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The chill of the Icicle Seafoods sale; uncertainty surrounding a change in ownership haunts residents of Icicle's hometown, Petersburg.

The Chill Of The Icicle Seafoods Sale

The "for sale" sign slapped on Icicle Seafoods on Dec. 3 may signal the end of locally owned fish processors in Petersburg. The firm's predecessor, Petersburg Fisheries, was born of a community-supported purchase of a processing plant owned by Pacific American Fisheries more than 25 years ago. Now, the impending sale of Icicle - long a source of local pride, an institution where social events have been shared, and the town's largest employer - has Petersburg residents concerned about changes to come.

Petersburg has watched outside interests acquire three of the city's processors already and now expects the fourth to be sold to ownership outside the community as well. First, Petersburg's Kayler-Dahl cannery and cold storage was sold to Seattle-based Whitney Fidalgo in 1969. In 1985, it changed hands again, becoming Chatman Straits Seafoods, a subsidiary of Sealaska's Ocean Beauty operation. On Sept. 26, 1990, Ika Muda Group of Indonesia purchased the cannery.

A second seafood processor, Petersburg Processors, became Nelbro when sold to British Columbia Packers in 1982. Then in 1990, a third Petersburg processor, the Ohmer families' Alaska Glacier Seafoods, merged with Ketchikan's Silver Lining Seafoods. Now a division of the Ketchikan company, the Petersburg plant continues to operate as Alaska Glacier Seafoods.

Dave Ohmer, manager of Alaska Glacier's Petersburg plant, says, "It has been a beautiful, happy marriage: Our productivity is up; our diversification in terms of other products is up; the amount of labor we're able to give our employees is up; and benefits we're able to provide our employees are up. We needed to diversify to make this plant more profitable. Merging with Silver Lining has been a positive way to do this."

Robert Brophy, president and chief executive officer of Icicle Seafoods since 1980, expects the sale of that business to produce positive results as well. He says the transaction should attract new capital needed for expansion. One of the largest seafood companies in the Pacific Northwest, Icicle had 1990 sales of roughly $265 million. The processor paid more than $100 million for Alaska fish and $12 million to employees in its widespread Alaskan operations.

Icicle Seafoods, which created one of the first employee stock ownership plans in Alaska, is owned predominantly by its fishermen, employees and managers. Each year Icicle's board of directors declares a percentage of company profits to be allocated to employees.

The disbursement is based on the number of hours worked that year and the length of time with the company. The board has the option of declaring profits in company stock, cash or a combination of stock and cash. When employees retire, they can keep their stock or cash it in.

Brophy explains that a number of major stockholders and original investors, who were nearing retirement age or had retired, have expressed the desire to sell their stock. Because Icicle stock is not publicly traded and the amount of stock involved is so large, the company's board decided to seek a buyer. The directors feel that the sale will provide the best return on value for all shareholders. According to Robert Thorstenson, chairman of the firm since 1980, if the price is not adequate, the stockholders may decide not to sell.

Petersburg fishermen and plant workers of Icicle Seafoods are wondering how outside ownership of the local plant, still called Petersburg Fisheries, will affect them. Brophy says he doesn't foresee major changes in the processor's operations. Patrick Wilson, Petersburg Fisheries' plant manager, is optimistic that the sale will make the company more competitive.

The residents of Petersburg - mostly local business owners, government employees and fishermen - have always considered Petersburg Fisheries "their company," says Thorstenson. The cannery originated as the Petersburg plant of Pacific American Fisheries.

Thorstenson was named superintendent of that cannery in 1960 at age 29 and was promoted to superintendent of PAF's eight Alaskan facilities in 1963. In late 1964, when PAF put its Petersburg operation up for sale, Thorstenson spearheaded the drive to buy the company.

In 1964, the community of Petersburg took advantage of the availability of Small Business Administration 502 loans. The program was intended to further economic development within local areas through the creation of local development corporations. Each corporation had to be comprised of at least 25 local businesses.

Fishermen and local businesses bought shares in the Petersburg Economic Development Corp. to raise $35,000 for the 10 percent down payment on the PAF operation. Once that funding was secured, the local development corporation was able to borrow $350,000 in Small Business Administration loans to complete the acquisition of the cannery, four fishing boats, two tenders and some scows. The Petersburg seafood processing operation was renamed Petersburg Fisheries.

The Petersburg Economic Development Corp. immediately sold the fishing boats to the fishermen who were running them: the Velvet to Jeff Pfundt, Little Lady to Neil McDonald, Johnny L to Robin Leekley and Puget to John Curry. Icicle still has the tender Chichagof. After a 1987 fire on the other tender, the Howkan, the insurance company declared the boat a total loss and sold it to a private party who now charters the Howkan to Icicle.

Thorstenson; Tom Thompson, manager of Petersburg Cold Storage; and fishermen Gordon Jensen and Magnus Martens together raised $55,000 in operating capital. They leveraged that investment, borrowing $1 million from Seattle First National Bank on the strength of their backing and personal guarantees. Thorstenson became Petersburg Fisheries' first manager, and the other three investors became vice presidents.

With this small amount of capital, Petersburg Fisheries was forced to operate during its first season on a shoestring. The fishermen and employees were not paid until canning from the year's harvests was in a bonded Seattle warehouse. Only then could money be borrowed against the canned inventory to pay everyone.

Things looked bleak at the end of the season, and the processor shipped all of its stateside workers south. The bunkhouse was rented as apartments to teachers. But the season was saved by a run of fall chums. Hoonah and Angoon fishermen brought their catches into Petersburg, and Petersburg Fisheries' canned harvest climbed to 39,000 cases worth $1.35 million that first year. Thorstenson remembers, "Everyone just had faith."

In 1966 Thorstenson hired Wally Swanson as cannery foreman and told him to expect a small harvest for canning. On the Fourth of July, Phil Clausen came in with his tender Cydonia deck loaded with fish. The processor canned non-stop all summer and put up 146,000 cases, a very large harvest in those days. School was even postponed a week for school children and housewives to work in the canneries. Clerks came to work after closing hours.

"Even members of the ministerial association helped. Everyone was worn out," Thorstenson recalls. "One of the ministers was standing on the dock and saw a tender coming up the Narrows. He said, |Please, God, don't let him stop here.'"

From this small beginning, Petersburg Fisheries grew quickly. Thorstenson gives much credit to the aggressive Petersburg fleet that helped to develop many fisheries from San Francisco to the Arctic Circle, chasing new opportunities in their boats.

Petersburg Fisheries had the tenders Viking Queen and Viking King built in 1967 and 1969, respectively. The company entered into a partnership in a floating crab operation at Dutch Harbor in 1968. To take advantage of opportunities in Southeast, the processor converted its Howkan and Chichagof tenders to fish king crab in the wintertime.

Petersburg Fisheries canned only 17,000 salmon in 1969. Being conservation minded, the fishermen asked that the Frederick Sound and Stephens Passage areas be closed to rebuild the runs. As testimony to that wisdom, the areas produced excellent catches in 1989.

Petersburg Cold Storage, a business owned by the Thompson family and whose refrigeration facilities were an excellent complement to the processor's operations, merged with Petersburg Fisheries in 1972. Petersburg Fisheries also purchased the Halibut Producers Co-op plant in Seward to provide a mainland outlet or the catches of halibut fishermen from Area 3 - the region extending across the Gulf of Alaska west of Cape Spencer. Thompson was sent to run the plant.

In 1976, Petersburg Fisheries' management changed the company name to Icicle Seafoods Inc. to capitalize on the trademark it had used on product labels for several years. The name also was better suited for a company whose operations were quickly growing beyond Petersburg.

The processor expanded further in 1976 with the purchase of the Alaska Seafoods plant in Homer. It also obtained an interest in Sitka Sound Seafoods. Thompson exchanged his Icicle stock in 1980 to buy the Sitka Sound plant.

Thorstenson moved from Petersburg to Seattle in 1977 to set up Icicle's corporate headquarters, which include sales, accounting, purchasing and personnel departments. Icicle's staff pioneered seafood export markets to Europe and Asia. To keep abreast of the latest technologies, the firm's management searched world-wide for new fish processing machines and fishing equipment.

To gain more mobility to follow fishermen to remote fishing grounds, Icicle built a division of vessels capable of freezing catches at sea. First in the company's Star Division were two large floating freezer ships, Arctic Star and Bering Star, built for Icicle in 1979. In 1988, the Coastal Star, Evening Star and Discovery Star were acquired.

Icicle also owns six tenders: Viking Queen, Tani Rae, Adventure, Kupreanof, Mitkof and Chichagof. The company operates a buying station at Ninilchik, from which product is trucked to its Homer plant. Other support stations are located in Dutch Harbor, Naknek and Dillingham.

In addition to its Alaskan operations, Icicle operates a surimi plant and a reprocessing plant, which manufactures consumer products from bulk seafood packages, in Bellingham, Wash. It also has 50 percent ownership in a canned products warehouse in Astoria, Oreg.

Thorstenson reports many interested buyers have requested Icicle's prospectus. Security Pacific Bank (previously Rainier Bank) is handling the sale of the company. The board was expected to narrow the field to five or six organizations in March, and a new owner conceivably could be taking the company's reins as soon as summer.

Changes in operations by a new owner could affect more than employment. The successful operation of Icicle Seafoods and, more specifically, of its Petersburg Fisheries plant has added to the quality of life in the predominantly Norwegian community. The enterprise has funded many local projects, including scholarships to graduating seniors. More than 300 employees and fishermen typically have attended an annual Christmas party and smorgasbord.

It is with many questions and at the same time hopes for the future that Petersburg residents regard the "for sale" sign on their last locally owned fish processor.

PHOTO : In the Petersburg Fisheries packing room, herring that will be used for their roe are packaged for overseas shipment.

PHOTO : Robert Thorstenson visits Petersburg every summer. Now chairman of Icicle Seafoods in Seattle, he spearheaded the successful drive by the community of Petersburg to acquire a local cannery, Icicle's predecessor.

A writer and retired commercial salmon troller, Marilyn George has spent more than two decades of her 30 years in Alaska in Petersburg, where she now lives.
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Title Annotation:Icicle Seafoods
Author:George, Marilyn
Publication:Alaska Business Monthly
Date:Apr 1, 1991
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