Cannery Economic Impact Study: 52% Unemployment If Canneries Close ff

A strong collaboration between private businesspeople and the local and federal government will be essential to build a stronger American Samoa economy, according to the consultants working on the ongoing Cannery Economic Impact Study.

Such collaboration will be especially important if the canneries were to close and throw half of American Samoa’s workers out of work.

Predictions of 52% unemployment if the canneries were to close were among the findings presented Thursday during a Chamber of Commerce meeting attended by more than 30 private sector leaders. The presentation was made by Malcolm McPhee and Associates, which was contracted by ASG to do the federally-funded study.

A public meeting on the study will be held on Wednesday, September 26, at 5:00 p.m.

The preliminary findings will be provided to the US Department of Labor, which has until the end of January, 2008 to submit to Congress a report on the impact of the new minimum wage program for American Samoa and Commonwealth of the Northern Marianas Islands (also known as CNMI, or Saipan).

McPhee said his group’s work “suggests that longer term recovery will require the best efforts of everyone including the Federal Government, the private sector and local government.”

He said the federal government’s influence on American Samoa’s economy in federal expenditures has been massive. As many dollars as the canneries spend in American Samoa, the group said the federal government spends three times as much, in the form of grants to ASG, social security payments, veteran payments and a host of other methods.

As important as those federal dollars are, federal policies may be even more important.

McPhee said there have been numerous recommendations by the Government Accountability Office (GAO), the American Samoa Economic Advisory Commission and Congress for a stronger federal role in territorial economic development.

”This has not happened as evidenced by the recent loss of the federal tax credit and minimum wage legislation. These issues might have been decided differently had there been such a federal policy,” McPhee explained. “I say ‘might’ because sometimes in heavy Congressional battles small interests sometimes get hammered. I am told of the old Samoan saying that when big trees fall, little trees get crushed. Some of these things may have happened in any case despite heroic efforts by the Governor and American Samoa’s Congressman. We hope to address this issue of federal policy in our work.”

He cautioned there are no “quick fixes” and it is not as easy as trying to identify a few industries and sending them invitations to set up shop in American Samoa.

”The identification of specific business opportunities is the role of the private sector, although sometimes government can suggest areas of opportunity,” he said.

According to McPhee, long term economic recovery or growth in American Samoa will require: accommodative federal economic development policies for American Samoa; accommodative local economic development policies and business climate for American Samoa; and an active and aggressive private sector business community in American Samoa.

Lewis Wolman, a former Chamber of Commerce president who is working with McPhee on the study, listed a set of advantages American Samoa offers possible investors, as well as disadvantages.

On the negative side, he cited statistics showing the low level of educational achievement in American Samoa and the negative publicity the territory received from the Daewoosa garment factory debacle.

He said the business climate here is “not welcoming”.

On the bright side, he noted the government has agreed to accept recommendations from the Chamber to reduce extra taxes now assessed on non-U.S., non-local invetors, eliminate the 44% “supertax”, and establishing a public-private Tourism Authority to replace the Office of Tourism.

Another example of collaboration is the strong support the Chamber has given the government for Governor Togiola’s fiber optic cable initiative.

Wolman listed American Samoa’s advantages that could attract new businesses in an effort to replace or supplement the canneries. He said the advantages are “impressive and real”.

For example, he noted that the territory has a 50-year history of major industrial; harbor facilities adequate for trade and commerce; a good airport with an extended runway; the stability of being US soil under the protection of the US flag; preferred access to US markets; “Made in U.S.A.” labeling; a workforce that speaks English well enough to entice the call call centers looking to set up here; lower wages relative to the States; an intact social fabric with strong families and villages; and a beautiful setting highlighted by the National Park.

Wolman said US oversight gives “confidence” to consumers, especially in light of the scandals with Chinese pet food, toys and other products.

Despite the concern over the canneries future, Wolman said there has been no indication the canneries will be closing, and he noted that StarKist is moving forward with pouch production and workers are being hired.

In addition to the known issues that have received significant publicity, Wolman said American Samoa should pay keen attention to Congress’ attempt to federalize immigration as is now being proposed for Saipan, that was once home to a booming billion-dollar garment industry.

”Saipan built their powerhouse economy on low wages, quota protection, and immigrant labor. Congress has taken away the quota protection, the low wages and now it is likely to take away Saipan’s control over the immigrant labor force. What the federal government giveth, it can take away. It is an important lesson for American Samoa,” he indicated to Samoan news sources.

It was the federal government who helped to bring the canneries to American Samoa and it should be the federal government who must help to forestall their departure, Wolman said.

American Samoa also relies on a foreign-born workforce. According to the 1960 census, Wolman said 88 percent were born in American Samoa. But, the 2000 Census says 55 percent are American Samoa born, and many of those born here are children of parents who are themselves from Samoa, Tonga, Philippines, and other Asian countries.

Wolman said 64 percent of the private sector workers are foreign-born, while ASG’s workforce is primarily American Samoans.

He said the tuna industry in American Samoa has grown steadily for decades, thanks in part to ASG’s immigration policies, which allowed large numbers of workers with low wage expectations to come in from Samoa and elsewhere.

”Foreign workforce has been our way of life,” Wolman said. He added there has been rapid population growth in American Samoa. But, he noted, the growth is due to immigrant workers moving into American Samoa to replace the American Samoans who have been using their U.S. status to relocate to the mainland.

Wolman interviewed 30 private business leaders over the past few months and said he garnered a wide range of opinions about the future of American Samoa’s economy, ranging from “alarmists to non-alarmists”.

Wolman pointed out to the Chamber members that 30 years ago there was a large tuna industry in southern California and the tuna industry accounted for seven percent of the US market. Now, imports make up 52 percent of the U.S. market.

”They left California and moved to Puerto Rico. Then they left Puerto Rico and shifted jobs to American Samoa. Some day, they might leave American Samoa in the future," he said. "When the dust will have settled, 52 percent of the men and women working today would be without jobs.”

Wolman said shipping, utilities and ASG revenues would be “dramatically affected”. Shipping and utilities costs would increase while ASG revenue would go way down with drops in port fees, fuel taxes, and loss of taxable income.

He said many people agree with the findings of the 2002 Economic Advisory Commission, which included Governor Togiola Tulafono and I’u Joe Pereira. The commission found five areas in which American Samoa can strengthen the economy: manufacturing, information and technology, tourism, fisheries and agriculture.

He said from the interviews he conducted, there are six criteria local business owners and the public want met as the territory seeks a better economy:

- reduce dependency on one industry;

- jobs for people with limited education;

- jobs for people with higher education;

- good jobs so Samoans do not have to move off-island to pursue economic opportunities;

- avoid damage to environment;

- protect the integrity of the culture and land system; and

- strengthen shipping and telecommunication links.

“American Samoa’s lifeblood as a remote island community is telecommunications and transport,” he said.