American Samoa's largest private sector employer, Starkist Samoa, is to stop hiring new staff, and is looking at shifting some of its production offshore
The company says it has suffered financially due to the mandatory minimum wage increase of 40 cents an hour, and is reducing investments to the local cannery.
It says other financial factors include access to fishing grounds, and a new trade agreement which opens up competitive pressures from countries such as Vietnam.
Our correspondent in American Samoa, Monica Miller spoke with Leilani Momoisea about the impact this might have on the territory.
MONICA MILLER: The scariest part of all was when the CEO and president, Mr Andrew Choe, has said that they are now having to evaluate and looking at alternative locations. And he came right out and said that he has informed leaders in Washington DC, he met with our Congresswoman last week as well as the Department Of Interior official who is overseas, Esther Kia'aina, and informed them that that they might have to shift some of the production that's now carried out at the American Samoa plant to Senegal.
LEILANI MOMOISEA: Is it feeling for workers like the writing is on the wall with this announcement?
MM: We haven't had any chance to talk with workers I believe that they have just been told the same thing that the press statement that the cannery put out, said. There's no specifics, it said that there's a general announcement that things are going to be very difficult for the local plant here. Usually this is one of the busiest production times for the cannery and they do have orders that they're filling but in spite of those orders they're saying that they would have to institute this freeze on hiring and reduction on any investment that they put into the local plant. Some of the factors that the statement points to, that have prompted this action, one if the minimum wage. As you know the American Samoa minimum wage was raised by 40 cents an hour since October 1st. There's also the issue of access to fishing grounds. Then there's another new trade agreement that the United States have signed which will pretty much put imports into the United States, fish products from Vietnam, on the same level as duty free exports from American Samoa. So that all has combined to put Starkist in the situation it's now in.
LM: Not long ago the American Samoa Chamber of Commerce has said that they had been talking to their members and the mandatory minimum wage hike had actually little impact on their members, they'd been planning for this and it wasn't a big deal.
MM: Yeah, the Chamber of Commerce had said that, except for the canneries. The other members businesses, had in fact prepared for this. But because you know, Starkist employs about 2,000 people and the Samoa Tuna Processors have close to 1,000, so they have the volumes. But all those factors combined, there was also mention of uncertainty with the tax policies of the United States. One of the incentives that the local canneries enjoyed, from year to year they're always waiting to see if the tax exemption, the tax credits that they enjoy are going to be extended. So, that's one of the issues that they mention in their press statement.
LM: As you say, 2,000 workers, this will have a huge impact on the territory.
MM: Oh yeah, because more than 80 percent of American Samoa's economy is dependent on the canneries. We've got the businesses that supply the fishing boats, and we also have the fuel industry, we've got the American Samoa Power Authority, this is their biggest customer, and then the American Samoa government which depends on the taxes from the employees, definitely it is going to have a domino effect on the territory.
LM: Do you think it's going to have any effect Samoa Tuna Processors, have they indicated whether they're struggling at all?
MM: We know that they are also hampered by the access to the fishing grounds, and they did mention when the minimum wage went up, that it is going to effect their ability to compete with the other low cost tuna producers. So yes, I believe that it's also affecting them.
LM: So tense times for a lot of people as they await more concrete details.
MM: That's right. I mean already we're getting comments from people asking what's gonna happen, and are there any more details? So yes, certainly there's gonna be a worry. The thing is, there's always been a lot of talk about diversifying the economy but 20, 30 years on, American Samoa is still dependent on the tuna canning industry. So, really there isn't much that the territory can depend on to off-set the loss of jobs if that's going to happen. We already experienced that when Samoa Packing closed in 2009. Fortunately there was money from the Federal grants after the tsunami that helped prop up the economy, but all that is finished now.
LM: And in terms of diversifying the economy, it would feel that American Samoa is very much on the back-foot?
MM: Yes, I mean, they've been talking about tourism, but we're hampered by - there's only two flights a week here, unless it's summer flights and also Christmas. There's also a limit on the accomodation, so we're really in a very difficult situation.