ST. GEORGE, Maine — The first shipment from Sea Hag Seafood left the plant Tuesday.
For 23-year-old owner Kyle Murdock, the opening of the lobster
processing plant was the culmination of nearly two years of planning and
hard work.
Murdock, a Monhegan Island native, attended Worcester Polytechnic
Institute in Worcester, Mass., majoring in physics with a minor in
differential math. He was planning on entering the Navy to focus on
nuclear propulsion.
While at college, however, Murdock was concerned about the fate of
the lobster industry, which was worth $335 million to Maine harvesters
last year. Since the Great Recession began in 2007, the price paid to
harvesters has declined. The price paid to lobstermen plummeted
further this summer. Prices fell in early July to $2.60 per pound.
Earlier this year, some lobstermen stayed ashore in hopes of reducing
the supply and increasing prices.
Murdock came from a lobstering family and has gone lobstering with
family members. As a youth, he had a student license and fished several
traps.
While heading home from college two years ago he thought about how
lobstermen would be helped if there was a local processing plant to buy
the product. As much as two-thirds of Maine lobsters at times are sent
to Canada to be processed in plants there. Gov. Paul LePage earlier this year called for encouraging more processing in the state in order to add value to the Maine catch.
Beginning two years ago, Murdock had increasing numbers of
conversations with people and developed a business plan to start up a
local lobster processing plant.
One morning while home with his parents, his father woke him to
inform him that the former Great Eastern Mussel Farm plant on Long Cove
was available. Murdock toured the closed waterfront plant and made an
offer, but that offer was rejected. He decided to return to college and
friends were helping him move to an apartment in the fall of 2010 when
he received word from the real estate broker that another bid on the
plant had fallen through and his offer would now be accepted.
The Great Eastern property was foreclosed on by The First bank in
2009. The First sold the 7.5-acre waterfront parcel in March 2011 to
Shining Sails Inc., which is owned by Kyle’s parents, John and Winifred
Murdock.
One challenge was to get financing for the project, Murdock said,
with the additional restrictions placed on potential lenders by banks
following the financial crisis of 2008.
"It’s tough to convince a bank to loan a 23-year-old with no credit
history $2 million. Most gave me a sideways look,” Murdock said.
He turned to Camden National Bank and met with its loan officials. He
said there were many requests for additional information and he met
them, and with its assistance, as well as support from the Maine
Department of Economic and Community Development and other private
financing, Sea Hag Seafood went from a business plan to a processing
plant.
He praised the state for its assistance.
"They were extremely helpful. I couldn’t have done it without them,” Murdock noted.
One key part of that assistance was being designated in a Pine Tree
Zone. That designation provides numerous tax breaks for fledgling
businesses.
"The tax benefits are enormous,” he said.
Pine Tree beneficiaries receive sales tax exemptions, for example, on
purchase of equipment. He said this amounted to a 7 percent discount
for him.
Pine Tree benefits also include a 100 percent corporate income tax
credit, 100 percent insurance premiums tax credit and access to lower
electric rates.
The company also received a state Community Development grant and
loan mix of $400,000, which was received with the support of the town of
St. George. The town’s planning board approved the project in May.
Murdock said the entire project cost, with the purchase of the
property, renovations and equipment, was between $2 million and $2.5
million.
Sea Hag began operating last week with the first shipment going out
of the plant this week. The company employs 30 people on the
manufacturing line and five managers. Part of the state grant
requirement was that a certain number of employees had to be hired, with
the workers being low-income.
As for him, Murdock said it is a full-time job to find sources of
products. He said he shops around to various dealers and lobstermen.
The property is located on the water, where lobstermen can offload
their catch, although, he noted, he does not sell bait or fuel, which
would attract lobstermen to drop off their catch directly at the plant.
He expects to process one million pounds this year, noting that the
plant did not start up until one third of the season had passed. He said
the plant, if it was running two shifts, could conceivably process
80,000 pounds of lobsters per day for 160 days a year — this would
amount to nearly 6,400 tons in a year.
He said that operating as a lobster processor during the winter will
be difficult because of the decreased amount of product and how much
more expensive lobster is during the off-season. He said he is
considering processing other seafood.
He said that he has had difficulty trying to find enough qualified
workers. He said some people came to orientation and then never showed
up to work while others would come for training for an hour or two and
decide this was not the job for them.
The Great Eastern Mussel plant closed in 2009 and Murdock said some
of the people who lost their jobs have come to work for Sea Hag Seafood.
The lobsters can be cooked and frozen at the plant. The product is sold whole and in parts and as picked lobster meat.
His products are sold wholesale but he does have one retailer.
Harborside Market & Gardens in Tenants Harbor sells his lobster meat
under the Sea Hag name.
