Now move ahead to John Fredriksen who owns Marine Harvest - as a holding company part of his even bigger firm (yes, the one whose CEO Jo Lunder was given a 6 months sentence for corruption in 2015 for hundreds of millions in bribes in Uzbekistan for telecom purposes).
And if you want to follow into Fredriksen's business problems, there is a blog that follows all the negative side of his business empire: http://fredriksenwatch.blogspot.ca/. He seems to be pretty unpopular with some people.
But let's go back to better times when JF looked at fish farms and said about the 2005 industry: This is cheap! Then he promptly bought Pan Fish and Nutreco. Of Troim and he, Sandvik notes: The duo was familiar with cyclical industries with high risk and found quickly realized that Pan Fish was extremely cheap compared to what it would be worth if it went well.
They bagged Pan Fish for a mere 766 million kroner, and you simply must read Sandvik's account of the merger, it is much better than can be summarized. This is near page 45 in the PDF of Under the Surface.
2. But there was this little legal wrinkle: a fish farm could not be owned more than 25% by a corporation. JF was Norwegian, but his office was in London. So, Sandvik notes the entrance of an apparently new, government player: That fall sent the Norwegian Fisheries and Coastal Affairs, Lisbeth Berg-Hansen, circulated a proposal to repeal the then ownership limitation of 25 percent.
Also spun into this was a requirement for research, processing and apprenticeships in the local regions where the farms operated. But Marine Harvest, now much bigger (boom) wasn't keen, thinking it a 'tax' on the industry that had to be eliminated for the companies to reach their potential. And also argued that such requirements were not made on other companies, for example, oil.
3. Sandvik: This is pure word for money. Here rejects NSL short and fine that the industry has no other responsibility than to ensure maximize the return to shareholders. Fish farmers owe
no society something.
Note that we are talking about multinationals who owe no other allegiance than to shareholders- where ever they might live. Workers and local revenue are expendible.
And, don't forget Berg-Hansen. Note also that Fredriksen, drove Pan Fish, from 2005 to 2014 - nine years - to produce 15 billion for shareholders. Yes, this is a boom.
4. You have heard of a banana republic? Yes? Well Sandvik calls Norway a Salmon Republic, Since the '80s parts of the government, and the industry wanted limits on concessions done away with. Note that you need to understand something about the government in Norway: it is a system of proportional representation, and thus those elected form part of the government, there is no Westminster model of the party with the most elected members forms the government with the smaller number of elected members from other parties forming the opposition and thus being frozen out of any power. So growing the industry is good, a national good, in Norway.
Problems with unbridled growth? One government secretary expressed it this way; Sandvik: "There will not be any problem, I'm sure, "objected Minister's personal secretary, Svein Munkejord. "I think the issue is how we are to meet the market we have achieved with fish. " 29
The government would help fund fish disease research and the industry had it in their better interest to see to fish welfare, so what's the problem? And, government began moving to a system that made new licences not so needed as they allowed the size of farms to grow. But then, over the years, more licences were also granted.
Sandvik notes one fish farmer who, tipsy, told the bar that the licence he got for 8 million, he sold for 30 million, doing absolutely nothing other than hold the licence a short while and sell it.
Then there was the move to direct licences to small local holders who would not be interested in speculation (yes, there is a convoluted logic here) because at 8 million kroner there would be no room to make it higher. And these owners would create the local jobs fish farms talk so much about.
The government reaped 485 million kroner, and the small owners, like the fellow in the bar, made millions selling the licences, not creating jobs and local revenue. In fact, some license lots went for the astronomical interest of 296 million kroner.
So, again Boom Bust Industry, and the government in a conflict of interest, and making poor decisions.And speculation, rather than jobs and revenue.
To see a review of the problems in the fish farm/seafood industry, look at this post: http://fishfarmnews.blogspot.ca/2015/07/key-document-fish-farm-news-bites.html. Just scan the bold face titles for a minute.