By Giff Johnson
For Variety

MAJURO — The Shanghai Deep Sea Fisheries Company last week launched the first phase of an $8.5 million investment in a new tuna processing plant in the Marshall Islands.
A Chinese construction crew is on a fast track to build the facilities to begin processing tuna in August.
The existing factory facilities — up to late-2004 run by an American company that went bankrupt — are being torn down, except for the foundation and underground water storage tank, so that the plant can be doubled in size. When the previous plant went out of business, overnight more than 600 workers were out of a job, which accounted for an estimated 16 percent drop in private sector employment, the government’s statistics office reported.
“We will open in August with about 200 local workers,” said processing plant consultant Ryan Ma, the director of the California and Shanghai-based H and M Food, Inc. “We’ll start small with a limited number of people and then increase each month until we’re in full operation by December.
“We’ve promised the government that there will be no less than 90 percent Marshallese workers (at the plant),” he said. Once the plant moves into full production, “we will need 600-650 local workers,” Ma said, adding that he expects the expatriate management team to remain about 35-40 people, or much less than 10 percent of the staff in a fully operating plant.
The plant will feed the processed tuna to the large Asian fish supply company TriMarine International Ltd., which has contract with the major tuna canning company, Star-Kist.
The Majuro-based plant will clean, filet, cook and freeze what are known as tuna “loins” that will be shipped to canneries in American Samoa and elsewhere for final processing.
Ma said Shanghai Deep Sea Fisheries Inc. had originally projected a $6 million investment, but that amount has jumped to at least $8.5 million, and the company’s board has set a cap on the investment at $10 million.
Although labor costs are significantly higher in the Marshall Islands than in other countries where loining and canning plants are located, Ma said the strategic location of the RMI in the midst of the Pacific tuna fishing grounds makes it attractive for this investment.
“The amount we save on shipping costs balances the extra labor costs,” he said.
The minimum wage in the Marshall Islands is $2 an hour, although the plant is expected to gain a government waiver to pay entry-level factory workers $1.50 per hour.
Resources and Development Minister John Silk said in an interview Thursday that the company can apply for both a minimum wage waiver, allowing it to start workers at $1.50 an hour, and also a five year waiver on gross revenue tax because it meets the requirements of being over a $1 million investment and employing more than 100 Marshall Islanders.
The plant expects to operate two shifts daily, six days a week and aims to produce 80 tons of fish per day. Ma thinks that the plant may be able to get production to a higher level by increasing the efficiency of the plant workers over time.