From: Shannon McMahon, The San Diego Union-Tribune
Published June 10, 2005 12:00 AM

Goodbye to a Sea Giant

It was a company that could weather the Great Depression, World War II and several recessions. But today's economy proved too difficult.

After 76 years in operation, the country's largest kelp harvesting facility originally called the Kelp Co. and today a division of International Specialty Products -- is closing its plant in Barrio Logan.

Managers from ISP told the plant's 135 employees this week that operations will be moved early next year to Scotland, where ISP has another production facility.

Kelco, as it was once called, grew up alongside San Diego's tuna industry in the late 1920s, harvesting brown seaweed, or kelp, and extracting the algin that is used in countless pharmaceutical, household and food products.

"I feel like this is one more piece of a really nice community unraveling," said Paul Dayton, a professor of marine ecology, specializing in kelp at the Scripps Institution of Oceanography. Dayton said he was "profoundly saddened" to hear that the San Diego plant was closing.

Workers at the plant seemed stunned yesterday.

"I'm sad that this is happening," said Dale Glantz, a marine biologist who started as a diver for the company 27 years ago. "This has been my life."

Another worker compared it with the death of an old friend.

"I started here as a deck hand," ship captain Jack Sickler said. "Been here for 37 years."

Kelp is harvested by ships that comb the waters off Point Loma and La Jolla.

Giant conveyor belts stretch from the stern of the ships into the water, threshing the kelp that lies within four feet of the ocean's surface.

In recent years, the kelp-harvesting business has been hurt by a rise in the cost of fuel, labor and raw materials, site manager Paul Altamirano said. The biggest blow came in recent months with rate increases for the company's water and sewage service. ISP's sewage fees rose from $1.3 million to roughly $2.8 million after new rates were introduced in 2004, Altamirano said.

"Our Scotland facility pays one-20th of the costs we pay," Altamirano said.

"We're competing with manufacturing facilities in places that don't have the same environmental regulations we have, and they have lower cost structures."

The water and sewer rate hikes were mandated by the state, said Michael Scahill, a spokesman for the Metropolitan Wastewater Department. The San Diego City Council approved new rate rules in 2004, which apportioned bills according to usage and the treatments required to clean a company's wastewater.

"This is not something where could give a discount to one person and not to another," Scahill said. "We're following the letter of the law."

Labor costs at other kelp-harvesting facilities -- primarily in China and Japan -- pale in comparison, Altamirano said.

The majority of the company's employees are union workers whose average wages range from $40,000 to $50,000 a year. Pay for salaried professionals, including marine biologists, food scientists and quality control specialists, starts at roughly $65,000 a year.

Union workers and salaried employees will meet with the company next week to discuss severance packages, outplacement services, and transferring jobs to other ISP facilities, Altamirano said.

The company said it will abandon the expansive kelp beds in the ocean off San Diego, which it leases from state of California.

"What happens to the kelp beds now is up to Mother Nature, it's not up to us any more," Glantz said.

Kelp is the world's fastest growing marine plant. Like bamboo, it grows two feet every day and is considered highly sustainable. Kelp sprouts from the sea floor and grows from 25 to 70 feet through the water. It entangles itself at the ocean's surface to form dense canopies, or beds that can stretch out 200 feet.

Algin is sold as a powder and added to products including Velveeta cheese, Corona beer, Eclipse breath strips and Mrs. Fields cookies.

Algin makes ice cream's texture feel less like ice crystals and more like cream. It keeps spice suspended in salad dressings. It coats paper to block ink from sinking through. It removes the brush strokes in a fresh coat of paint.

The Kelp Co. began harvesting kelp and extracting algin in National City in 1929. In the 1930s, San Diego State football players did much of the harvesting, using the laborious work as a form of summer training.

The company's plant moved to Barrio Logan in the early 1940s as the country prepared for the second World War and the Navy wanted its National City real estate.

More than 90 percent of the kelp harvested off the shores of California is handled by ISP, which processes 30,000 to 40,000 tons of kelp off San Diego County annually.

"They were very environmentally aware," said Dayton, the Scripps researcher.

"This is one of the few businesses that harvests a wild marine resource and hasn't destroyed it. They have sustainably harvested it. They do it right."

In the earliest years of kelp harvesting, algin was used as a fertilizer and in explosive powder. During World War I, there were 1,500 kelp companies operating off the California coast. But after the war ended in 1918 and the explosives contracts ran out, most of those companies shut down.

Today, ISP is one of the leading producers of algin products. Headquartered in New Jersey, ISP operates plants around the world. After shutting down the San Diego plant -- which it acquired in 1999 -- it will focus its algin processing in Scotland.

It will import several species of kelp as a dry product from subcontractors or through joint-ventures in kelp-rich countries such as Chile, Tasmania, Iceland and South Africa.

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Source: Knight Ridder/Tribune Business News

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