bc seafood sector swot analysis industry perspective stuart nelson nelson bros fisheries ltd
TRANSCRIPT
BC Seafood Sector SWOT Analysis
Industry Perspective
Stuart NelsonNelson Bros Fisheries Ltd
Perspective on SWOT Analysis2
SWOT Analysis
Large scale project A qualified team of consultants
commissioned by Province to report on the state of the BC seafood industry in 2003
Insights to form the basis for subsequent strategic planning… how to renew the BC seafood sector?
Perspective on SWOT Analysis3
Industry Perspective
Stu asked to provide industry perspective on the SWOT Analysis
Not knowing what “industry perspective” means, Stu retreated to the Nelbro archives
Maybe it would be interesting to review what industry has expressed to government over the years re: the state of the BC seafood industry?
This approach could lead to insights…if not… this presentation is in serious trouble.
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Presentation Outline
The more things change, the more they stay the same…
Profound BC seafood industry change Current state of industry Monty Python analogy Summary
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The More Things Change…
Need to be Market Driven
Managing to the market is required if industry is to be globally competitive and economically viable
Presentation to “Ottawa”, FCBC, March 1998
Focus must be on customer’s needs first… BCP Strategic Plan, 1995
Industry must retain the ability to be reactive to changing conditions from the retail market level right back…
A Status Report on the Commercial Fishing Industry of BCFABC, 1983
It all begins with a housewife asking her local grocer, “a can of BC salmon, please!”
Nelson Bros educational materials, 1959
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The More Things Change…
Recognition that Volume is not The Answer
The problem is exacerbated by reduced salmon abundance, however reduced abundance is not the cause…
Presentation to “Ottawa”, FCBC, March 1998
Fluctuations in wild salmon supply are overshadowed by increases in total salmon supply squeezing prices and margins
BCP Strategic Plan, 1995
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The More Things Change…
Industry Financial Performance
Financial performance of the the BC fish processing sector has been inadequate for close to a decade…
Gislason et al, 2003
Industry is in financial crisis Fisheries Management: The Bottom Line
The Business of Fishing in BC, FCBC, 1993
The commercial fishery is experiencing severe economic difficulties
A Status Report on the Commercial Fishing Industry of BCFABC, 1983
In 1969 the industry was insolvent… A Status Report on the Commercial Fishing Industry of BC
FABC, 1983
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The More Things Change…
Need Secure Access to Raw Material
Industry requirements: One fishery, one manager Secure access to raw material with clear
allocation rules Presentation to “Ottawa”, FCBC, March 1998
Business Requires: Access to high quality raw material at reasonable
prices Fisheries Management: The Bottom Line
The Business of Fishing in BC, FCBC, 1993
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The More Things Change…
Supplement BC-caught Fish with Outside Resources
To ensure adequate volumes, BC processors are increasingly sourcing raw material from outside the province
Gislason et al 2003
We get our fair share of fish from the Fraser River, but we also pack in fish from the outside… we even carry cohos from Ketchikan, Alaska… the price is cheaper there than in BC
Ritchie Nelson, Nelson Bros, 1930
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The More Things Change…
Need for Industry-Government Cooperation
What is needed is coordination between government and industry alike to follow through with present initiatives (fleet rationalization, SEP)
Unknown is whether or not gov’t and industry alike will have the perseverance to resolve our problems and design our future…
A Status Report on the Commercial Fishing Industry of BCFABC, 1983
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The More Things Change…
The World is Changing…
Historically, the performance of the industry fluctuated as a reflection of year-to-year variances in catch levels and levels of market demand… in more recent times, performance has been affected by numerous other factors…
A Status Report on the Commercial Fishing Industry of BCFABC, 1983
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Longstanding/Recurring Messages
Industry has expressed over and over: Need to be market driven, abandoning mere
volume orientation Need to access high quality raw material on
reasonable terms Need for government support/cooperation That the world is changing… more variables
and complexity Difficulty earning satisfactory financial returns
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So What’s the Point?
With so many consistent themes, it’s tempting to think: Industry is crying wolf… Industry is not changing & adapting – same
problems, different decade Industry lacks imagination
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Industry Change Has Been Profound
The BC seafood industry in 2003 scarcely resembles that of only a decade ago
Don’t be fooled because many of the faces are same…
Industry strategy, philosophy, and structures have been substantially transformed
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Signs of a Transformation
Harvester group hosting Seafood Summit… not processor group (there isn’t one)
Largest salmon brand in Canada doesn’t produce a scale (Cloverleaf)
Fishermen’s Union is involved in allocating quota to vessels (Groundfish Development Authority)
Groundfish processors share their business plans with Union, Communities, and each other! (Groundfish Development Authority)
Salmon processing – the only thing worse than not enough salmon is… enough salmon!
“too many boats chasing too few fish” is not on the list of industry challenges in a SWOT study
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More Signs of a Transformation
Women in top posts! Albion Fisheries. The Seafood Alliance. The BCSFA. SOKOA.
mid-40’s, thinning hair, thickening waist = young whipper-snapper!
Dogfish and pilchards are back… what’s next? whales and seals?
Halibut fisherman cuts-short the fishing trip… to effect repairs… to the satellite dish
Zero-martini lunches Fisherman writes a letter to the Minister… and knows what font
he used Rob Morley not a “suit”, but a “sweater”…
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BC Seafood Industry Adaptation
Although well-aware of challenges, industry has been unable to reverse a marked decline in revenues
Given lower revenues, there is no choice but to adapt
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Revenue-Earnings Pattern
Preferred – “Real Businesses”
Revenue & Earnings - Desired Pattern
Revenue Earnings Linear (Revenue) Linear (Earnings)
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Revenue-Earnings Pattern
Typical Seafood
Revenue & Earnings - Seafood Pattern
Revenue Earnings Linear (Revenue)
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Revenue-Earnings Pattern
BC Seafood in Recent Years
Revenue & Earnings - Recent BC Pattern
Revenue Earnings Linear (Revenue) Linear (Earnings)
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How Has Industry Responded?
Strategically
1. Cut costs – same activities, lower budget
2. Rationalize – fewer activities
3. Specialize – get rid of unprofitable endeavors
4. Consolidate – more of profitable activities
5. Diversify/Shift – get into new/different activities
6. Exit - if 1.-5. fail… get the hell out!
Emphasis on defensive strategies… growth & investment on the sidelines.
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How Has Industry Responded?
Philosophically
From: We’ll do it ourselvesTo: We’ll do what we can and outsource the rest…From: Margin orientation (speculate)To: Cash flow orientation (low risk, low return)From: Processing as key competitive functionTo: Processing as service to be purchased/sold
From: We’ll achieve growing revenues and earnings, just like “real businesses”
To: We’ll exploit opportunities as they arise, and not make any big mistakes…
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How Has Industry Responded?
Structurally Historically, big companies had all the stuff
People Fixed assets Access to Capital
As companies have rationalized, they have: Reduced staffing & fishermen levels Closed facilities, sold assets Lessened ability/willingness to risk capital
People, facilities, and assets don’t disappear, they become: Fish brokerage firms, consultants, independent fishermen Custom unloading, custom processing service providers
As “big companies” shed structure and reduce risk tolerance, opportunities open-up for others…
The “stuff” in the industry is now much more spread around…
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What Does the Industry Look Like Now?
Given strategic and philosophic responses by industry to a changing business environment, and resulting structural changes, what does the industry look like today?
How is it equipped to deal with the challenges and opportunities as identified in the SWOT?
Are we in better shape now than we were in the good old days?
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“The World has changed, and the BC seafood sector needs to change with it…”
Successful businesses and industries are those that can adapt and reposition themselves when circumstances change…
By this measure, we’ve done a great job… lot’s of repositioning in light of changed circumstances…
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Industry-in-General Challenges in Adapting to Changing Business Conditions
A lack of leadership, cohesion, and the will to respond to change
Focus on the short term to the detriment of long term strategic planning
Production inefficiencies Neglect of research and development, product
development, and investing in human resources Lack of attention to changing consumer needs Inefficient and/or inflexible government regulation
Guilty on all counts…
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Compared to Past
BC Seafood Industry Today Is:
Nimble… able to respond to changing circumstances
Opportunistic… able to exploit emerging opportunities
A network of industrialists and service-providers
Collectively, serving customer needs
Small… more players, and the big ones aren’t as big
Positive cash flow vs. strong margins
Fractured Fragile – prosperity can
be easily undermined Undercapitalized – capital
on the sidelines…
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An Obvious Analogy:
Brave Knight as BC Seafood Industry
Brave Knight confronts & prevails over traditional seafood industry business environment…
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Brave Knight as BC Seafood Industry
Brave Knight confidently prepares to deal with a new, complex business and regulatory environment…
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Brave Knight as BC Seafood Industry
Brave Knight suffers a pretty nasty wound… but remains optimistic…
‘tis but a scratch!
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Brave Knight as BC Seafood Industry
Brave Knight is down to one digit… only one leg to stand on… but keeps fighting.
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Brave Knight as BC Seafood Industry
Brave Knight is but a trunk… defenseless… but his mouth still works!
Just a flesh wound…
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Making Sense of the Brave Knight Analogy
Different sectors of the BC seafood industry are at varying stages of health
The competitive environment grows increasingly complex
A supportive government/regulatory framework would be helpful… but an ambivalent or hostile one may prove fatal
Industry will invest to place itself on a firmer competitive footing… once the dismemberment has stopped…
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British Columbia Packers LimitedAnnual Report Highlights1977-1983
Year / $millions 1979 1980 1981 1982
Investment in Fixed Assets
12.6 28.5 9.4 16.8
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Government as Industry Supporter
From Western Grocer
magazine - 1961
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Summary
Many themes or challenges facing the BC seafood industry have been around for a long time, though the list grows ever-longer
The industry knows what it must do… Industry not crying-wolf when describing challenges… SWOT
Analysis has very effectively captured them After years of adaptation and rationalization the industry remains
vulnerable to a hostile operating and regulatory environment Industry needs the support of government to successfully confront
it’s challenges Do not underestimate the amount of change the BC seafood
industry has undertaken… or the scope of the challenge to “heal” certain sectors
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No Flesh Wound…