Earlier this year, High Liner Foods announced an unsolicited bid for Icelandic Group, which, if successful, will vault the century-old Lunenburg company into one of the largest seafood suppliers in the U.S. After tough times in the 1990s how did it rebuild its culture to get back on top?

Company: High Liner Foods Incorporated
Revenue: $584,715,000
Location: Lunenburg, N.S.
2011 Rank: 8

“When we give presentations to potential investors, we still have to start off by telling people that we don’t own boats or fish farms,” says Kelly Nelson, the executive vice-president, CFO, and secretary of High Liner Foods Inc. It’s all part of the continuing process of rebranding a century-old company that has evolved radically from an East Coast fishing operation to a North American food company specializing in fish.  

Some confusion is understandable. For starters, current president and CEO Henry Demone is both the son and the grandson of fishing captains. But today the fact that High Liner is headquartered in Lunenburg has more to do with its history (it’s Demone’s hometown) than proximity to fishing grounds. Ironically, not everyone loves Demone in the town where he grew up. “You don’t have to look very far to find someone who doesn’t like me,” he says from his modest office in historic Battery Point, overlooking the entrance to Lunenburg Harbour. “Some people still don’t like what I did to this company.”

Of course, it’s hardly a popularity contest when you’re eliminating a fleet of 50 fishing boats, reducing the number of fish plants from 14 to four, and gutting employment from 5,000 people to just over 1,000. But if you’re a survivor like Dale Martin, change is a good thing. In 1992 Martin was a 13-year High Liner veteran who started working there right out of school and was managing the fleet in Lunenburg when High Liner’s quota was cut by 95%. At that point, Demone had been at the helm of the company for three years. “When we looked at what we had left, we had one value-added business that had some critical mass,” he says. “We had the High Liner brand that had some Canadian and U.S. retail sales and a profitable scallop business, so we decided to build
on that.” 

In 1994, High Liner started its metamorphosis from a supplier of frozen blocks by replacing local catch with headed and gutted fish, which then added value by turning the raw materials into easy-to-prepare frozen foods, such as the ubiquitous fish sticks of many a childhood lunch. “A lot of people said it couldn’t be done,” says Demone.  

And, of course, people resist change. But not Martin, who oversaw the fleet plan of about 50 vessels, until the last ship was sold in 2006. He then started travelling the world in search of fish to buy as head of procurement. His new job was initially to supplement High Liner’s own catch and, when it dwindled to zero, to replace it. He moved on to become a seasoned buyer of many different species as the company started developing new products
and markets.

The story of the company’s turnaround has been often told but, surprisingly, Demone isn’t particularly proud of it. “Some of it, in the early days, was just plain survival and scrambling to service the debt,” he says. “To tell you the truth, it was a bit reactionary.” By which he means the company had to adapt to the tough economic conditions of the time. What’s less well known is that Demone’s impressive leadership focus was aimed equally at corporate culture, which evolved from a lack of optimism into a culture of innovation. 

The decision to focus on food processing and to grow that business emerged during the mid-1990s. Demone says that once High Liner had gotten its head sufficiently above water, it was able to make strategic decisions that were forward looking instead of reacting to adverse conditions. Over the ensuing years, the company has worked hard to create the mindset that it’s in control of its own destiny. CFO Nelson cites a key turning point 1998 when senior management underwent a facilitated strategic visioning session that resulted in a statement of vision and values that is remarkable for its clarity and lack of jargon. 

Four core values were identified: quality, integrity, involvement, and innovation. High Liner interprets quality as delivering the best possible products and services to its clients, which is fairly predictable. But the second value, integrity, is more interesting. According to the company’s website, integrity means building “relationships of trust [that] will lead to stronger business and daily lives that are less stressful and more enjoyable.” It’s a cultural value that seems antithetical to the cutthroat world of the global food business, but it’s a value Demone clearly believes in. He illustrates an example with an anecdote about removing people who were “toxic” to work with. For him, behaviour and being a team player are as critical to a performance review as a contribution to strategic goals. Involvement is the third value, which is described as “listening and understanding each other.” Demone tries to push responsibility down through the company, so people feel they aren’t just cogs in a production line but rather active participants in continuous improvement. 

At High Liner, involvement is closely tied to innovation, which isn’t limited to white coats in labs coming up with new products. Any and all employees are  encouraged to add process improvements to the product-development process. According to Demone, the failure rate for new food products in general is about 80%, but at High Liner that percentage is reversed, making for a success rate of about 80%. 

The risks of new product introduction are mitigated by a Stage-Gate process, a system that helps companies funnel new ideas through a development process of research and investment that weeds out most less-promising ideas along the way. High Liner devotes 3% of its revenue to research and development, a percentage that seems low compared to high-tech start-ups, but it’s significant in the food business, especially when recent sales amount to $700 million per year.

Next-generation opportunities
High Liner has recently redefined itself through aggressive corporate growth. Instead of going back to sea, Demone’s team is steadily expanding by being a consolidator in the highly fragmented seafood industry. He notes that among the protein industries, as they call themselves, seafood is much more complex. “We buy 30 different species from 20 different countries,” he says. There are a lot of small players, and Demone wants gradually to fold them into High Liner.

Dale Martin and his boss, Paul Snow, the vice-president of procurement, are constantly on the lookout for new fish, products, and processes they can take back and add to the Stage-Gate funnel. This kind of creative efficiency helps High Liner stay competitive with Asian producers. In fact, the company is an Asian producer since it went into partnership in 2008 with a Danish company on a processing plant in China. It enables High Liner to better protect its unique processes and control supply chains of Russian-caught northern cod from the Barents Sea into award-winning frozen food products available at retailers such as Walmart.

Despite recent headlines about the return of cod and the growth of aquaculture, Demone has no interest in vertically integrating by buying either fishing or fish-farming companies. He says there are still areas of the world where fishing is a good investment, but that local interests are invariably so strong and entrenched that, as an outsider, it’s better to buy
the product than own the means of production.

The fact that the company is growing is mostly what excites Dale Martin about coming to work these days. At 54, he sees many opportunities for the next generation and, while he feels nostalgic for the daily “hails” (radio reports from ships’ captains of their catches), he knows the long-term vision of High Liner for timed purchases from many suppliers and storing raw materials is a more sustainable business model.

And what excites Demone? Staying focused on his job of observing how the world is changing and finding ways to adapt and communicate corporate strategy. He enjoys watching employees develop their skills and ensuring that the units work well as a team. “I see the big picture and quickly understand the implications,” he says. “In a business like this with global supply chains, this is critically important.”

As for corporate culture, it may have come a long way from its roots in adversity, but a certain amount of practicality keeps everyone’s feet on the ground. “You have to accept reality, even if it’s brutal,” says Demone. “And you have to be reasonably tolerant of failure. We just ask that if you fail, keep it small, learn from it, and don’t repeat it.”