Maine Lobstering Union Buys
by Mike Crowe
The Maine Lobster 207 LLC announced it will conclude a transaction in mid-March to buy the wholesale division of Trenton Bridge Lobster Pound in Trenton, Maine. The Trenton Bridge Lobster Pound, established in 1956 by the Pettegrow family which still owns it, is already divided into separate retail, online and restaurant businesses. Lobster union members will own the wholesale operation and the 20 employees who have been running it will remain in their jobs, including Warren Pettegrow who will remain the manager. Pettegrow said, “business will continue as it has been.”
In 2012 the boat price for lobster in Maine tanked. There were plenty of reasons proffered, but getting the same boat price adjusted for inflation that your grandfather got in 1956 was all that mattered to lobstermen with 2012 expenses. A few Maine lobstermen decided to make an effort to change this situation. It wasn’t long before they realized they needed to be organized to present their case. Lobstermen work in another world, alone or with a sternman, on the horizon beyond the sights, sounds and structure of the world the rest of us know. Organizing people is not a part of their job description.
That’s where the International Aerospace and Machinists Union (IAM) came in. The Union has 4,000 members in Maine. A small group of lobstermen went to the IAM because it was an organizing mechanism. When lobstermen went to the union for help with organizing a plan, the union was also looking for an answer to dwindling manufacturing jobs and those workers who had been their base. Attempts to increase the lobstermen’s share of the final market price began with challenges to the lobster buyer-dealer end of the market equation. The realities of supply and demand market forces, lobster flooding into markets contracted by the finance industry boondoggle that pulled the rug out from under the economy, also referred to as the “recession” in 2012, led to a change in the Maine Lobster 207LLC strategy. In what may at first glance appear to be an “if you can’t beat ‘em, join ‘em” end run around their previous position, the union approached the Pettegrew family in Trenton with a proposal.
Warren Pettegrew is a 4th generation lobster dealer who said the union proposal presented him with an opportunity to pass on part of the family business to lobstermen. Local lobstermen had made their business possible over the last 61 years, said Pettegrow. The Pettegrow wholesale business was not for sale when the union began a conversation with the family 2 1/2 years ago. When word got out that the union was in discussions with the Pettegrows the family was approached by corporate players who pressured the Pettegrows to sell to them. Therefore, said Pettegrow, the sale to the union also meant Warren could avoid selling to a corporation where he, in his capacity as manager, would be answerable to a likely absentee CEO.
The members of the lobstering union can sell their lobster to the Maine Lobster 207 LLC or not. Non-members can sell their lobster to Maine Lobster 207 LLC at Trenton. The Maine Lobster 207 LLC is the owner of record and all members of the Maine Lobster 207 LLC own an equal share of the business. The IAM organized the membership and facilitated the sale. For that they will gain membership fees and continue to provide organizing skills, financial expertise and a legislature presence in Augusta.
The Maine Lobster 207 LLC purchase will not isolate lobstermen members from market price and other fluctuations, but they hope it will provide some economic stability by having positions in two parts of the industry.
The Lobster union bought the Trenton Bridge wholesale division and will also develop its own online retail sales unit. “But,” said Joel Pitcher, the IAW representative who guided the Maine fishermen who originally sought union organization, “the wholesale division was purchased primarily for the buying location in Trenton.”
Long before the sale the union had many meetings over six months trying to figure out how the relationship with Trenton Bridge might work. Trenton Bridge was not for sale at the time. When the lobstering union approached Warren Pettegrow word got out.
Corporate entities are hot to buy into the half-a-billion-dollar Maine lobster industry, said Pitcher. Pitcher said a corporation approached Pettegrow after hearing of the lobstering union’s interest in Pettegrow’s business and offered what was described as considerably more than the $4.1 million Maine Lobster 207 LLC paid. Having the IAM work with the lobstermen’s financial goals in the beginning was, said Pitcher, an out-of-the-box plan for them. Approaching the Pettegrows and holding many meetings over six months trying to figure out how the relationship with Trenton Bridge Lobster Pound might work, as well as how to finance it, was way out of the box.
The final loan structure for the $4.1 million transaction was done in three parts. There was $900,000 loaned by IAM Union locals and districts to Maine Lobster 207 LLC. These locals and districts regularly put membership fees in bank CDs in $100,000 increments at less than 1% interest. The Maine Lobster 207 LLC agreed to repay the loan at 8% interest. There was also a conventional bank loan of $2.1 million and Pettegrow made a subordinate loan to Maine Lobster 207 LLC of $1 million to be repaid in five years.
Warren Pettegrow and his family have deep roots in the community, said Pitcher. He knew there was a lot of corporate pressure on businesses like his. At one point, said Pitcher, Pettegrow was told by one corporation which made him a much larger offer, that he should sell to them or he would wish he had. Pitcher said Pettegrow was threatened with being driven out of business if he didn’t.
The Pettegrows have enjoyed buying and selling lobster to the people they and their father went to school with. “Selling to the Union enabled me to pass the business on to local lobstermen rather than a corporation where, said Warren Pettegrow, I would have to answer to a CEO.”