. LCanadian Translation of Fisheries and Aquatic Sciences
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1 ISSN LCanadian Translation of Fisheries and Aquatic Sciences No Profitability, employment and fleet adjustment J. S. Johnsen Original title: Lonnsomhet, Sysselsetting of Flatetilpasning In: Fiskeriteknologisk Forskningsinstitutt Rapp. (Prosjektnummer , 1981 (Abstract, table of contents, and summary only) Original language: Norwegian cc,,,eas Available from: Canada Institute for Scientific and Technical Information National Research Council Ottawa, Ontario, Canada KlA 0S2 to.t 1.1 ocaans typescript pages
2 Secretary of State Secrétariat d'état MULTILINGUAL SERVICES DIVISION DIVISION DES SERVICES MULTILINGUES TRANSLATION BUREAU BUREAU DES TRADUCTIONS LIBRARY IDENTIFICATION FICHE SIGNALÉTIQUE Translated from - Traduction de Author - Auteur Norwegian Into - En English Jan Sigurd Johnsen Title in English or French - Titre anglais ou français Profitability, Employment and Fleet Adjustment Title in foreign language (Transliterate foreign characters) Titre en langue étrangère (Transcrire en caractères romains) Lonnsomhet, Sysselsetting of Flatetilpasning Reference in foreign language (Name of book or publication) in full, transliterate foreign characters. Référence en langue étrangère (Nom du livre ou publication), au complet, transcrire en caractères romains. Fiskeriteknologisk Forskningsinstitutt - Rapport Reference in English or French - Référence en anglais ou français Institute of Fishery Technology Research - Report No Publisher - Editeur Institute of Fishery Technology Research Place of Publication Lieu de publication Year Année Tromso, Norway 1981 DATE OF PUBLICATION DATE DE PUBLICATION Volume Issue No. Numéro Page Numbers in original Numéros des pages dans l'original 5 Number of typed pages Nombre de pages dactylographiées Requesting Department Ministère-Client DFO Translation Bureau No. LSM Notre dossier no Branch or Division IPB Translator (Initials) SOWF Direction ou Division Traducteur (Initiales) Person requesting Demandé par N. Johnson Your Number Votre dossier no Date of Request 86/09/03 Date de la demande CanadU SEC (84-101
3 1+ Secretary Secrétariat of State d'ètat MULTILINGUAL SERVICES DIVISION DIVISION DES SERVICES MULTILINGUES TRANSLATION BUREAU BUREAU DES TRADUCTIONS Client's No. Nociu client Department Ministère Division/Bremen Division/DMmtion. City Ville DFO IPB Ottawa Bureau No. No du bureau Language Langue Translator (Initials) Traducteur (Initiales) LSM Norwegian SOWF INSTITUTE OF FISHERY TECHNOLOGY RESEARCH Profitability, Employment and Fleet Adjustment Report dated 24 November 1981, by Jan Sigurd Johnsen, Economics Department Project Number: ABSTRACT Given the current availability of raw material, it is found that various fleet structures affect the employment and the economy of a relatively large fishing station. The report is mainly based on data from The report shows that conventional inshore fishing requires 40-50% more work that trawler fishing and seining. A fleet composed of coastal fishing vessels would therefore be the most profitable for local fisheries. Intermediate, long term, storage of raw material is very costly. Whether additional subsidies aimed at levelling production are an effective method for increased employment, can be determined from the figures presented. KEYWORDS: Fleet structure, profitability, employment. Canadâ SEC 5-25 (Rev. 82/11)
4 2. TABLE OF CONTENTS Page FOREWORD SUMMARY V VII 1. INTRODUCTION 1.1 Introduction and problem definition 1.2 Database DESCRIPTION OF OPERATIONS AND RELATED FLEET Operations Operations development Departments, capacities and product range Wharf Department Filet Department Finished product Department Catch and production periods Raw material costs - product estimates The Fleet Cost distribution Seine, handline and Danish seine along the 12 coast and on the banks (GARN) Pollack seining off Northern Norway (NOT) Fresh fish trawlers (TRAL) Summary of profitability/employment for the fleet
5 3. Page 3. METHODS OF INTERMEDIATE STORAGE 3.1 Long term storage of pollack bolgterm-stored raw material as shortterm adjustment Production of longterm live-stored pollack as long term adjustment 3.2 Double freezing Criteria for good production Rotnd freezing - industrial filet Cost estimates for double frozen raw material 26 at the Fish Processing Company(A/S Fiskeforedling) Additional investments Raw material costs Production costs Capital costs Capacity utilization of double freezing 29 facility - average additional costs 3.3 Product mix and profit 3.4 Whether to provide intermediate storage and choice o f storage form 4. THE LP MODEL Objective function Model limitations Production capacity Quality restrictions Raw material supply 37 38
6 4. Page Fresh fish trawlers Coastal fleet (GARN and NOT) Packers RESULTS Introduction Short term adjustment Today's situation Long term adjustment Today's fleet structure Deliveries from today's coastal fleet only Total quantity taken by the coastal fleet Regular employment Regular enploymertby today's fleet structure Production adjustments with new fleet structure Effect mdcostsof intermediate storage Change to new fleet structure Remarks on the analysis APPENDIX Explanation of computer runs Data Delivery time, fishing equipment, type of fish and 63 utilization for Soroysund municipality in Figures Tables References 67
7 5. SUMMARY In most resource dependent industries, variations of the input factors are usually required in order to obtain the best possible production results, both technical and financial. As well, steady employment is desirable. These factors appear particularly important at this time of low catch potential in the Norwegian fisheries. On the basis of these considerations, this study used a model in which the objective was to maximize the contribution margin for both fleet and operations. The production costs of the operation were considered given, while the fleet structure and therefore also the catch costs were considered variable. The fish processing data were obtained from a refrigeration plant in Northern Norway and information regarding the catch was obtained from the Fisheries Department. In order to calculate and compare the labour intensity in the fleet, an income of kr per man-year was used. The vessel group GARN then shows a labour intensity which is 40-50% higher than NOT and TRAL. The coastal fleet (GARN, NOT) showed relatively lower operational costs than the trawler operations. In comparison with the NOT group, GARN and TRAL have 27% and 92% higher total catch costs per kg raw material, respectively. On the basis of the chosen groups, this means that only the fresh fish trawlers operate at a loss. Long term storage of pollack and double freezing are used today as a stage in a more more even production flow. However, intermediate storage means \ increased costs for an industry with lowered profitability (Olsen et al., 1981). Whether
8 6. such storage should be recommended depends on the specific circumstances with regard to raw materials and additional investments. Calculations on the basis of our data show that long term storage is slightly more costly than double freezing. With a subsidy of kr. 1 per kg, the long term storage of pollack shows a tôtal additional cost per kg amounting to kr Of this, some kr is regained in the form of an economically more correct product composition. Overall results and employment were calculated for five production strategies. Due to "low n fishing costs, but in spite of large seasonal variations, the best overall results would be obtained by a fleet comprising only coastal fishing vessels. Today's fleet structure, which also includes fresh fish trawlers, only provides half the financial return of a coastal fleet structure. In today's resource situation with respect to our most important fish species, the coastal fleet is therefore best suited for both'economy and employment. If the trawlers are disposed of(or sold) and not replaced by coastal fisheries vessels, the operating results for the fisheries in the location studied will be negative. This is mainly explained smaller by operational losies due to /t quantities produced. If a coastal fleet structure is combined with production levelling, a much better operational result will be obtained in comparison with today's fleet structure in which fresh fish trawlers are included.
Department of Fisheries and Oceans Northwest Atlantic Fisheries Centre St, John's, NFLD
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