Star-Kist Will Sell Local Plant to Boat Owners : Terminal Island Cannery Was Scheduled to Close

Struggling to preserve a market for local fishermen, a group of San Pedro fishing boat owners has agreed to buy the Star-Kist mackerel cannery on Terminal Island.

The Fisherman’s Cooperative Assn., an organization of about 30 boat owners, signed a letter of intent Wednesday to purchase the processing plant, which Long Beach-based Star-Kist Foods had planned to shut in about two weeks.

Neither Star-Kist nor the cooperative would disclose terms of the agreement, but a source familiar with the deal said the price is between $1.5 million and $2 million. Twenty-five of the cooperative’s members have agreed to pay $20,000 each toward a down payment for the cannery, cooperative officials said.

Operating Since ‘20s

Sale of the cannery, which in recent years has processed about two-thirds of the cooperatives’ mackerel catch, is subject to approval by local, state and federal agencies, including the Los Angeles Harbor Department, which leases the cannery site to Star-Kist.

Frank Iacono, the cooperative’s general manager, said the group hopes to close the deal by April 27 and begin operating the plant sometime in May.

“If they just shut the doors and nobody else took over, this whole fleet would just die right there and then,” Iacono said. “We couldn’t chance that.”

The plant has been in operation since the 1920s and is one of only two fish canneries still operating in Los Angeles. About a dozen have closed over the years, many because of stiff competition from lower-cost canneries overseas.

“We are sad to be leaving, but we are certainly glad that it will be maintained as a fish cannery and that it will continue to support the local fishermen,” said Brian Leamy, vice president of pet food operations at Star-Kist.

Job Losses Scheduled

Star-Kist announced in December that it would close the plant and halt the production of mackerel for human consumption because it was unprofitable, largely because of competition from canned tuna, which is preferred by consumers in the United States.

About 200 of the cannery’s 700 employees are scheduled to lose their jobs, while the remaining 500, who work in the pet food division, are to be transferred to a former tuna plant on Terminal Island, where Star-Kist is consolidating its pet food operations.

The letter of intent requires the boat owners’ cooperative to negotiate a contract with the United Industrial Workers Local 24, which represents the 200 workers being laid off by Star-Kist.

Iacono said that although the cooperative hopes to save jobs, it must cut costs and find other sources of revenue--such as renting storage space in its freezers--to keep the cannery in business.

The cooperative is willing to operate the plant on a break-even basis for several years, and Star-Kist has expressed interest in distributing its canned mackerel if the cooperative can produce it at a lower cost.