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SalMar has today, Monday, sent notice of layoffs to a total of 851 employees at its processing facilities in Frøya and Senja. In the press release announcing the news, the company states that “this is mainly because the government’s proposal for a new salmon tax has destroyed the market for long-term fixed-price contracts”. The announced layoffs will apply to the period January 1 to June 30, 2023, and include 748 employees at InnovaMar in Frøya and 103 employees at InnovaNor in Senja.
Gustav Witzøe’s company is the second to announce layoffs in processing operations after Lerøy Group announced 339 employee layoff notices last week.
No one willing to enter into fixed-price contracts
As SalMar points out in its release, if finally approved, the government’s proposal involves tripling the tax on salmon production in Norway. The taxable income as a basis for the new tax must be a ‘spot price’ for the whole fish, which means that it can deviate significantly from the actual realized sales price of a diverse portfolio of products and contracts. This has a particularly negative impact on downstream processing, as this is usually based on fixed-price contracts. “Such contracts are usually entered into well in advance of deliveries and are absolutely necessary in order to fill the facilities with enough processing activity”, says Frøya’s company.
In the current situation, “there is simply no one willing to enter into fixed-price contracts anymore”, However, they acknowledge that there will be room for some activity in processing also after the turn of the year, “mainly due to contracts entered into before the government presented its tax proposal on 28/9/2022”, they say.
Processing most affected by tax proposal
In the statement, the company also stresses that for years it has prioritized the development of production facilities for further processing of salmon in central and northern Norway. “The company had a processing share of over 45 per cent in 2021”, they state. “Processing provides three to four times as much employment as the export of whole, gutted salmon. With so much further processing, SalMar and our employees are hit all the harder by the government’s proposal”.
As said, the announced layoffs will apply between January 1 and June 30, 2023, and include 748 employees at InnovaMar in Frøya and 103 employees at InnovaNor in Senja. However, of those 851 affected contracts, 696 are associated with further processing at the two facilities, but the remaining 155 are at InnovaMar’s slaughterhouse in Frøya. The company has clarified that these are due to normal fluctuations and lower slaughter volumes in the winter months, something that has been “the norm for many years”.
Deeply regrettable situation
The company claims that it will do everything possible to ensure that those who now receive this notice will be able to work even after the turn of the year. “SalMar finds the current situation deeply regrettable”, the statement continues, “in the future, we will do our utmost to find remedial measures in a difficult and demanding situation for everyone”. This involves, according to the release, working closely with employees and their union representatives.
“There will therefore not be 851 of our employees who will be made redundant at the same time”, says CEO Frode Arntsen. “But in a situation where fixed-price contracts for processing cannot be entered into, processing is also not possible. Political risk is difficult to insure against”, he states. On behalf of the company, Arntsen thanks employees, suppliers, and partners for their efforts, and adds: “I promise that we will do absolutely everything we can to keep the wheels turning in our factories and thereby seek to minimize the scope and effect of the layoff notices”.
SalMar is one of the world’s largest producers of farmed salmon. The company, which last week completed the merger with NRS and announced strong Q3 2022 results, is active along the Norwegian coast from Møre og Romsdal in the south to Troms of Finnmark in the north. Its main facility, InnovaMar, is located together with the head office in Frøya, Trøndelag.
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