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Updated: October 28, 2019 Focus on Transportation & Infrastructure

Filling in the lobster supply chain: New processing sites are keeping dollars in Maine

lobsterman File Photo / David Clough Hugh Reynolds, owner of Stonington-based Greenhead Lobster, opened a 15,000-square-foot lobster processing facility in Bucksport.

Stonington-based Greenhead Lobster, a family-owned Maine lobster business since 1997, opened a new 15,000-square-foot lobster processing facility in Bucksport in July.

Owner Hugh Reynolds says he is transitioning his business to lobster processing after seeing live lobster export revenues reduced by as much as 80% as a result of retaliatory Chinese tariffs and the Comprehensive Economic and Trade Agreement between Canada and European countries.

“We’re all but defeated in the Chinese live lobster market,” says Reynolds. “That’s a foregone conclusion. That’s why we’re now investing in lobster processing — to create new products and new markets in the U.S.”

Greenhead is just one of several lobster processing sites that have opened in recent months. Ready Seafood and Luke’s Lobster have opened sites in Saco (more on that below).

Lobster wholesalers and suppliers are turning to processing their lobsters in Maine to control costs and quality, focus more on the domestic market and have to ability to brand their products as Maine products. The investment coincides with some hard knocks the industry has taken from tariffs and the international trade war. The new sites have opened with a combination of fresh investment and by taking advantage of federal and local incentives.

Reynolds says that before the tariffs and trade agreement impacted his live lobster business, he had been selling the company’s lobsters to Canadian processors, who would then sell the lobster back to U.S. food service businesses. The new vision for Greenhead is to process lobster in Maine instead, so that it can brand its lobster tails and meat as Maine lobsters to U.S. food service and retail businesses. Processing lobsters close to their source also increases quality, he says.

“We can sell a totally Maine product,” says Reynolds. “Maine has a great brand. We’re branding Maine lobster as a high-end delicacy that is a treat for people to enjoy in restaurants. By processing in Maine, we can protect the quality of the products so that the Maine brand is upheld.

The new facility’s high-pressure pasteurization process increases the quality and shelf-life of Greenhead’s fresh and frozen lobster. Lobsters are processed through the new process to give them an instant, humane death. The tails are frozen raw and all of the remaining raw lobster meat is removed so that chefs and consumers have the freedom to prepare the meat as they prefer. The HPP process also allows Greenhead to cook the meat onsite to extend its shelf life.

“The lobster industry is changing. We’re starting to see a lot of outside capital and the industry is attractive for investors,” says Reynolds. “It was the right time for us to build a processing plant and build our Stonington lobster Greenhead Lobster brand.”

Greenhead Lobster’s new processing facility is in Bucksport’s Buckstown Heritage Park, a 63-acre business park off Route 1. According to Reynolds, the town of Bucksport gave Greenhead Lobster the land for its new processing plant. (Note to entrepreneurs: The town’s website is still offering free land in Buckstown Heritage Park for qualifying businesses.) Forty to 50 new jobs have been created with the opening of Greenhead Lobster’s new processing facility. Reynolds estimates that the new Bucksport lobster processing plant will process approximately 3 to 4 million pounds of lobster annually.

Ready Seafood opens site on Route 1 in Saco

Ready Seafood is one of the largest live and processed lobster wholesalers in the country. The company buys and sells over 15 millions pounds of live and processed lobster each year, sourced from the Gulf of Maine and Canadian Maritimes. In September, Ready Seafood had a ribbon cutting ceremony for its new lobster processing plant on Route 1 in Saco.

The new facility represents a $15 million investment and was funded by several grants and economic development programs. Construction of the facility was funded in part by an economic development program that was created as part of the new U.S. tax law. Former Gov. Paul LePage designated Saco as one of 32 federal “Opportunity Zones” in 2018. Businesses that relocate or open in these opportunity zones receive considerable tax breaks. The program is designed to act as an economic revitalizer for regions with long-standing economic challenges.

The Maine Technology Institute invested $2.5 million in Ready Seafood’s lobster processing plant as well, through a grant from its Maine Technology Asset Fund. MTI provides grants, loans, investment funds and services to projects that foster economic growth and job creation in Maine. Ready Seafood also has a credit enhancement agreement with the city of Saco and received a federal Community Development Block Grant for construction of the processing plant.

Why the big investment? In 2017, the Maine lobster industry exported $200 million worth of wholesale lobster to Canada for processing. Processing lobster locally increases profit margins for Maine wholesalers like Ready Seafood and also allows them more control over quality.

Ready Seafood’s new lobster processing plant brings 200 full-time employees to the area and will create about 50 new full-time positions. Using an automated production process and high-pressure processing technology, the new 40-acre lobster processing facility can process 100,000 pounds of lobster each day.

“We are seeing a surge in economic development and business expansion in the area as a result,” said Denise M. Clavette, Planning and Development Director for the city of Saco. “We believe Ready Seafood played a huge role in jump-starting the momentum along the Route 1 corridor in Saco.”

In addition to lobster processing, Ready Seafood is collaborating with the University of Maine, Southern Maine Community College and St. Joseph’s College on studying lobsters and sustainability of the lobster industry for Ready Seafood and the Maine lobster industry at large.

“We are the largest live and processed lobster wholesaler in the country, but we are always focused on improving our understanding of our resource and educating the next generation of scientists and stewards of the sea,” says Curt Brown, Ready Seafood’s marine biologist.

Luke’s Lobster expands into processing

Luke’s Lobster opened its lobster production facility in Saco in 2012 in an effort to create sustainable, long-term growth for its restaurant business. With its own lobster processing plant, founders Luke Holden and Ben Conniff wanted to gain more control over the quality, price and consistency of the lobsters in its 29 restaurants.

“We needed to be heavily invested in the source in order to have sustainable long-term growth,” says Holden. “Being from a third generation fishing family and having a father who was issued the very first lobster processing license in the state of Maine, the lobster production industry was very familiar to me.”

Luke’s Lobster’s 45,000-square-foot production facility’s average daily volume is approximately 40,000 pounds of live lobster. It is the only Marine Stewardship Council-certified sustainable and Safe Quality Food Level 3-certified seafood company in North America. The site does both primary and secondary processing, which includes branded lobster and crab meal preparation kits for Whole Foods and other retailers. Luke’s also has its own fabrication facility on its campus, which allows the company to build and engineer all of its stainless steel production equipment onsite, from conveyors to graders and tables.

Holden reports that he and co-founder Conniff have been able to grow the production business as the Luke’s Lobster restaurant business has grown. Having a foot in both businesses has helped the company remain stable through the ebbs and flows of commodity prices over the last seven years. Today, half of Luke’s Lobster’s sales are to third-party partners. In 2018, Luke’s Lobster won the Global Supplier of the Year Award from Whole Foods. Luke’s Lobster also supplies Whole Foods stores in England and Canada.

“We’re very proud to be a Maine business that has more than 250 employees in Maine and we’re dedicated to selling the Maine brand,” said Holden.

Though not directly and immediately impacted by the trade agreement and Chinese tariffs in the way that other lobster companies may be, Holden says over time, both could affect Luke’s Lobster.

“It hasn’t affected us directly because we aren’t in the business of live lobsters,” says Holden. “But over time, as an industry, we are transferring a lot of the value that this state and country has created to the Canadians. Over a long period of time, that’ll start to have an effect on our business in some shape or other because it’ll make Canadians stronger buyers and resellers of lobster products instead of Maine or U.S. citizens. And that’s when I think it will start to affect us more significantly.”

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