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Clawing his way to the top

If you're finding crab more affordable these days, its partly because of a Tierra Verde man whose company imports a lot of it from China.

By KRIS HUNDLEY
Published December 28, 2005

	[Times photo: Bill Serne]
	Sue Cherwinski, Jack McGeough and Jeff Smith open a shipment of samples of crab and fish from China at Newport International in Tierra Verde. The company acquires seafood from more than a dozen countries.
	Most of Newport International's sales are to commercial interests. Only about 10 percent of Newport's products are sold directly to consumers.

After more than 40 years in the seafood business, Jack McGeough, chief executive of Newport International in Tierra Verde, finds himself the king of Chinese crabmeat, responsible for nearly half the imports into the United States.

The evolution of his $35-million business reflects China's growing effect on every industry, from shoes to software to seafood.

China's production of frozen and pasteurized meat from blue swimming crab has grown tenfold since 2000, reaching 3,300 tons last year. The combination of plentiful supply, low-cost labor and growing demand has meant crabmeat from foreign sources outstrips domestic product by a 6-1 ratio. And McGeough, whose company is importing about 180 tons of crabmeat from China each month, is betting the numbers will continue to grow.

"Fourteen years ago, we imported our first frozen crab and it wasn't pretty," he said. "But now foreign processors have reached world-class quality."

Bill Springer, publisher of Seafood Business, a Portland, Maine, trade journal, said the influx of imported crab means the once prohibitively priced food item is popping up on menus of mid market restaurants.

"Imports have opened up whole new markets for the crab business and domestic resources couldn't have supported this opportunity," he said. "And I'd challenge you to taste the difference."

McGeough, who played defense on the Rhode Island Reds hockey team in the early 1960s, got his start running a seafood restaurant during the off season in Wickford, R.I. Soon he owned a couple of processing plants; before long, he'd added a fleet of lobster boats and trucks.

Based in Newport, McGeough's business was doing $40-million in sales - catching, processing and selling a broad variety of seafood to distributors and manufacturers - when he and his wife, Jeanne, moved to Tierra Verde in 1990.

"The idea was to slow down and enjoy life a little," said McGeough, 65. "But I can't sit still."

Newport shed its investments in the supply chain and shifted focus to marketing, sales and product development. The company, which has about 24 employees locally, sources seafood from more than a dozen countries, handling shrimp from Venezuela, mahi-mahi from Colombia and Peru, flounder from Argentina and, increasingly, crab from China.

Among its customers: restaurant chains like PF Chang's and Macaroni Grill; major food service distributors like Sysco Corp.; and manufacturers of everything from fish sticks to crab cakes sold in supermarkets like Publix and SweetBay.

About 10 percent of Newport's products are sold directly to the consumer; the company's Jack's Catch label on canned crabmeat appears in a limited number of retail outlets.

Though McGeough talks about the importance of having a diversified product line, crabmeat accounts for about 70 percent of Newport's inventory. And the bulk of that is coming from one processor in Xiamen, on China's east coast across the straits from Taiwan.

Since forming the relationship with Yingfeng Foods in Xiamen two years ago - McGeough said he pinned a $100 bill to the plant's wall and called it his investment - the plant has shipped all its frozen and pasteurized crabmeat to Newport. Today about 1,300 Yingfeng workers take freshly caught crabs through the cooking, picking, canning and pasteurization process, following Newport's specifications.

Women who do the painstaking work of winnowing 1 pound of crab meat from 10 pounds of whole crab are paid by production. Workers' pay averages about $124 a month, the company said.

Low labor costs mean imported crabmeat retails for less than domestic. McGeough, who is allergic to shellfish, said his Chinese import sells for $14 a pound, compared to $24 a pound for domestic.

"We never want to take away from the domestic business," McGeough said of the U.S. blue crab industry, whose catches are generally sold whole, rather than picked for their meat. "But it's a dying industry."

Douglas Lipton, director of the Maryland Sea Grant Extension program in College Park, helped prepare a complaint against imports by domestic crab fishermen in the late 1990s. The claim, which was rejected by trade officials, was premature but prescient, Lipton said.

"A number of large domestic producers have gone out of business due to a combination of things, including labor issues and the supply of crabs," he said. "But other U.S. companies decided if you can't beat them, join them, and they've gotten into the importing game. Firms that are more adept at playing in the global marketplace are left."

The biggest crab importer globally is Phillips Foods in Baltimore. Other major players, after Newport, are TransGlobal of Tampa, BlueStar of Miami and Sigma International of St. Petersburg.

McGeough hopes to parlay his company's pipeline of imported crabmeat into new items - from crab, jalapeno and mozzarella appetizers to breaded crab lumps - that will be marketed to restaurants and the public under the Jack's Catch label. The company will be moving to a renovated funeral home in downtown St. Petersburg soon after the first of the year and adding about a half-dozen employees to market new products.

After a 45 percent rise in sales last year, McGeough said he expects 15 percent growth in 2006. "My staff wants to take sales to $100-million," he said. "I see no barriers. I have no fears."

Lipton, the crab industry expert in Maryland, said despite his early concerns, importation has proven to be a boon to the business.

"It forces our guys to get better at what they do because the quality coming out of Asia is so high," he said. "The consumer is the big winner because while it's not making crab really cheap, it's making it widely available at a reasonable price in product forms not available before on a year-round basis."

Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.

[Last modified December 28, 2005, 00:36:14]