Gov. Togiola Tulafono says labor wages are the main hurdle the government faces as it continues discussions and negotiations with companies to fill the void in the local economy when COS Samoa Packing closes at the end next month.
Speaking on his weekend radio program, Togiola says the administration is fully aware of mounting local concerns over the closure of Samoa Packing, which will lead to a domino affect in the private sector.
He revealed that almost every day discussions are ongoing with four companies to replace Samoa Packing. He called this the biggest challenge American Samoa and his administration is facing now.
The administration’s talks and negotiations with these four companies are not far from being completed and ASG has been able to address about 90% of the issues raised by the companies, but the main obstacle at this point is the minimum wage, the Governor stated.
According to Togiola, ASG has offered many incentives to these companies to help them make their decision, but the big issue at hand is how to put a moratorium on the federally mandated minimum wage increases.
He said these companies have stated during discussions that there are foreign countries offering wages less than US$1 per hour and these countries are also working to attract them.
Togiola said if the local minimum wage reaches $7.25 per hour as mandated by federal law, these companies will see no reason to come here at all.
Besides labor costs, he said these companies also have to look at shipping costs, which continue to increase.
The Governor said the issue of minimum wage increase was also raised by the trade delegation that was here two weeks ago from Manukau City, New Zealand. He said the delegation has questioned the government as to what is being done to address this important matter.
When Samoa Packing closes here, the company’s owner Thai Union Frozen, will open in October a Chicken of the Sea International plant in Lyons, Ga., employing 200 people and utilizing modern technology and equipment for the operation.
Togiola said there is now a local argument that it’s not the minimum wage issue that caused the company’s closure, because Chicken of the Sea will pay much higher wages in Georgia.
The Governor pointed out the proposed production in Georgia is much different than Samoa Packing operations. He said Samoa Packing’s local operation is labor intensive and involves, among other things, the off-loading and cleaning of the fish, which are minimum wage positions.
For the operations in Georgia, the fish will be off-loaded and cleaned in Asian countries — where labor costs are much lower — before the fish is shipped to Georgia for packing, said Togiola, adding the workforce at the Georgia plant is much smaller.
He said this is the same process being used by Bumble Bee, saving them money.
Thai Union says the canning operations in Lyons will be housed at a 200,000 square-foot facility, where workers “will process frozen tuna loins into shelf stable Chicken of The Sea canned tuna” to be shipped throughout the United States.
Togiola said the argument that the minimum wage is not the main issue when it comes to the canneries is not true, and pointed, for example to StarKist Samoa, which has already started laying off workers due to the high labor costs in an effort to cut rising costs but at the same time remain competitive. |
Comments to this story (16)
ed wrote: |
27 Aug 2009 04:36 PM |
Kick all Tuna canneries out. They are the reason our island has been held hostage over a bunch of fish stories. Elect new young people with better decision making than these old ones, . They always say nice things, but nothing ever materializes. |
New York wrote: |
27 Aug 2009 01:21 PM |
| It is sad to see my people go through this ordeal. it is also difficult for the business owners and the middle to upper class people like the governor that has too much money to realize how much of a help the hike would bringto the peolple! tell me governor, how does it make sense that the cost of living rises every year and you and the business owners disagree with the hike? you all do not feel the effect because you have money to throw away. the corruption and greeddiness is almost inevitable. this is why my family and i moved out of Am Samoa (my home sweet home)cause the rich get richer and they stomp on the poor. good luck my people, God is watching them..... |
Alo o le Manu'atele wrote: |
27 Aug 2009 08:28 AM |
| Scape goat, scape goat. The governor knows darn well, the minimum wage increase was not the reason for COS to move out. We are a teritory of the U.S. Please do not compare us to the Asian countries. Uncle Sam has been so good to us but because of greed and the abuse of our fa'asamoan culture, the elected leaders cannot resist the love of money. Do we hear Guam and Puerto Rico having the same issue? No. Why? Because their leaders have plans for such times as this. Ours do not! Well, American Samoa, we asked to elect our own governor. Ua a nei la? Learn from poor decisions and look to the future. We can only learn from the past and make the future of our people better. DO NOT MAKE YOUR DECISION depending upon fa'a-aiga because it will damaged our government and paralyzed our paradise. This is the 21st century. We have alot of well-educated sons and daughters of Samoa who are well qualified to Lead our lovely Amerika Samoa. God Bless! |
Taualaga a Solomona wrote: |
26 Aug 2009 09:14 AM |
| The law is the law. We either adapt,adopt or think outside the box. Eat unlaven bread and taste the bitterness of life. Keep the faith American Samoa, this storm will pass. Don't give up and don't sell your tofa or soul to things that shine but are not real gold. Ia manuia le folauga. |
kafaopaaa wrote: |
25 Aug 2009 12:38 PM |
| Thai Union is worth a tiny 69.0 billion (business week aug 25) or just google it. its already impossible to catch up to the current cost of living, plus to add to the pain, hold back the minimum wage? is the money worth the principle of constant abuse? as of now, american samoa is about 14 years behind the federal minimum wage, this should not continue! "in the end, it is not the companies doing the abuse, but the government that allows it, by the people who voted it"
for the people? which ones? |
Company Strategist wrote: |
25 Aug 2009 11:39 AM |
| To the hourly cannery workers, the $0.50/hr wage increase is 12% additional income. To the stores, the impact is 50% of this or 6% increase in prices of basic commodities (meat, milk, bread, etc.). In the businessworld, the store owners will pass the 6% to the consumers through price increase since the main purpose of business is profit (maintain profit margin of 10% - 20%). Other costs of services such as bus/travel, room accomodation, utilities (electricity/water) will also increase. After adding all the increases (6% plus ?? others), I will not be surprised if the workers will not feel the effect of the wage increase, as far as their pocket is concerned.
To the Gov't, there should be a procedure in place to check the prices of the basic commodities so price increases will be in the vicinity of 6% and not over. This will include the program to counter check the documents to justify the price increase. This is a difficult job as Gov't personnel will be pitted against 'Seasoned Accountants'. Adequate technical skill of the Gov't personnel is critical to the success of this job. If such skill is not available, getting one is costly. Not to mention the extra time spent for this.
Regarding 'AS Competitive Edge' in Tuna Canning, one is already mentioned which is AS is near the fishing grounds. This means, faster turn-around of fishing boats which reduces fishermen operating costs. To the cannery, this will mean lower fish prices. Another advantage of AS is on the 'duty-free' goods, meaning all products made in AS enter the US with zero duty (I read this in one of the earlier news related to the visit of NZ businesspeople). Asian Canneries are charged duties ranging from 10% to 25% by the US. So, the question really is, which is more profitable, doing business is AS or Asia (China, Vietnam, Thailand, Phils.)? In summary (comparing AS and Asia), AS has lower fish costs(?) and 0% duty while ASIA has lower labor, lower energy costs and, 10% - 25% duty. |
Ma'afe'e wrote: |
25 Aug 2009 08:48 AM |
| Minimum wage (7.50/hr), is mandated by Federal Law! Therefore, negotiate on something else that make sense, and use federal government resources for help. We must clean-up ourselves first, recruit and hire people with pride and common-sense, and start to think outside of the box to attrack businesses into American Samoa. Now wake up and go to work, but importantly- do your job honestly! |
p.mamea wrote: |
24 Aug 2009 07:57 PM |
| Governor Togiola have yet to give in to the fact that he doesn't have an economic plan nor does he has any idea of how to run a government in crisis. It's obvious when you sit in the office and facing the Pulu Tree your vission is obstructed and all you see all day are ghost employees going in and out, enjoying cup of coffees at the parking. |
"Politics vs Honesty" wrote: |
24 Aug 2009 07:47 PM |
| C'mon governor, the people are not that stupid, we think it's you , every time you opened your mouth and say something, it doesn't make sense at all. If there are countries that are luring in these companies at $1 and hour than why didn't they took it in heart beat?, and why insisting business in AS ? governor it's just not true, you're lying and mis-informed the public at best, MNW is not the culprit that prevented these companies, it's the corruptions, in-efficiency, and embiguities tax laws. Wish the Editor can follow up which countries is he talking about ? It's hard to believe that $10K for directors, $200K for Samoan Heritage, and several thousands for the annual flag days vs a lousy $.50 MNW increase is beyond comprehension. ASG are a bunch of corruptors, theives and pretendors ! Honesty is still the best policy! try it Governor, you might get re-elected the 3rd term ? it may not be unreasonable after all ! |
Mike wrote: |
24 Aug 2009 02:13 PM |
| While an important factor, the increasing minimum wage is not the main reason COS is leaving the territory, and the Governor knows this. He is trying to mislead you for his own purposes by telling you otherwise. It is a documented fact that COS started considering leaving American Samoa as early as 2006, well before increases in the minimum wage took effect. And while it is true that StarKist is laying off workers, this is mainly because their sales in the US have fallen, so they need to ‘can and ship’ less tuna, so they don’t need as many workers: less workers means less output, it's as simple as that. If StarKist’s sales started rising again and they needed more output, they would hire back however many workers they needed in the blink of an eye. (And you can rest assured that the StarKist CEO hasn’t cut his multi-million dollar per year salary by even a single penny to help out). The fact is, most tuna producing countries in the world have wages far lower than those in American Samoa. For example, Vietnam’s minimum wage is $0.25 per hour. Is that really where you want to go, American Samoa? When it comes to the tuna industry, the fact of the matter is that American Samoa has lost its competitive edge (lower wages) and also has to contend with significantly higher shipping and energy costs. |
Manu'a wrote: |
24 Aug 2009 01:50 PM |
| The minimum wage is not the obstacle to the problems we are facing. You and your cronies are the problem. You have been in office for more than 10 years without any goals to off set probable hardships againts ASG. You didn't see what was comming because you didn't have any economic long range planning for ASG. Most of your key people in important ASG positions are people from Tauese's administration. Same ideas and same methods for running things 16 years later. When Utu lost the election you should have put the past behind and hire him as your Economic Advisor for ASG. If you were a student of Machiavelli you would understand the mentality behind it. If the min. wage is the obstacle, how will my family ever make ends meet, now that my grandmothers social security check will be in trouble? |
For Min. Wage Increase wrote: |
24 Aug 2009 12:55 PM |
| The Governor should try and survive on min. wages and see if .50 cents makes a difference in his life as it does to others. Its okay to blow $200,000.00 but its hard to give the actual working individuals what they are really worth. Dont compare us to foreign countries when we get most of our money from the USA and we are a US Territory. We should get paid what we are worth! |
Anonymous wrote: |
24 Aug 2009 12:43 PM |
| American Samoa should not be held hostage to a fish economy. However. American Samoa must adapt to change. Even if minimum wage remains unchanged, natural/financial resources determine whether any corporate asset should yield to absolute or competitive advantage.
Therefore, use the minimum wage increase for venture capital development, alternative energy technology product and service, and auto assembly-line manufacture/parts.
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Charles V. Alailima wrote: |
24 Aug 2009 11:03 AM |
| The technology of food processing has changed tremendously fast and American Samoa factory infrastructure development has not adapted to prepare for it over these many years. Samoa Packing as the smaller company probably was able to adopt the new production methods faster than Star Kist which needs to amortize its current investment in plant and equipment before moving on to the newer proccesses. Star Kist may also want to see if the US market accepts tuna in a package so it lets Chicken of the Sea go first this time. American Samoa's wage rates were never able to compete with the low Asian rates. What kept the canneries here was a business strategy based on locating the entire fish production process in a place central to the fishing grounds on stable US soil. With the new technologies in freezing loins and packaging and more confidence in the stability of Asian countries, the new business strategy seems to be to have the human labor of gutting fish off-shored to low wage countries and the technology intensive final processing and packaging done closer to the market. Unless American Samoa wages go down to the low Asian rates the loining operations are lost anyway once the new processes kick in. What American Samoa still has is servicing a fishing fleet. If we wish to get in on the high wage scale jobs then the focus should be on making a new technology intensive food processing and packaging facility perhaps with Samoa, Fiji and Tonga. engaged in loining. |
Former Star Kist Management person wrote: wrote: |
24 Aug 2009 05:37 AM |
| The whole issue is the company again is taking advantage of this whole situation. The company knows that the gov't of am. samoa is in trouble and they do have the upper hand on all and any discussion of staying or coming in to the void by samoa packing. It has nothing to do with the hourly wages. It has everything to do with the company taking the sweat of the am. samoan producing high yields of profit as the only terminology that the fish industries do and wholey believe it. High yield is equal to high profits. Am.Samoan, once again these company(ies) are raping and stealing your well deserve increase in wages. This is the culture of profit seeking company. The am samoa gov't need to talk to big brother uncle sam about having an american samoa cannery produce their own tuna and selling to the u.s. arm forces and find contracts with other u.s. business as well. After all, the am. samoa are the ones that are producing the tuna. There is no need for any training of the work force. The am. samoans are the experts and have done this since 1960. Wake up governor. |
Fermented Lie wrote: |
24 Aug 2009 03:04 AM |
| This is a Governor that does not know business and motives of businesses. I am happy to say, he understands less and less, of what American Samoa needs more and more, and that is Leadership.
Solution Togiola-- We have none from you yet and the day of Closure is upon us in 30 days. What is your solution Togiola? Where are the jobs created with the Undersea cable investments? Where is your plan Togiola? Stop fermentable lies that you know is not true. |
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