Clearwater Seafoods celebrates 40 years of business

Halifax-based seafood giant Clearwater Seafoods celebrated its 40th anniversary Wednesday, marking the occasion with a gala dinner, a donation to charity and a few jokes about the urban myth that has surrounded the company's founding.

Clearwater is one of North America's largest publicly traded seafood companies, has 2,500 employees worldwide and sells 45 million kilograms of wild seafood a year in 40 countries.

'I'm here to confirm what Clearwater's early critics always suspected, which is this was a highly illegal operation," company co-founder John Risley said at an event at the company's retail store on the Bedford Highway.

A front for drug smuggling?

"The suspicion was this wasn't a lobster business at all. This was a front for the drug business, and hidden in all the boxes of lobsters we were shipping everywhere were a load of drugs."

Risley said the company's actual wrongdoing didn't involve drugs, but a series of renovations and additions made to their original facility on the Bedford Highway without proper municipal permits.

Risley said he and co-founder Colin MacDonald constantly misled a hapless city building inspector who would show up looking for the boss and demanding a halt to construction.

"Whether it was Colin or I, we'd say, 'We have no idea,  we just work here ... but we'll tell him when we see him,'" said Risley.

Why Clearwater succeeded

Clearwater's rise from humble beginnings in 1976 was driven by the company's ability to secure long-term quotas from the Canadian government and, more importantly, developing markets outside Nova Scotia and the northeastern U.S.

The company started exporting to Europe and eventually conquered Asian markets. Securing federal quota enabled Clearwater to deliver on its overseas commitments. It also operates vessels off South America.

"Nova Scotians and Eastern Canadians can supply the world. We don't have to restrict ourselves to a small corridor and hand it off to someone else to do," said MacDonald.

Largest shellfish licence holder in Canada

Besides lobster, the company sells products such as scallops, shrimp, clams, crab and groundfish.

Clearwater is the largest holder of shellfish licences and quotas in Canada. It achieved this in part by purchasing family businesses when owners were looking to retire. As well, the Canadian government awarded companies like Clearwater an increasing share of quotas in the 1980s and 1990s.

Risley says common property ownership in the resource sector sounds great, but is not practical and leads to a rush to exploit the resource before a competitor does.

"We have to have fishermen and companies that are vitally concerned with the sustainability of the resource," he said. "And the best way to do that is to give them economic incentive to care about the resource: not what can I do today to make sure I catch more than the next guy, but what can I do today to make sure in five years from now I'm catching more than I am catching today?"

Black hat in some quarters

Despite its success — or perhaps because of it — wariness and hostility about Clearwater's clout have long swirled around the company.

The Newfoundland government once blocked its attempts to take over that province's largest seafood company.

Recently, the Trudeau government sided against Clearwater in its first major fisheries management decision, which looked at who would get to catch a dwindling stock of northern shrimp off Newfoundland and Labrador. Clearwater holds one of the original offshore licenses awarded when the shrimp fishery was pioneered in the 1970s by companies using large factory freezer trawlers.

In 1997, Ottawa allowed smaller boats from Newfoundland into the fishery with the proviso that when the stock dropped — inevitable given the northern shrimp population's temporary boom after the collapse of the cod fishery  — the late entrants would have to get out. This policy was known as Last In, First Out (LIFO).

This summer, the Trudeau government discarded LIFO and pledged to award more quota to the inshore fleet.

Northern shrimp defeat

The outcome was no surprise to MacDonald, who says he knew that when the policy was introduced there would be a "high risk" future governments wouldn't honour it.

MacDonald says the decision was short-sighted because large companies generate greater economic value from the resource.

The ruling has potentially ominous consequences for the company.

"We worry about whether this was an ad hoc decision or whether we have a dramatic change in policy. I think it was very ad hoc," said Risley.

As part of its 40th anniversary event, the company cut the price of its live lobster sold at its retail store by 40 per cent from 12:40 to 3:40 Wednesday afternoon. Proceeds from the sales will go to the IWK children's hospital.