1. Industry Challenges … & Potential Solutions It’s not just about demographics! Robert Verge, P.Eng., MBA, CA, CMC Managing Director, CCFI November 15, 2016

2. Fish – A High-Growth Industry
200-Mile Limit
Moratorium
SOURCE: UN FAO

3. Different Worlds
Growth in supply is from aquaculture, developing countries
Developing countries now represent 2/3 of global fish exports

4. Canada Not Participating in Growth
Decreased landings from capture; no increase from aquaculture
26% Drop

5. Currency Exchange

6. Diverse Species  Niche Markets

7. Variable Catches by Species
Rising Prices, Exchange Rates
Climate
Change
Shellfish
Groundfish
& Pelagics
Increasing lobster catches offsetting decreasing shrimp, crab catches
Rising Prices, Exchange Rates
Climate
Change
Dramatic changes in catches, values
Groundfish
& Pelagics
Shellfish

8. Variable Catches by Province
Rising Prices, Exchange Rates
Climate
Change
Shellfish
Dramatic variations in catches, especially in NL, NS
Groundfish
& Pelagics
Rising Prices, Exchange Rates
Climate
Change
Shellfish
Rising prices, exchange rates now offsetting decreased catches
Groundfish
& Pelagics

9. We need to make better use of our decreasing labour force
Seasonality
Avg. No. Sea Days by Vessel Home Port, 2010
We need to make better use of our decreasing labour force

10. Variable Prices
SOURCE: John Sackton

11. KPIs – Canada Not Doing Well
$000

12. Low Returns on Capital
SOURCE: AAFC

13. Processing Plants, NL 77
171
Source: DFA

14. Plant Worker Incomes, NL
(Inflation adjusted: Constant 2010$)
Special Taxfiler Tabulations from STC for NLSA, GovNL

15. Processing Employment, NL
Source: DFA

16. Not Enough People
Owners of fishing enterprises and processing plants complain
they can’t find enough people to run their operations
CCFI is continually being asked to find ways to automate processes on fishing vessels and in processing plants
And the problem is expected to get worse!

17. Availability of People
Short-Term
How many want to go into the fishery?
Long-Term

18. We Have a Labour Supply Problem
Reasons
No growth in industry output
Seasonal employment
Low incomes
Dependence on EI
Smaller population cohort after baby boomers
More attractive opportunities elsewhere
Automation can be only part of the solution – we must also
Increase industry output value
Provide better employment opportunities – longer periods of employment, better incomes, less dependence on EI, career progression
It’s not just about demographics!

19. NS: Ivany Report, 2014
“ … it will not be possible to turn around our economic outlook as a province unless we significantly improve productivity and competitiveness in our traditional rural industry sectors.”
“For many years the highest public policy priority for these sectors has been simply to maintain jobs in rural communities. But today we find that many business operators are insufficiently profitable to support the investments in product quality, plant productivity, worker training, and market expansion that are needed to maintain and grow market share. In some sectors it is increasingly difficult to find local workers to take the low-wage and seasonal jobs many employers offer. As a result, young people are leaving rural communities, other countries are out-competing us in the marketplace, and the province is not realizing the full value of our asset base. These business models need to be revised if the province and our rural communities are to escape the current pattern of weak economic growth and population decline.”

20. Technological Change Amazon Fresh/Santa Monica Seafoods
Superchilling + Controlled Atmosphere
Every link of the value chain
Craemer’s new Tracking & Tracing Fish Box

21. Reasons to Automate Tasks that could not be done otherwise
Unique capabilities
Time
Economics
Process optimization (business processes + production processes)
Production planning
Assessing possibilities to identify best outcomes
Scheduling
Process coordination, monitoring, and control
Compliance with regulatory requirements
Quality consistency
Flow control/process reliability/error reduction
Energy efficiency
Safety
Increase revenue/reduce costs
Increase throughput, product yield, quality, output value
Reduce labour, waste

22. Challenges It’s not just about reducing the need for labour
We need capabilities that can only be provided through technology
Automation will mean
People will need more technical skills – which are also in demand elsewhere
Higher incomes, better benefits, and good lifestyles will be needed to attract them
We transition from a labour-intensive industry to a capital-intensive industry
Can the industry attract the capital?
Already struggling with profitability and low ROI
Variable raw material supply – species, quantity, size, quality, price
Uncertainty, due to resource regime shift
Longer operating seasons needed to justify the investment
Can we change the business model?
Long-term investments require greater stability and predictability