Cut in visas for workers hamstrings Omega Protein

By Hank Schultz contact

- Last updated on GMT

Omega Protein has had to drastically alter how it operates its fishing vessels because new visa restrictions have dried up its source of workers.  Omega Protein photo.
Omega Protein has had to drastically alter how it operates its fishing vessels because new visa restrictions have dried up its source of workers. Omega Protein photo.
Fish oil producer Omega Protein is struggling with a change in immigration policy that has severely cut the number of workers available for its fishing boats.

In the past the company has used a number of workers who were in the United States under the H-2B visa program, which applies to temporary non agricultural workers. There is a ceiling on the number of these visas that are granted annually, but in the past the program had a big loophole in that some workers were exempt from the H-2B cap, which is currently set at 66,000 per year. Congress chose late last year not to renew the “returning worker” exemption. This program, which went into force on Dec. 18, 2015, allowed workers who had previously been in the U.S. on an H-2B visa granted between October 2012 and September 2015 to be cap-exempt for fiscal year 2016.

Omega Protein is the largest vertically integrated fish oil processor in the United States.  The company fishes for menhaden, an oily, herring-like forage fish, with two fleets, one that fishes in and near Chesapeake Bay and the other that works the Gulf of Mexico, mostly off of Louisiana. The company sells fish meal and fish oil into the animal and human nutrition markets, where some of its oil is used in omega-3 supplements. It has human nutrition subsidiaries that produced and/or sell botanical ingredients, whey protein ingredients and other lipid ingredients.

Improvising on the fly

In addition to its own fish processing facilities, the company also has its own shipyard which has been a boon in that some larger vessels that were being used as supply boats could be reconfigured as catch and carry boats that could be operated with fewer workers and store a large amount of fish aboard.  Where the company was employing 15 workers per active vessel last year, it is now trying to make do with five. CEO Bret Scholtes said it is something of a short term solution, as the supply boats were originally intended to allow fishing vessels to remain on the water throughout the relatively brief fishing seasons (there are two per year) without the need to have to return to shore to offload fish.

Scholtes said the company is also stepping up its recruiting efforts to try to bring in more resident workers. Fishing is hard work, and the company pays its workers based on catch totals, not on an hourly wage with overtime benefits.  During an earnings call this week with analysts Scholtes said something to watch is “how do those recruiting efforts translate into the number of workers that we have available to us in the heart of the fishing season.” ​The call was posted in transcript form on the site seekingalpha.com

Omega Protein’s revenues for the first quarter of 2017 were $74 million, down from $85 million in the same period a year ago, due primarily to lower animal nutrition revenues. Gross profit for the first quarter was $20 million, decreasing from approximately $25 million in the first quarter of last year.

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