The tuna processing plant in Majuro on the Marshall Islands was hit with a series of payless paydays from June through August and, in early September, the factory shut down and remained closed. The crisis at the processing plant is forcing the company to consider halting its current processing-which cleans, cooks and freezes skipjack tuna for canning in American Samoa-to move into fresh-frozen steaks and other higher-value fish products.
The plant-owned by PM&O Lines President Robert T. Colson and a group of private investors, and known as the PMO Processing plant-was the largest private employer in Majuro with more than 600 employees and an annual $8-to-$9 million injection into the local economy. But it's never made a profit. As the plant shut down in September, PMOP management asked the government for money to make payroll. But a major issue confronting the government, which through its Marshall Islands Marine Resources Authority (MIMRA) guaranteed a $2 million loan from the Bank of Marshall Islands for the factory to start, is how much to keep pumping into the plant. As the first payless paydays hit, MIMRA agreed to refinance the loan, injecting $300,000 into the plant. To get the $300,000, PMOP agreed that all revenues from the sale of processed fish to StarKist in Pago Pago would be returned to Majuro. But officials in Majuro familiar with the operation say that in late July only 60 percent of the revenue from a shipment of tuna worth $190,000 was returned, while in June, although more than $200,000 in shipments went out, no revenue was returned to the Majuro operation.
PM&O's Colson, who is based in San Francisco, told that the company is following the terms of the agreement, and “we have to pay a lot of bills from (San Francisco).â€
Colson dismissed speculation about connections between the money woes of the Majuro plant and the financial soundness of PM&O Line, which provides container-shipping service from the U.S. west coast through the central Pacific to Asia. The shipping company dropped its Saipan-Yap-Palau service late last year, and earlier this year reduced from three to two container ships, moves that Colson says have stabilized the shipping firm.
Complicating the picture further for the Majuro operation is the fierce price competition from Asian and South American canneries-who pay around 50 cents an hour compared to the PMOP's minimum of $1.50. The company may now shift operations to frozen tuna steaks that sell for as much as $10 a pound in the U.S. in contrast to the pennies for the pound for the tuna it processes.
Still, Majuro officials say the plant can work if all the revenue from processed fish sales is put back into the operation. Colson says, however, that through June, the plant suffered a net loss of over $860,000 and the investors have lost an average of $1 million a year since inception.
The tuna processing plant in Majuro has become one of the largest private employers in the country, but has been hit by hard times because of small tuna and price competition from Asian and South American canneries.
