Cover Story
What's American Samoa's future if canneries pack up?
The challenges ahead for the US territory
Year in and year out, the continued existence of American Samoa's thriving tuna canning industry is imperiled, and thus the economic foundation of American Samoa is imperiled. At least that's the story line advanced by the two multinational companies operating tuna processing plants in Pago Pago. But despite the dire warnings that American Samoa's tuna processing industry is becoming globally uncompetitive, the two canneries keep investing more money and hiring more workers. In the past 25 years, the American Samoa canneries have increased their work forces approximately four-fold, far outpacing job creation in the government or the rest of the private sector. The two plants are now reported to be the largest and third largest tuna processing plants in the world. StarKist Samoa and Samoa Packing directly employ more than 5000 full-time workers - compared to 1976, when they employed 1400. They process almost 1000 tons of tuna each working day, enough to fill a thousand 20-foot containers each month for an annual export of US$500 million worth of tuna - the majority of the canned tuna eaten in the United States. StarKist Samoa is owned by food conglomerate HJ Heinz (annual sales: $9 billion), while Samoa Packing is part of Chicken of the Sea, now owned by Thai Union, a privately-held, very large company based in Thailand.
American Samoa's tuna plants face global competition from newly emerging tuna processors such as Thailand, Ecuador, Indonesia, the Philippines and Vietnam, which provide low wages. Thus the canneries are constantly fighting to keep minimum wages low in American Samoa. The vast majority of the tuna industry workers earn between US$3.25 and US$3.50 an hour. Although such wages are low compared to the United States and Guam, where the minimum wage is US$5.15 an hour, they are relatively high in Polynesia and thus draw workers from Samoa and Tonga.
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In fact, 52 percent of the residents of American Samoa aged 25-44 were born in independent Samoa, while only 33 percent were born in the territory. The statistics reflect not only the attractiveness of American Samoan wages within the region, but also the preference for many American Samoan youth to join the United States military or migrate to the United States after high school.
The territory's rapid population growth (American Samoa's population has almost doubled in just 20 years, from 32,000 in 1980 to about 60,000 today) and immigration imbalance has caught the attention of politicians. But few specific actions have been taken to address immigration or population issues.
At present, the government employs one-third of the local workforce, one-third is employed by one of the two canneries, and the remaining third is employed by the rest of the private sector (much of which is geared to support the tuna industry and the tuna fishing fleet). After 40 successful years in American Samoa, the Pago Pago canneries are accustomed to making adjustments necessary to remain competitive. But few people in American Samoa expect the canneries to remain another 40 years, or even 10 years.
An important federal tax advantage now enjoyed by the territories expires in five years, and the trend towards global free trade means the canneries will probably lose the significant tariff advantages they now enjoy. A bill presently before Congress, for example, would give Andean nations such as Ecuador the same tariff advantages that American Samoa now has. The difference is that the prevailing wage rates in Ecuador are well below US$1 an hour, and the regulatory environment is presumably less strict (the canneries are subject to United States EPA rules in American Samoa). Nobody knows if or when the canneries will leave, but most in American Samoa believe there will be a day of reckoning.
As the territory looks to the future, it is trying to identify a post-tuna, higher-wage economy, while holding onto the low-wage, tuna-based economy that has led to general prosperity in the past 30-40 years. The challenge is a difficult one, and it is not yet clear how it will be met.
