Norsk Fiskerinæring Nr Translation from Norwegian of an interview with Magnus Roth

Transcription

1 Norsk Fiskerinæring Nr Translation from Norwegian of an interview with Magnus Roth Stronger after the storm From their offices in Drøbak Ocean Trawlers and Magnus Roth sold so much fish that it was hard to believe that it was within legal limits. The Directorate of fisheries wondered and NRK (national broadcaster) was sure that they had landed the largest predatory fish in the Barents Sea. Since then they have both retreated. Ocean Trawlers is selling more fish than ever. But now the offices are located in Hong Kong, the operations have been MSC-certified and the new CEO, Magnus Roth, is even willing to talk. After having said very little the last seven years Magnus Roth is for the first time giving an interview en route from the airport express train to International Departures at Gardermoen, Oslo s airport. It is a good thing that the OT CEO is an efficient man; little time is lost on hesitation when defending the company s business model for bringing Barents Sea fish to the market. - The future is not selling the fish to China that can never be sustainable. The best thing to do is to produce as much as possible onboard and deliver directly to market, says Roth implicitly criticizing other players, including the Norwegians. Swedish born Roth has not stopped paying attention to Norway. Norsk Fiskerinæring encounters a chipper Ocean Trawlers boss on his way home ten steps away from the security check point an hour before his plane leaves eastward. In a sense it s an echo of the much more difficult and dramatic exit eight years ago. Then as now it was Norway he was leaving for Hong Kong. Now both the company and Magnus Roth are well established in Hong Kong. - When you come to Hong Kong, you can smell business. It is a hard working business and financial center really trying to develop and move things forward, says the 54 year old. The Legacy from Wägården The legacy can explain where he and Ocean Trawler partner Vitaly Orlov set their course, but not why they left their Norwegian base in Drøbak. But first of all we want to find out how a young naval officer from the east coast of Sweden managed to become a large scale fish wholesaler on the east and west coast of Norway. Roth points out that Sweden traditionally has been a contributor to the increased activity in the world fish trade and that us Norwegians shouldn t mind being reminded of this from time to time. - The modern global fish trade really started in Sweden. In the seventies Nils Wärgården was given an exclusive right to all Soviet fish export. At the time the Soviet export was zero, but in the years following he built up the export from five different fleets and Wärgården s company Joint Trawlers in Helsingborg exported more fish than anyone else, says Roth. He first tried his luck at getting a job with Joint Trawlers, but when that

2 Norsk Fiskerinæring Nr Interview with Magnus Roth 2 didn t succeed, he turned to the newly established Witte, owned by Abba, in turn owned by Volvo and now an Orkla company. Ålesund and Murmansk Prior to this Roth had carried out his first job in 1983 when he unloaded a cargo of pelagic fish in Nigeria. As fishing inspector for Witte there was little time left over for other activities than fish and travelling; of the first nine months the newly engaged Roth spent 225 out of 270 days on the road. - Later I arrived as a newlywed in Ålesund in May of 1985 with a wife and two birds, says Roth, adding that the birds by no means were able to acclimatize to the Sunnmøre climate and died within a week. The offices of Witte International on the other hand were performing quite well. In 1985 Norsk Fiskerinæring wrote an article about Witte, calling it the fastest growing company in the Norwegian fishing sector. Roth and two colleagues from Scansea were in 1989 given the opportunity to buy Witte s Norwegian operations, and in 91/92 became the first international company to establish offices in Murmansk. - This was amidst all the turmoil when Soviet became Russia and the Moscow-centered system became decentralized, says Roth, who in the meantime had moved from Ålesund to Drøbak. The person they hired in Murmansk was a former employee of their agent. His name was Vitaly Orlov and made all the deals with the Russian ship owners and was to play a central part in events to come. - Vitaly and I saw the changes in the Russian system that they wanted to expand, not just buy and sell, but build a foundation for the future. Our colleagues in Scansea were more focused on trading and possibly short-term profits. In 96/97 this caused Vitaly Orlov and I to leave Scansea and establish Ocean Trawlers. Orlov had moved to Roth s base in Drøbak the previous year. The fish reseller office in Murmansk decided to go with OT, and within a year the company took over nearly all the trading of Scansea. According to Roth this was one of the main reasons the company managed to sustain their high growth rate, a question the company has had to answer on numerous occasions. - We didn t create any new trading, but we out-competed the competition. And we had a different philosophy; working with the ship owners not against them. In 1997 Russian fishers delivered tons fresh fish for processing in Northern Norway and were paid NOK 6 per kilo, but if they had had their own freezing vessel, they would have been paid NOK Of course the Russians wanted to work with partners who were willing to share the risk of building a processing fleet, says Roth who together with Orlov did exactly that. In 1998 they bought Ole Sætermyr and resold it, on credit, to a ship owner in Russia with a sales agreement with OT. - During the first five years we probably did the same more than 15 times, even though some of the deals ended prematurely. This secured us delivery, while at the same time giving us access to fish from other operators who saw it as beneficial to deal with us, he explains. According to Roth there were a total of 52 vessels on bareboat charter in the Western part of Russia at the time, but only their boats were paid in full and handed over to the owners.

3 Norsk Fiskerinæring Nr Interview with Magnus Roth 3 - This happened at the same time as production capacity in China was increasing and these two developments worked together, he adds. Worst primetime We have now presented a bit more of Roth s version of the story. Many Norwegian TVviewers were introduced to a decisively different story in the fall of 2004 when the investigative journalists of Brennpunkt aired a program named The Predatory Fishermen. In this program the bareboat-model was portrayed as a hindrance to the development of the Russian fishing industry, and OT was accused of both corruption and organizing unlicensed fishing. Other media also international were quick to follow up. After a while OT chose to meet the media pressure with closed doors and silence. And Roth has never really spoken to the media since then. - The whole thing was based on a report developed by the Norwegian Fisheries Directorate. A consultant with six months experience had written an internal memo questioning our vessels and our operations. The problem was that they tried to translate the Norwegian system to the Russian system; a system based on company quotas and not vessel quotas. This meant, at the time, that one vessel could fish on several quotas for more than one company and not just the owner s quota. Given that they had missed this crucial point some very incorrect conclusions were drawn, says Roth. Norsk Fiskerinæring will not dive down in the details of the case, but notes that the Norwegian Fisheries Directorate rejected the contents of the memo in Also the national broadcaster NRK, known for their unwillingness to admit fault, had to go on record admitting that they could not document their claims and that their case was without merits. The consequences for OT, however, were difficult to turn around. - When investigative journalists get a lead, they run the story even though it is false. And the consequences are severe. The 27 people who lost their jobs in Drøbak were not happy. For me personally it was the worst experience of my life. I hope somebody really tries to get to the bottom of what really happened. Rising from the ashes We first wanted to try to find out what has happened since. Drøbak was abandoned and Hong Kong became the new HQ, partly because they already had an office there. Magnus Roth was burned by Brennpunkt and wanted to spend his efforts on other things than talking to the press. But now he is here, dressed in a blazer with a tan, calm and collected. Even though 27 lost their jobs in 2003, more than 30 people are now employed by OT. In a recent press release Roth was named CEO and before Christmas a press release went out stating that the OT fish is now MSC certified. It all gives the impression that both company and founder have come out strengthened from of the ordeal. - We did come out of the ordeal strengthened and we are not negative to the focus given to the issue. Even though we were innocent there were many players who built themselves up because all the focus was on us. We fished the same quantities year in and year out, while our competitors could increase their catch by as much as 300 percent. It was a long haul before this came under control, but it did and it was largely due to the increased focus. NGOs, the Coast Guard and the Russian authorities got

4 Norsk Fiskerinæring Nr Interview with Magnus Roth 4 engaged. In 2004 we implemented traceability on all our fish, says Roth who now is of the opinion that it is time to focus elsewhere. - The odd thing is that Norway is not tackling the coastal fisheries in Northern Norway percent of this is illegal, unreported and unregulated. This leads to mispricing in the saltwater fish market, leading serious players in Norway and Portugal to suffer. Green stamp OT is one of the largest suppliers of cod and haddock from the Barents Sea. Every fifth piece of cod or haddock a Brit eats with his chips are from Roth s company. On October 24, 2010 MSC issued a release that must have been an eye-opener to those who still connect OT to illegal fishing. Cod and haddock delivered by OT is certified as sustainable according to the MSC regulations. Roth sees this as an extension of the work done on traceability. - Through MSC our suppliers are obligated to uphold routines, control and production specifications. We could have been certified as early as 2004, we started before Aker Seafood, but finished a bit later due to certain practical obstacles in Russia. - Do you get anything back in the market from the certification? - You get credibility. I see it as a mark of quality. If you are to remain a player you have to demonstrate that you re a high quality supplier. Many of our largest customers demand it. You don t get a premium in the market, but in time I think there will be a MSC and a non-msc market. Today some markets care, others don t. Northern Europe does, Southern Europe doesn t. In the US the retail segment cares, while food service is demonstrating an increasing interest, especially the restaurant chains, he says. OT wants to grow in their first year bearing the MSC stamp. According to the MSC release tons of Russian cod and tons of Russian haddock has now been certified with the blue logo. In 2011 Roth expects that the volumes will increase by 10 percent. He has budgeted in accordance, with a sale of USD 330 million compared to USD 300 million this year. - In which markets are you most active? - It depends on the product. I view gutted fish as a commodity and it is sold to various producers. We send the big fish to Portugal and Norway, while smaller fish goes to China and Canada. If we re talking fillets the UK is our main market, but we see a lot of growth in continental Europe, from Italy to Switzerland and Germany. Since establishing offices in the US we have managed to breathe life into a market that was almost gone, says Roth. What does Norway want? Even though boarding is rapidly approaching Roth takes the time to reflect on the developments of filet production. - In 1987 there were 27 factory vessels in Norway. Today there are seven filleting vessels left. Who is the Minister of Fisheries that managed that? There is talk of tons of Norwegian white fish going to factories in China. In reality the number is

5 Norsk Fiskerinæring Nr Interview with Magnus Roth 5 probably closer to tons of cod and haddock, but it is still odd. If they had built a factory fleet, producing top quality product, that would have made sense from a business perspective. Instead they continued to downsize the fleet. - When operating on the Russian side there are very different payroll costs on these kinds of ships? - The fish is sold at market price. You can t base production on costs you have to base it on revenue. We are opening up new markets, but we can t produce more fillets than we can sell, Roth answers. Before he adds. - I see the problem. Norwegian ship owners are competing with the oil industry where the crew works for two weeks, have three weeks off and still make a million NOKs. That does make it difficult to make a profit, but it is wrong to blame others. Maybe it s time to reassess the Norwegian system? Competition is healthy you can just keep running to government all the time. Roth and Orlov Roth s slight accent is probably the most Norwegian thing about the company these days. The offices are located everywhere but Norway; Hong Kong, Maidenhead outside London, and New Canaan in Connecticut. A sign of both continuity and change in OT is that the man who took over for Orlov in Murmansk now is in charge of procurement. The collaboration between Roth and Orlov remains the same. - We always make joint decisions and we are both involved in everything that happens with the company. Due to the language he works more with Russia, while I traditionally work more with sales. But I know what he is doing, and he knows what I am doing, says Roth. This year there was, however, time for a bit of change: In March Roth was named CEO of the OT-group. - We ve had several CEOs, but Vitaly and I concluded that it was easiest to run it ourselves, says Roth, who with the new position has to get used to being in the public eye to a larger extent than before. Russia also a market The dealings of Skandi Seafood are not, however, his domain. The company was founded as a joint venture with Danish Espersen. Skandi Seafoods are pursuing a different path than OT, with processing plants in Vietnam and China. - Apart from the ownership stake they are just a customer like any other. The founding of the company in 2008 was a strategic decision. Our main focus is on building markets for onboard processed fish, says the OT CEO who is glad to repeat the virtues of his factory fleet. - We are best at everything that has to do with emissions and the environment, but we can t produce fillets that weigh exactly 222 grams we need a bit of leeway. At the same time we are the first producer to produce cod loins and portions at sea. This has been given up by the Norwegians, the Faroese and the Icelandic. - How many vessels are currently playing on your team?

6 Norsk Fiskerinæring Nr Interview with Magnus Roth 6 - The ship owners we have sales agreements with employ 6 fillet trawlers, becoming 8 this year. When it comes to H/G-vessels we have about 10. And we buy about percent of our volumes on spot. - How much fillet will you deliver this year? - Our budget is tons from 8 vessels tons to England, tons to the rest of Europe, and tons to the US. The demand in Russia gives us hope that we can channel 1000 tons there and maybe reduce to tons in England. - Are you noticing any shifts in customer preference between fresh and frozen? - We believe in growth in demand for chilled i.e. frozen fillet thawed in a controlled environment. This is due to the fact that it is often better than fresh. - Who is your biggest competitor? - We have several competitors, but we are so vertically integrated that there is nobody else who is structured like us, says the new CEO. Even conflicts seem to be resolving themselves for new Ocean Trawlers Group. Little over a year ago OT sued Icelandic Group over the ownership to a number of fish cargos. Now Roth can report that they managed to sit down and come up with a solution everybody could live with. The story of OT and the former naval officer at the helm is all about the will to grow and innovate and at the same time about the willingness to not deviate from the course based on the fundamental business model and choice of raw material. At the end Roth has to leave for the gate but we manage to slip one last question about the prospects of current and new species for aquaculture. - I am not a farmer, says Magnus Roth.