At Phillips seafood, tsunamis hit close to home

In devastated villages of southeast India yesterday, the head of Phillips Foods Inc.'s India division spent the day on a truck, delivering rice and water. The head of Phillips in Thailand did the same, in Thai fishing villages where the homes of Phillips employees were washed away.

From Baltimore, corporate headquarters of the homegrown seafood company known for Maryland-style crab cakes sold across the country, Mark Sneed monitored his division presidents' progress by cell phone. The company already knows that more than 30 of its thousands of employees were killed by the Indian Ocean tsunamis, and it's trying to find out the fate of the many who remain missing.

"We have trucks. We have rice and water, and they're out helping," said Sneed, president of Phillips Foods Inc. "You have people surviving day to day on whatever food people give them. These areas are the exact areas that we source our product from. We understand their lifestyles and what their needs are. We're trying to get food to them."

Since the tsunamis struck nearly two weeks ago, Sneed has turned his attention to matters not normally the province of a seafood company executive, such as getting food to disaster victims and finding ways to help fishermen replace their boats and nets. Today, Phillips' chief executive officer, Steve Phillips, will fly to Bangkok, where the company has its Asian headquarters. For Sneed, Phillips and others at the company, the tsunamis hit too close to home.

The company has been trying to learn what's happened to employees and their families in the hardest hit regions and to determine what remains of the many fishing villages. In dozens of those villages, an estimated 10,000 fishermen used dug out canoes to supply Phillips and other companies with crab and fish.

"We've heard rumors that complete villages were wiped out," said Sneed. "There was substantial damage to the fishing infrastructure. People lost lives, they lost boats, they lost everything."

So far, 21 employees have been confirmed dead in India and another 12 in Thailand, most of them women who extract crab meat in the plants.

Because it has been hard to reach some areas, "We don't know what happened in Indonesia," Sneed said.

The fate of Phillips "mini-plants," small facilities that employ 20 to 40 people closer to the ocean where crab meat is initially extracted and cooked before being shipped on ice to the larger processing plants, is also unclear.

"We're getting conflicting messages about the status of those plants," said Sneed. Many are "difficult to get to because the roads are gone."

The nearly half-century-old family-run company that started as a small crab shack in Ocean City now imports 99 percent of its crabmeat from Asia, to sell as canned crabmeat, crab cakes and crab chowder in restaurants, supermarkets and through food distributors across the country. In Southeast Asia, Phillips employs up to 15,0000 workers at more than a dozen seafood canning and pasteurizing plants in Indonesia, Thailand, the Philippines, India, Malaysia, Vietnam and China.

Sneed says the company was fortunate that none of its plants was damaged and all are operational. Last week, production fell by 30 percent at plants in countries hit by the tsunamis.

Some of that could be related to human despair - and resulting inability to work - rather than damaged buildings, said John Connelly, president of the National Fisheries Institute, the seafood industry's trade association. People could be afraid to go back out on the water.

Sneed said it's still too early to assess production capacity, but "without the product coming in from the fishermen, [the plants] are just buildings," he said.

Because the company has plants in countries that were not hit, such as the Philippines and China, Phillips has alternative sources. The company is considering increasing production at plants in those countries or buying, likely at a higher cost, from those countries. The company is discouraging its customers, such as distributors, and their customers, such as restaurants and hotels, from increasing orders because of fears of shortages.

Another unknown for Phillips and others in the seafood business is the longer-term impact on the industry. For now, Sneed said, production at the Phillips plant in South Baltimore, which produces crab cakes, breaded shrimp and soups, has not been disrupted. There is a lag time of six weeks from the time products are shipped, either refrigerated or frozen, in container ships from Asia to the U.S. He estimates the market will begin to feel an impact by March or April, possibly in increased prices.

Connelly, of the trade association, said most crab operations appear to be up and running but infrastructure - like boats and docks - "has been dramatically impacted."

That means some companies might have problems getting their product to market, he said.

John Sackton, president of, a seafood industry news service in Lexington, Mass., said the local fisheries in Asia were badly damaged, not the ones that serve the export market. Small boats were destroyed, while large boats a mile offshore were left untouched.

"The humanitarian aspect of this has been unbelievably bad, but the economic impact on the seafood trade is not going to be that great," he said. "There's been very little destruction of the processing plants, as near as we can tell. There's so many countries that produce crab meat ... that any shortfall from Indonesia would be made up elsewhere."

Phillips is one of the nation's largest importers of crabmeat, importing some 13 million pounds of crabmeat and six million pounds of fish a year.

That represents nearly 6 percent of total U.S. crab imports, which exceeded 220 million pounds during the first 10 months of last year, according to the most recent government statistics. About 14 percent of that was from Indonesia, India, Sri Lanka and Thailand. The United States imports about 80 percent of its seafood and most of its crabmeat.

Phillips said yesterday it has set up the Phillips Foods Tsunami Relief Fund. Management teams in each Asian country will distribute money to help both employees of the Phillips plants as well as local fishing villages rebuild.

In Bangkok, Steve Phillips plans to meet with the company's Asian team, local government officials and other business people to develop a strategy to help in the rebuilding.

"We have people on the ground who understand those countries and know how to get things done quickly and inexpensively," Sneed said.