Trident Seafoods Corporation Business Information, Profile, and History

Company Perspectives:

Trident believes that customer satisfaction is achieved through integrity, honesty, and on-time delivery of quality products, value pricing, and full service. We value long-term relationships with our customers. Our goal is to earn customer confidence and our pledge is to maintain a competitive profile. We will continue to listen to our customers and to exercise our creativity in developing new product lines to meet the ever-changing needs of the market place.

History of Trident Seafoods Corporation

Trident Seafoods Corporation is a vertically integrated harvester, processor, and marketer of seafood, operating onshore and offshore properties in Alaska, Washington, Oregon, and British Columbia, Canada. The company's fleet of processors and trawlers catch, can, and freeze pollock, salmon, crab, herring, and a variety of shellfish and groundfish. Trident pioneered vertical integration in the northwestern waters of the Pacific Ocean.

Origins

Revolutionary innovation in the offshore fishing industry was delivered by a native of Tennessee, an unlikely birthplace for an individual who would forever change the dynamics of doing business in the northwestern Pacific Ocean. Chuck Bundrant, Trident's founder, had escaped the landlocked confines of Tennessee long before he brought his vision to offshore fishing, however. In one of the most arduous occupations anyone could chose, Bundrant began his fishing career working on what tellingly was called the "slime line" at an Alaska crab processing plant. His time spent processing seafood for others sparked the genesis of Trident, a company whose birth was predicated on vertical integration--a business term signifying the ability of a single corporate entity to control the production of most, or all, aspects of its product, from raw material to distribution.

A vertically integrated sock manufacturer, for example, might own the cotton fields from which the socks were produced. That same company might own a packaging plant to package the socks it produced. Taken to a deeper lever, the sock manufacturer might own a distribution company to deliver its socks to market. Vertical integration, frequently sought after by commercial concerns of all types, gives the vertically integrated company greater control over its destiny. No longer subject to the whims of third-party enterprises, the self-reliant company is able to dictate its own way of conducting business and enjoy control over the supply and prices for virtually every component of its finished product. For Bundrant, vertical integration meant combining offshore fishing activities with onshore fishing activities, the union of fisherman and processor.

Bundrant's days on the slime line gave way to plans to become an entrepreneur in 1970. "It all started with one boat," Bundrant states on Trident's Web site. "We asked why we couldn't catch crab and process crab on the same vessel. They said it wasn't going to work." The question was innovative, the reaction typical of the response received by an industry pioneer. Bundrant's vision flew in the face of convention, but he pressed ahead regardless. The boat in question was the 135-foot Billikin, a vessel whose success blurred the line separating the often acrimonious relationship between fisherman and processor. At the time of Bundrant's idea to construct the Billikin, he was working as an Alaska king crab fisherman, as were his soon-to-be business partners, Kaare Ness and Mike Jacobson. The trio found themselves at the advent of a decade of robust growth in the business of harvesting crap. Vertical integration, the strategy underlying Bundrant's plans for the Billikin, promised to give the three fishermen a greater share of the profits available in the crabbing industry, particularly access to the lucrative business done on the docks.

Bent on processing crab where they caught it, Bundrant, Ness, and Jacobson designed the Billikin to include crab cookers and freezing equipment that enabled them to deliver a finished product. Once operational, the Billikin marked the beginning of a new era in the Alaska seafood industry, ushering in a time when fisherman would join the vastly more lucrative seafood processing industry.

Trident was founded three years after Bundrant conceived the idea for the Billikin. At the time, in 1973, the fledgling enterprise was eased through its formative stage by the rising demand for fresh seafood, a demand that was global. The crucial first years of development were also aided by the expertise of several key individuals who joined Bundrant and his team in leading a revolution. A year after Trident's founding, Ed Perry, owner of San Juan Seafoods, a processing company based in Bellingham, Washington, joined the trio of fishermen, giving their company greater opportunities to fish and to process a spectrum of products, thereby diversifying Trident's business beyond harvesting crab. With a line, rather than a single item, of seafood to bring to market, the company enjoyed modest growth, gradually expanding its operations to meet growing market demand.

A decade after its formation, Trident had secured itself as a pioneering member of the seafood industry in the northwestern waters of the Pacific Ocean. At this point, the company could rely on seafood buyers in Europe and, most importantly, from the insatiable Japanese market. To serve these customers, as well as domestic purveyors, Trident's company-owned vessels and independent catcher vessels were delivering a full range of salmon, herring, shellfish, and groundfish products to the company's processing facilities in Alaska. The ability to serve these customers was measurably improved from 1984 forward by the arrival of Bob Eaton, a successful and inventive fisherman. Eaton joined the company's fold and pioneered new fishing technologies, assuming responsibility for managing the company's expanding fleet.

Industry Consolidation in the 1990s

By the 1990s, Trident ranked as a powerhouse in the regional seafood industry. After 20 years of expansion and innovation, the company enjoyed a solid presence along the western coast of the United States and Canada, operating facilities in Alaska, British Columbia, Washington, and Oregon. Toward the end of the decade, the processing industry experienced a period of consolidation, further erasing the distinction between onshore and offshore fishing companies. For many companies in the industry, survival, or at least the prospect of long-term growth, depended on the their actions during the period of consolidation. The smaller companies became the targets of larger companies, both the industry giants and medium-sized companies such as Trident. It was a situation that required companies in the seafood industry to either aggrandize through acquisition or become the target of those companies who did not shy from acquiring. Bundrant sensed the gravity of the moment. Trident assumed the role of an acquirer, taking on an aggressive stance during this pivotal period of consolidation.

Trident's role as a consolidator began as the 1990s ended. In a classic example of vertical integration, the company, in early 1999, acquired a fish processing operation in Fife, Washington, 30 miles south of the company's Seattle headquarters. Before acquiring the Fife plant, Trident had served as one of the major suppliers to the facility, whose 120 employees produced surimi seafood and imitation crab. The Fife plant, acquired from Japan-based Nichirei Foods, gave Trident a modest boost to its operations yet considerably more control over the passage of its raw material--fish--through the processing stage and into the market.

At the time of the Nichirei transaction, a measure of Trident's stature could be taken. The company produced roughly 25 million pounds of pollock, cod, halibut, salmon, and tuna annually and operated more than 30 vessels, including four offshore processors and six onshore facilities in Alaska. Annual sales were approaching the half-billion-dollar mark. The dynamics of the company's business, which affected the conduct of its physical operations and influenced, to some measure, its acquisition of the surimi plant in Fife, were changing at this point due to new federal regulations on the fishing industry. In the years ahead, Trident responded to two forces, industry consolidation and federal legislation. A third force, emanating from an Alaska courtroom, would pock celebrations of the 30th anniversary of the inaugural sailing of the Billikin.

The 1998 American Fisheries Act dramatically changed the way in which Trident and other companies of its ilk conducted business. Before the legislation, fishing operators lived a decidedly frenetic life, their success dependent on catching as many fish as possible before the industrywide catch limit was reached. Once the fishing season started, operators took to the water, trying to catch more fish than they had the previous season and racing to catch more fish than their competitors. The 1998 American Fisheries Act legislated a different way of conducting business, establishing agreed upon quotas on the catch limit in the vast fishing grounds off Alaska. By creating fixed allocations based on each company's historical catch, the 1998 American Fisheries Act helped stabilize the fishing industry, freeing its operators from the mad dash to catch as much as possible as quickly as possible.

The 1998 American Fisheries Act changed not only the way in which Trident conducted its fishing activities but also the way in which the company defined its corporate strategy. With its quota of the total catch fixed by regulators, the company was forced to find other ways to fuel its growth. The years of catching an historically high number of fish were gone, so the company began delving into deeper levels of its business, going beyond the rewards engendered by vertical integration and striving to increase its revenues from value-added products. (An example of a value-added product in Trident's business would be to dip shrimp in a variety of batters and sell the battered shrimp for a higher price than plain shrimp). Bundrant explained the change in the company's strategic orientation. "We're trying to become more of a food company than just a seafood company," he said in a March 17, 2000 interview with the Puget Sound Business Journal. His objective, as stated in the same interview, was "how to add value and be able to sell everything we produce."

Bundrant's hopes for a bigger, more diverse Trident were realized in a signal 1999 acquisition, a transaction that met the challenges posed by the 1998 American Fisheries Act. Several months after acquiring the plant in Fife, Trident completed the purchase of Tyson Foods Inc.'s $180-million seafood assets, a deal that transformed the company into "the Microsoft of the waterfront," as hailed by the Puget Sound Business Journal in its March 17, 2000 issue. Tyson Foods was in the midst of exiting its non-core business interests and sharpening its focus on its chicken business, leaving the company's seafood assets, accumulated during the 1980s and early 1990s, up for grabs. Bundrant jumped at the opportunity, obtaining sea-worthy fishing vessels, associated fishing rights, and onshore processing plants that made Trident one of the largest competitors on the northwestern Pacific Ocean.

Following the Tyson Foods acquisition, Trident entered the 21st century exerting considerable sway in the industry. The company was supported by 12 processing plants in Alaska, Washington, and Oregon and a fleet of three at-sea processor boats. The addition of Tyson Foods' seafood assets enabled the company to begin processing onion rings, a symbolic step towards Bundrant's desire to transform the company from a seafood company into a food company. At the heart of the company, however, was its seafood business, which spanned the spectrum of fish and value-added fish products. Pollock, which accounted for about 45 percent of the company's revenues, served as Trident's mainstay, followed by salmon, a contributor of 25 percent of total revenues, with lesser percentages collected from catching and processing crab, shrimp, herring, shellfish, and groundfish. Trident's value-added and commodity products were primarily sold through restaurants and warehouses, but some of the seafood was sold at the retail level and marketed under such brands as Arctic Ice, Sea Alaska, Sea Legs, and Rubenstein.

Trident in the 21st Century

At the end of 2000, Trident acquired certain assets of a family owned processor and wholesaler named Depoe Bay Fish Co. Previously, Trident had been leasing Depoe's surimi facility, but the company acquired the plant in a deal that divvied Depoe's assets between Trident and Pacific Seafood Group. The acquisition represented yet another move toward consolidation orchestrated by Bundrant, but Trident's attention during the first years of the decade was focused not on consolidation but on the issues being debated in an Alaska courtroom. At issue, according to the company's attorney in the May 2003 issue of National Fisherman, was "the most important case, the most important thing, that Trident has ever been involved in."

In 1995, a lawsuit was filed by attorneys representing roughly 4,500 sockeye fishermen at Bristol Bay in Alaska. The lawsuit, aimed at a collection of processors that included Trident, sought $1.4 billion in damages as compensation for the alleged conspiracy to cheat gillnetters out of a fair price for their fish caught in the early 1990s. The case revolved around the marked price differences between 1988 and 1991, claiming collusion among the cabal of processors was responsible for the steep drop in prices paid at the docks in Bristol Bay. In 1988, processors paid more than $2 per pound for sockeye. In 1991, processors offered less than $.50 per pound. Executives for the processing companies maintained that market supply and demand dictated the precipitous decline in dock prices, with Bundrant voicing unequivocal disdain at the accusations of collusion. "I will never accede to this horseshit extortion," he exclaimed outside the Alaska courtroom, according to the May 2003 issue of National Fisherman. "I will never settle," he vowed. At the time of his pronouncement, Trident's position as an industry stalwart was secure, but the courtroom proceedings clouded the company's future. If Bundrant stood by his words, and the trial ended with victory by the gillnetters, the damage to Trident's operations promised to taint the company's fortunes as it moved beyond the 30th anniversary of the inaugural sailing of the Billikin.

Principal Subsidiaries: TT Acquisitions, Inc.

Principal Competitors: American Seafoods Corp.

Chronology

• Key Dates:
• 1973: The Billikin, Trident's first at-sea processor, sets sail.
• 1998: The 1998 American Fisheries Act legislates significant changes in the national seafood industry.
• 1999: Trident acquires certain assets of Tyson Foods' seafood business.
• 2000: Trident acquires certain assets of Depoe Bay Fish Co.
• 2003: A lawsuit filed against Trident and other processors goes to trial.