Relocating Canneries Would Be A Sound Business Decisionff

The U.S. Senate assessment report calculates that the two Samoan tuna canneries will fully relocate elsewhere within four years if the IRS section 936 is not extended.

However, COS Samoa Packing’s general manager Herman Gebauer told Samoan news sources that all options will have to be explored first and no final decision has been made, when and if the tax credit expires January 2006.

”We have to wait and see what will happen,” said Gebauer. “We can’t go without knowing the impact of it. There are a lot of options our corporate people are looking at which I am not privy to.” He said additional discussions, with ASG for example, would be held in January, to see what other avenues would need to be pursued.

Starkist officials were not immediately available for comments.

The Senate report predicts that the canneries, within four years after termination of the tax credit, “will have fully transplanted their operations to more economically conducive locales.”

”This is understandable as a sound business decision” because termination of the Section 936 “will significantly alter the rate of return on investment,” it says.

An argument can be made that the canneries can not afford to close local operations because of their existing investments, but the report says “conglomerates such as the two canneries forecast and project income earnings far into the future.”

Based on decision modes practiced by huge companies, the report contends that “the canneries will not hesitate to close shop if the economics are no longer favorable measured by the achievement of predetermined rate of return on investment.”

The report also provided an analysis of the post  IRS Section for American Samoa when the canneries complete its relocation elsewhere by 2010, causing the huge unemployment rate, effecting not only those who used to work at the canneries but companies that dependent on the canneries.

”The size of economic and social devastation is dependent on the amount of the assistance received from the federal government to supplement lost economic activities,” it says.

However it says that the estimated 9,800 jobless individuals, means many families will be without money to purchase basic necessity of life and those living off-island will have to increase their financial support.

While this money will provide some relief, the report said it is not sufficient to purchase food and defray accrued indebtedness. Therefore, vehicles, homes, land and other valuable personal assets will be seized to cover loan defaults.

The report also predicts that some crimes will definitely be on the rise and since insufficient funds are available to the government to maintain the required number of public safety officers, the protection of property and life is compromised.

”Domestic and family violence will erupt uncontrollably,” according to the report, noting that the quality of health care services will be relentlessly compromised. It also states that a mass out-migration will be observed, air and surface transportation scaled back to the 1960 era and the majority of American Samoa residents will revisit traditional forms of cooking (e.g. kerosene burner or firewood as cooking fueling), lighting, washing, traveling and even diet.

”From a political perspective, the United Nations will certainly assess American Samoa's debilitated status,” the report predicts. “It will also examine the possible causes which propelled American Samoa towards this state.”

”What ever the outcome of the United Nation's assessment, the US will bear the brunt of the criticisms that will result for allowing one of its longest protectorates and insular possession to plummet to such social economic and political devastation,” it says.