Uruguay's largest fish processing plant suspends activities: 960 workers redundant

Uruguay's largest fish processing company Fripur, generating half of the exports in the country's sector, will lay off 960 workers and suspend its activity from Aug. 19, after falling into administration, it was reported in Montevideo.

Fripur has been under financial problems since 2013 and received a decisive blow when Nigeria cut imports of (full) croaker, one of the mainstays.

Last week the Uruguayan Labor ministry announced the company was suspending operations: ”Yesterday (Aug. 14) the decision to suspend the production activity of the company by next week became official,” said Juan Castillo, the ministry' national director.

The government estimates that in addition to the 960 direct employees, the company generates at least another 500 indirect jobs.

Fripur has been suffering financial problems since 2013, and received a decisive blow when Nigeria cut imports of (full) croaker, which had been one of the mainstays of the group. Before it had been suspended from exporting to the European Union (for six months) after inspectors discovered that construction work was being done while the production line was operating.

On 31 July 2014, the company went into bankruptcy. After the filing, no investor has expressed interest in buying the company's debt which ranges between $30 million and $50m, Castillo said.

The head of Uruguay's Fisheries Resources Department, Daniel Gilardoni, said at the time the company has been undergoing a complex situation since the beginning of the European crisis.

In effect the Uruguayan fishing industry has been hit by tough international competition and the economic crisis gripping Europe, the main destination for processed fish exports. But also according to union sources to bad management and lack of sufficient investments to modernize the processing chain and the cold system of the fishing fleet.

Since 2006, the $79m-turnover-processor invested $18m in the company’s processing plant, it was reported previously by company sources.

Fripur is also vertically integrated, with a fleet of 21 boats with quota.

Its fishing operations are in both Uruguay and Argentina, with 15 vessels in Uruguay fishing hubbsi, or Argentine hake; two fishing red crabs and two clams. The other six vessels fish both hubbsi and hoki in Argentina under five licenses.

The company belonging to the Fernandez family took off in the mid seventies when Uruguay decided to promote the fishing industry with generous loans to buy vessels and mount processing plants.

Although originally in the meat industry, the Fernandez family, under the leadership of brothers Maximo and Alberto quickly turned Fripur into the leading processing company in Uruguay and main exporter.
However strong competition, plus powerful demanding unions both at sea and land, and involvement in politics proved to be the wrong equation.

Very close to former president Jose Mujica, the Fernandez family and Fripur paid for his presidential sash, for the popular song and dance party on inauguration day, and during the electoral campaign they flew the candidate in their private aircraft and also to neighboring countries.

The Fernandez family have since gone into real estate and wind farms, which under the Uruguayan system are a win-win business: not only do they receive generous incentives to invest but also all the power produced must be purchased by the country's electricity company, UTE which works under conditions of a national monopoly.

Finally it must be said that Fripur bank debts are mostly with the government's Banco Republica, (close to 40m dollars) which in Uruguay operates as a development bank, more interested in looking after jobs and keeping companies afloat than in recovering funds with a profit.