023.

In the 2000s, however, the fisheries confronted an existential challenge: farmed fish, which could be grown year round, without natural fluctuations or a journey from small boat to processor. It’s hard to compete with such consistency in the wild, with high fixed costs and a limited time to deal with what could be either massive volume or a dud of a season.

That didn’t stop a new competitor from getting into the market in 2007. Silver Bay Seafoods, a company started and largely owned by fishermen, built modern plants that could deliver higher-quality frozen fillets. That helped to boost prices and allowed the company to offer other amenities, like health insurance for its shareholders. But it also expanded processing capacity, and within a few years, it started to look as if too many processors were chasing too few fish .

The pandemic initially brought some relief. Stuck at home with more expendable income, Americans bought more seafood. Annual per capita consumption of seafood jumped to 20.5 pounds in 2021, the highest level on record, according to the Commerce Department. But going into 2022, surveys by the food industry association FMI found, inflation-weary consumers got thriftier. It was poor timing for the fishing industry — 2022 also brought an enormous sockeye salmon catch in Bristol Bay.

That created a nasty hangover in 2023. To make matters worse, millions of pounds of pollock and salmon from Russia started showing up on the market . Unlike Alaska, Russia isn’t burdened by restrictions designed to maintain a small boat fleet and prevent overfishing.

Even in the pollock fishery, which is regulated by the federal government and allows larger vessels in order to operate on rough seas farther from shore, Americans are at a disadvantage: By law, their boats must be constructed in the United States. Shipyard capacity is scarce and costs are high, preventing U.S. fishing companies from investing in state-of-the-art equipment that would lower operating costs.

That’s a problem for some private equity investors who bought into the industry in recent years, but it’s also a threat to the Alaska Native communities that have rights to a share of the pollock quota. Harvesting it employs tribal members and funds community services.

Eric Deakin is the chief executive of the Coastal Villages Region Fund, which supports 20 communities on Alaska’s far west coast. Last year’s plummeting pollock prices drained the organization’s reserves, and this year isn’t looking any better.

“If we don’t see some light at the end of the tunnel by the end of next year, we’re going to have to make some deep cuts,” Mr. Deakin said. Anything from job training to transportation equipment could be on the table.

The challenges haven’t stopped. High interest rates weighed on processors, which have to borrow to pay fishermen before they sell the product. Retailers shifted to just-in-time ordering, forcing the factories to hold inventory in freezers longer.

Last year Trident, the country’s biggest seafood company, announced it was selling four plants. Earlier this year Peter Pan Seafoods said it could no longer operate and OBI Seafoods mothballed two plants, leaving some communities with no good options for marketing their catch. Silver Bay picked up several facilities, but even some of its fishermen owners are uncomfortable with the way the industry has consolidated.

“The more buyers there are, the more people can pay for your fish,” said Mitch Eide, a Silver Bay shareholder who fishes across southeastern Alaska. “Even if it is our company, we don’t have to have one company dominating the market.”

Adding to the uncertainty, the Commerce Department is considering whether to list king salmon as threatened or endangered, a move that could make it more difficult to target even the more abundant species. Climate change is also making seasons harder to forecast — not an inviting environment for long-term capital commitments.

“To invest millions to automate your plant, you better know that there’s a stable market 10, 20 years out,” said Quentin Fong, a seafood marketing specialist with the University of Alaska-Fairbanks. “There’s less and less predictability in terms of supply, so I think some of the companies are trying to pull back.”

Fresher Fish, Lower Costs?

Some processors are trying to make an end run around the industry’s increasingly tough math, this time with an assist from the U.S. Department of Agriculture.

One of them, Circle Seafoods, is incubating in a Native community on Alaska’s far southeastern tip called Metlakatla, on a sparsely-populated island accessible only by ferry, seaplane, and, of course, by fishing boat.

MAIN POLLOCK

Bristol Bay

MAIN SOURCE OF

SOCKEYE SALMON

Pacific Ocean

CIRCLE SEAFOODS’

Gulf of Alaska

The project is the brainchild of Pat Glaab, who designed and built processing plants for other companies before striking out on his own. Circle landed nearly $22 million in U.S.D.A.-backed loans to build a mobile processor on an old oil barge in Washington State, and wanted to start operating in Alaska while it was under construction, to work out kinks in its processes.

Conveniently, the Metlakatla Indian Community had an idle processor that it wanted to revitalize. When it was built 100 years ago, the Annette Island Packing Company was supposed to sustain the town, through both employing residents and buying fish from the local fleet. Its longtime manager retired and another operator pulled out in 2018, forcing the town’s fishermen to sell their catch in nearby Ketchikan.

Circle’s gambit is predicated on delivering better-quality salmon at lower cost than other processors, generating higher demand at an affordable price. The key, according to Mr. Glaab, is to rapidly deep-freeze the salmon whole, preventing any deterioration.

A tall, always-moving former fisherman, Mr. Glaab lives on a boat tied up to the plant’s pilings and works on the “buy line” — where fish are pumped out of ice-filled holds on boats onto a conveyor belt to be sorted — alongside a group of younger staff. They’re there late at night and early in the morning, clad in rubber suits to keep out the fish slime, corralling slippery pinks and chums and sockeyes into separate bins and then on to thousands of freezer trays.

Mr. Glaab’s phone is full of photos of fish slabs in various states of freshness, with some that were frozen and thawed improperly showing large gapes in their flesh. “If you could take that fish and make it really valuable, there’s no single thing you could do that would be better for the economy of Alaska,” Mr. Glaab said.

The approach requires less labor on site than other processors. It also smooths the production cycle so workers can be employed year round, rather than brought to remote locations for a few months in the summer, which is very expensive.

When Circle launches its barge next year, the plan is to turn the upgraded Annette Island plant back over to Metlakatla. Having a local processor would provide employment and keep profits local — the kind of asset that many Alaska towns are worried they could lose.

“We could be buying the majority of our fish again, which would be a huge benefit,” said Albert Smith, Metlakatla’s mayor. After being elected three years ago, he sold his own boat to his son, who now fishes for Circle. Eventually they might buy fish from all comers, Mr. Smith said, but “first and foremost we’ve got to take care of our own and get them the best price possible.”

There is a lot of hope for this kind of model. But it’s not a proven solution.

Another company, Northline Seafoods, has a similar approach. It launched its new barge in Bristol Bay this year, with the help of its own $42 million loan backed by the Agriculture Department. But Northline suffered an electrical fire that briefly halted operations, and many fishermen who had been selling the company fish returned to other buyers.

Circle Seafoods hopes to build up to a fleet of barges to operate at scale. That would probably help fishermen, but also challenge land-based processors that are already struggling. If mobile processing takes off, it could also mean fewer jobs in places like Petersburg.

According to Mark Working, managing partner of the Seattle financial advisory firm Zachary Scott, that might be a necessary trade-off.

“You can’t change things and keep it the same,” said Mr. Working, who facilitated Northline’s financing . “It’s a competitive world. If Alaska doesn’t figure out how to get that great quality product to the consumer, it’s going to cease to exist anyway.”

‘We Don’t Get the Help That They Do’

Even if the technical challenges of consistently delivering perfect fish to market are solved, that leaves international competition, aging capital-intensive infrastructure and consumers who still predominantly opt for other animal proteins — despite, as the fishing industry eagerly points out, seafood’s advantages for human health and the climate.

In recent months, the White House banned Russian fish from being sold in the United States, blunting further price declines. The federal government also bought hundreds of millions of dollars ’ worth of salmon and pollock for food assistance programs to clear out unsold inventory.

But many fishermen and their processors want the federal government to go further than a few food purchases and one-off loans. Historically, the seafood industry hasn’t received the attention bestowed on manufacturing, and has fallen between the cracks of regulators at the Commerce Department and subsidies housed at the Department of Agriculture.

“We compete in the grocery store with both plant and animal producers, and we don’t get the help that they do,” said Julie Decker, president of the Pacific Seafood Processors Association.

If the industry is to move forward on a firmer footing, she argues, it must be more integrated into the safety net that was created for American farmers to maintain domestic food production through the vicissitudes of markets and seasonal conditions. That could mean cheap financing to help processors upgrade their facilities, more funding to market Alaska wild seafood both at home and abroad or higher trade barriers for seafood coming from places like China.

Stabilizing processors is one thing. But fishermen have their own difficult economics to contend with: Fuel, insurance and crews have all gotten more expensive in recent years. Unlike farmers, they don’t have access to subsidized crop insurance that smooths out the bad seasons. Fisheries law provides for aid payments when stocks are disastrously low, but they have taken years to arrive.

Without some help, many fishermen are wondering whether it’s worth it to stay in a business that typically is passed from father to son.

Ross Avila, 44, is a second-generation fisherman who trolls for coho and king salmon. Unlike some other stocks, those have declined in recent years, shortening the periods over which they’re allowed to fish. There’s also only one buyer for trollers in his home port of Ketchikan, and the prices have been disappointing.

“A lot of guys are starting to look at this like it’s a really expensive hobby,” said Mr. Avila, while painting the bottom of his boat, the Patsy. “The industry has changed a lot in the last five years. The cost of everything goes up, and the reward at the end isn’t as lucrative as it could be.”

What Comes Next?

Petersburg has saved its fishing industry before.

In 1965, when the local plant was set to close, fishermen banded together to buy it . They named the business Icicle Seafoods, and it grew to include many facilities and vessels across the West Coast.

But the factors that will determine the ongoing health of the seafood enterprise feel far above their heads.

Icicle was bought by a private equity firm in 2007, and then sold in 2016. In 2020, it merged with the owner of a shuttered Petersburg plant and became OBI Seafoods. The curtailed operations last summer meant fewer workers in town spending money, and delayed payments for fishermen.

In late 2023, Trident announced it was selling Petersburg’s other major plant. A Ketchikan-based processor bought it, but the turmoil has put residents on edge.

Tom Westhoff used to work for Icicle, and a few years ago bought Coastal Cold Storage in downtown Petersburg, catering to a tiny minority of fishermen who market their fish directly to consumers. That can bring higher margins, but retail is a lot of extra work, and the market is limited. Most fishermen are stuck with the prices the commercial processors offer.

“That’s the question: whether the way the industry is structured can afford to pay people to be fishermen. At this point, no,” said. Mr. Westhoff, a ponytailed man who manages a small team hauling in silvery salmon and snowboard-size halibut. “Even some young guys who are quite good at it are driving a truck, because it’s not worth the work.”

The fishing downturn has drained some of the town’s wealth. The local boatyard has been quieter, as captains put off nonessential maintenance. More “for sale” signs have gone up on boats across the docks, but few people are buying, making it difficult for older fishermen to cash out and retire. Lower fish prices meant less tax revenue flowing to the borough and to the harbor.

Petersburg’s 100-year-old grocery and hardware store, Hammer & Wikan, has seen sales drop, especially for the kinds of food and equipment that fishermen usually take with them on trips.

Nobody thinks fishing is going away. But Jim Floyd, the store’s general manager, worries the industry will not fully recover. As president of the local Chamber of Commerce, he’s seeking other ways for Petersburg to keep thriving.

“I told everyone it was going to be a tough year this year, and I don’t see it getting better next year,” said Mr. Floyd, sitting in a board room at the back of the cavernous hardware store, stuffed with both boating gear and tourist wares. “We just need to shift the economy. We can’t be so dependent on one thing.”

An earlier version of this article misstated the surname of the director of the Petersburg Vessel Owner’s Association. His name is Nels Evens, not Evans.

An earlier version of this article misstated Tom Westhoff’s relationship to Coastal Cold Storage. He bought it a few years ago, he didn’t found it.

An earlier version of this article described the Alaska Seafood Marketing Institute incorrectly. It is a state agency that operates with public and private funding, not a nonprofit.

How we handle corrections

Lydia DePillis reports on the American economy. She has been a journalist since 2009, and can be reached at [email protected]. More about Lydia DePillis

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Juneau businesses argue against ‘Ship-Free Saturday’ ballot proposition

An advocacy group is telling Juneau residents to vote no on a proposition set to appear on the local ballot this fall, which would ban large cruise ships on Saturdays starting next year. 

The Greater Juneau Chamber of Commerce hosted a forum Thursday featuring a panel of executive members of the group Protect Juneau’s Future sharing why they believe the proposition is bad for the local economy.

McHugh Pierre is the president and CEO of Goldbelt Incorporated, a local Alaska Native corporation. The company owns popular tourist attractions like the Goldbelt Tram downtown and has invested millions into a gondola project at Eaglecrest Ski Area. 

“I don’t want to be told when to do things and when not to do things, because when does it stop and start? Is it just visitors on Saturdays? Is it truck drivers on Tuesdays? Is it cultural storytellers on Wednesdays?” he said. “I don’t like any of it. It’s bad, and we just need to vote against it.”

Protect Juneau’s Future has been actively campaigning against the initiative from the get-go. They have orange signs hanging around town and ads on social media that discourage people from voting for it.  

Pierre and other members of the group, like Holly Johnson with Wings Airways & Taku Glacier Lodge, said their businesses rely on tourism. 

Johnson said even just taking away one day out of the week would be a major financial blow for her. And, it could get the city into hot water legally.

“This is not about Saturdays. It will never be good enough. All days of the week would never be good enough for the people that are really pushing this,” she said. “But they tacked on to something that was really emotional.”

But, the proposition does have support — it made it onto the ballot after a group of  local activists gathered more than 2,300 signatures  in favor of it this spring.  

Karla Hart is one of the activists who led the effort. In an interview in July, she said the number of signatures shows how much people in Juneau want to limit the growth of tourism. 

“I think it says that Juneau really seriously wants some hard stops on cruise industry impacts in their lives and that they haven’t received that from the city Assembly. And that they don’t think that those hard stops are coming unless citizens take action,” Hart said.

Local election ballots will be mailed to residents on Sept. 12. The last day to vote in Juneau’s by-mail election is Oct. 1.

Clarise Larson, KTOO - Juneau

Related articles more from author, ketchikan police chief to resign in plea deal over off-duty assault charges, homeless students in alaska, nationally could lose access to added aid, anchorage man dies in plane crash near mcgrath.

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