Firm coming on leaps and bounds in salmon industry

All 40-odd farms are represented by coloured stickers, clustering around Loch Fyne in Argyll and the Outer Hebrides. Other colours represent plants for slaughtering and gutting and possible sites for new farms. Mr MacLelland, who takes over as chief executive next month, is soon prodding at them like an amiable colonel preparing for battle.

"It's so much easier when you see it spread out in front of you," he says. "This is how the company fits together."

Fitting the SSC together has been one of his top priorities since he arrived as chief operating officer last year. The company was formed four years ago as a sort of afterbirth from the three-way merger of salmon farmers Pan Fish, Marine Harvest and Fjord Seafood into the current Marine Harvest Group.

The European Commission decided that this new entity would be excessively dominant and ruled that bits of the Scottish operation be spun off. Mr MacLelland says the "poorer- performing elements" around Loch Fyne and the Hebrides were pushed together to create Lighthouse Caledonia, funded by a listing in Oslo, where most salmon farming stocks trade.

Lighthouse proved too weak to survive, however. It was taken private through a rescue deal from the Edinburgh-based private equity group Northern Link in late 2008. This led to chief executive Oddgeir Oddsen departing the following year, although he has remained on amicable terms with the company, and a restructuring that saw the name changed to the SSC.

In 2010 it was re-listed in Oslo, added 10 farms through the takeover of West Minch Salmon and reported improved figures. But there was more upheaval in the boardroom: before year-end came the departures of new chief executive Mike Corbett and chairman Jim Mullins after only eight and 21 months respectively in post.

That was when Mr MacLelland arrived as chief operating officer. Robert Brown III, a corporate financier and former Lehman Brothers managing director, became chairman, while Bill Hazeldean was made chief executive. Hazeldean, who had been on the Lighthouse/SSC board since 2007, is one of Scotland's best known entrepreneurs. He built up seafood processor Macrae Foods of Peterhead and sold it in 2004, and then set up food-to-go group Adelie. Mr MacLelland, 53, a food scientist by training, served as Hazeldean's lieutenant at Macrae. He stayed to run that business for three years after the sale and then rejoined Hazeldean at Adelie.

Mr MacLelland says it was always intended that he would take the top job once he had got to know the business. In reality, he has been in charge of day-to-day operations for some time. Hazeldean can now fully focus on running Associated Seafoods, the seafood processing company he co-owns with the SSC and Northern Link.

The SSC is fourth-placed in the Scottish industry behind Norwegian-owned Marine Harvest and Scottish Sea Farms and Polish-owned Meridian. It controls about 20% of the market, having harvested 23,000 tonnes of fish this year and 24,000 tonnes last year.

This is expected to jump to 28,000 in 2013 thanks to the West Minch takeover, but it will take more than that to satisfy shareholders. The plan is to reach 40,000 tonnes over the next five years, for which the company has just borrowed £40m towards a total investment that will be more like £50m.

This is to be spent on about eight to 10 new farms producing an average of 1500 tonnes a year – bigger than the current 1000 tonnes average. Unfortunately for Mr MacLelland, he has to achieve this expansion in one of the most controversial industries around.

Environmentalists don't like large-scale salmon farming because they worry about things like over-crowding, the threat to wild salmon from lice and the damage to the seabed underneath the farms.

Getting 10 big farms past planners will be no mean feat, particularly in view of recent opposition to proposed farms in Islay and Eigg, plus to a farm extension in Harris that had already received consent. The SSC has scaled back its plans in Harris as a result, showing that getting consents in the bag is not necessarily job done.

Mr MacLelland plays down these skirmishes, insisting that opposition is not as bad as some might think.

"There are people that have got strong views, but they are not in every community. Many people are supportive. We have just received planning permission for a new site at Locheport [in North Uist] without any problems at all," he says. "It's just that in some locations you have got to work a bit harder."

His other challenge will be to make the numbers work at a time when salmon prices have plummeted. One irony of the upheaval at the SSC was that it coincided with a strong period for the Scottish salmon industry.

Having traditionally played third fiddle to the Norwegian and Chilean industries, Scotland received a golden ticket when Chile collapsed amid disease from careless over-farming. The supply shortage meant that prices were abnormally high for a couple of years, leading to bumper profits for the producers. But prices sank earlier this year as Chile came back onstream, falling by more than half to around £2.70 a kilo at present (although Scottish farmers claim a price premium of about 50p). This has fed through to corporate results for the first time in the past few weeks as the 'big five' producers have published their third-quarter figures. Everyone's salmon farming profits were well down, with the SSC and fifth-ranked Grieg Seafood reporting losses.

The SSC's pre-tax loss was £1.9m for the quarter compared to a profit of £3m a year earlier. A fall in production meant that revenues fell 14% to £17.8m, while losses were exacerbated by a near-£1m rise in production expenses.

Mr MacLelland says that the fall in salmon prices was the main reason for these figures. He says the salmon price has overshot on the way down and will rise to a more stable level next year, though he won't commit himself to a number. As for the fall in production and rise in expenses, they are to do with the size of the company.

"We are increasing our volumes because we have an imbalance in production," he explains. "In the first half of this year, we harvested at Loch Fyne, but we have less salmon now so our costs per kilo have gone up. Then in the second half [of 2012] we have Loch Roag [in Harris] and then Loch Fyne again, so in that 12-month period our operating costs will reduce."

The idea behind getting eight to 10 new sites is to be able to harvest more evenly across the piece to smooth out the bumps and swells in profit. MacLelland taps at one or two of the coloured dots on the map to emphasise his point. He is clear about where this company wants to be going. If the salmon price rises and he wins the argument with enough communities about building new sites, stability for the SSC might finally be within reach.