Factory closure of large processor ‘due to Brexit and high prices’

In another sign of the turmoil created in the seafood sector by the combination of Brexit, the Russian invasion of Ukraine and the cost of living crisis, the Icelandic owner of Grimsby processing company Five Star Fish has announced the closure of its factory, which at one stage employed over 400 staff, reports Andy Read.

The company only bought the factory from a local processor in 2020 – part of wider investment that also saw processing facilities set up in Ireland and Spain.

Bjarni Ármannsson, Iceland Seafood’s chief executive, said the site at Grimsby, which accounts for 10% of the group’s turnover, but has lost considerable sums of money for the last two years, was no longer ‘a strategic fit’. The company would now focus on its other European facilities for processing.

In a trading statement, the company wrote: “The recession in Europe is starting to have a negative impact on demand in key markets. The price of seafood has increased significantly, whilst at the same time consumer purchasing power is diminishing due to increased energy prices and overall high inflation.

“We believe in the future and that we are well positioned in our key markets, with well-run value-added operations in Europe. But we must adjust to a different reality, and are therefore exiting the UK market from a value-added perspective.”

The factory relied heavily on adding value to cod and pollack imported after initial processing in China, rather than fish directly exported from its Iceland base. The company said that the extra paperwork following the UK’s departure from the EU had made importing fish more difficult.

“The processes around entering products into the country from South East Asia, those became more cumbersome,” Bjarni Ármannsson said. “The UK market has become more difficult post-Brexit. The UK has become more cumbersome in terms of paperwork.”

The factory has been put up for sale as a going concern, and the company is understood to have been helping existing staff to find work elsewhere in Grismby’s processing sector.

Although this is devastating news for the workforce, demand for fish at the Humber processing hub remains strong. Martyn Boyers, chief executive of Grimsby Fish Docks Enterprise, told Fishing News: “Five Star were not direct buyers on Grimsby fishmarket, so in fact their unfortunate demise will not impact on us.

“Demand for fresh fish in Grimsby is consistent, and prices have been strong for some time. Grimsby fishmarket is still prominent, and has seen continual supplies from Iceland. This source accounts for around 80% of the fish auctioned on the market, topped up with further supplies from Norway, Denmark, Faroe, Ireland and Scotland.

“Currently we are in the middle of improvements to the fishmarket using some grant funding through the England FaSS. Times are tough, but we remain positive about the future.”

UK Fisheries factory in Denmark also earmarked for closure

In Hanstholm, a factory owned by Humberside-based UK Fisheries Ltd – itself a subsidiary of a joint venture between Icelandic and Dutch fishing companies – has confirmed that it will close permanently with the loss of 45 jobs.

Although Brexit was not mentioned as a factor, the same issues of the Ukraine invasion, the cost of living crisis and an acute lack of raw materials, as with the Five Star Fish factory, were confirmed as the reasons for closure, exacerbated by difficulties and losses caused by Covid lockdowns.

In a statement, the CEO of the company said: “In 2022, we have seen a sharp deterioration – first with the outbreak of war in Ukraine, then a completely abnormal/exploding inflation of all the consumer goods and energy used in connection with our production – we are talking about increases in the order of 100%-400%.

“Unfortunately, the very sharp increase in costs has not been able to be passed on to our customers through price increases.”

The closure was announced within a fortnight of UK Fisheries confirming that its whitefish vessel Farnella, the last UK distant-water vessel targeting fresh fish from the Humber, will stop fishing in December due to lack of viable quotas.

This story was taken from the latest issue of Fishing News. For more up-to-date and in-depth reports on the UK and Irish commercial fishing sector, subscribe to Fishing News here or buy the latest single issue for just £3.30 here.