April 20, 2019
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Maine lobster company pursues new customers in Korea, Vietnam to survive Chinese tariffs

Rich Beauchesne | The York Weekly
Rich Beauchesne | The York Weekly
Alex Van Etten of Maine Coast Co. carries a 100-pound crate at the company's York facility, which has a capacity for 160,000 pounds of live lobsters and provides rapid-ship delivery worldwide through Logan Airport in Boston.

YORK, Maine — The most recent round of U.S. trade talks with China seem to be signaling an easing off of tariffs imposed last year, perhaps as soon as this month. That would be good news for Tom Adams, owner of lobster wholesale business Maine Coast Company.

Since “July 6,” he says, effortlessly recalling the exact date, a 25 percent tariff has been imposed on all lobster exported from the United States to China, as trade tensions between the two countries escalated. At the time, trade with Chinese companies comprised about 20 percent of all company revenue and business was growing, he said.

[Maine sends more lobsters north as Canada’s exports to China boom]

“The first couple of days we were stunned. We were very vested in the China business,” he said. Company officials had been monitoring trade talks in the early months of 2018, he said, but there was no sign that lobster would be included in the tariffs. Almost immediately afterward, trade with Chinese companies evaporated, resulting ultimately in an 80 percent drop in business to the country.

“We said, ‘Oh, boy, what are we going to do?’ It was scary, a good solid kick in the gut,” said Adams. “We heard on Friday, and by Monday morning, we got the team together and said, ‘Here’s the game plan.’”

[Lobster wholesaler tells Chellie Pingree China tariffs have forced her to lay off workers]

That game plan has proven highly successful if extremely stressful, he said, and has kept the company on an even keel. In 2017, he said, the company’s revenue was $56.4 million; Maine Coast ended 2018 with $57 million in revenue, despite the loss of China trade for the last six months of the year.

But Adams is the first to say the transition required a nimble workforce that worked hard to find new business.

“If you had asked me in July if I had thought this was possible, I would have said, no,” he said. “It was hard. There was a lot of stress and hard work. Our employees are relying on the company doing well for their families. If we do better, they do better. When this happened, we didn’t want to lay people off and I’m glad to say we haven’t.”

[Maine lobster exports to China drop off as trade war intensifies]

A key part of the game plan was to grow the market in other Asian countries including Singapore, Malaysia, Vietnam, Hong Kong and Korea. The company had just hired two salespeople, one fluent in Mandarin and the other in Cantonese, which was helpful. “We knew we were being shut out of China, so we asked, where can we direct our sales efforts?

“It was hard for them, because they were planning to use their skills and expertise in mainland China. All of a sudden we are saying, ‘Whoa, we need you to focus on here and here and here instead,’” said Adams. The effort worked. The company has almost doubled its business with Singapore, Malaysia and Vietnam alone.

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As domestic sales remain the bread and butter of the company, the staff also focused on expanding that market to include restaurants and Asian food markets in major metropolitan cities around the country. “All that business doesn’t add up to one China, of course, but we did manage to maintain our revenue.”

That is fortunate, because the company had just completed a $1.4 million expansion of its Hannaford Drive property the same month the tariffs were imposed last July. The 5,000-square-foot addition increased packing capacity, added more loading docks and increased cooler space. “Hindsight is 2020,” said Adams of the project that had been in the planning stages for two years. “The timing was not beautiful. But I could never have built a business plan that included tariffs.”

[US still sends lots of lobster to China, but tariffs keep industry on edge]

Meanwhile, companies in Canada where there are no tariffs have been taking up the China slack. According to Adams, they have built infrastructure “very quickly” to meet the demand. “Canada does a good job of funding the seafood industry, and is putting money into its airports to support this business. That infrastructure is not going away,” he said. “There will be a percentage of sales that will never come back.”

Exactly when that business with China will come back remains uncertain. In early March, it appeared fairly certain a trade deal between the two countries could lift most or all of the tariffs. Yet several weeks later, President Trump said the tariffs could stay in place indefinitely.

But the goal is to not only maintain the new markets but come back as strong as possible in the Chinese market as well, Adams said. “That’s the hope,” he said. “The demand for live lobsters is still growing. It’s growing in the U.S. It’s growing in China and Asia. I take pride in the fact that Maine Coast is still growing, too.”

 



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