to build a trawler typical of the large 

 ones now operating, Oi/ Local industry 



would provide enough profits to attract 

 the investment required for continuance of 

 the industry? It is difficult to estimate 

 the cost of buHding a typical large otter- 

 trawler today, partly because such a vessel 

 has not been built for many years. Best 

 estimates are that it would entail an in- 

 vestment of at least $2^50,000 to $500,000 



leaders believe that this is too big a 

 vessel for cvirrently projected yields. 

 They feel that a vessel about 100 feet long 

 (versus the 106-foot vessels now typical) 

 would be of optimum economic size, since 

 capacity utilization on present trawlers is 

 at a low rate. 



The nature of the risk for fishing 

 vessel operations requires a return on 

 investment of from 10 to 12 percent in 

 order to retain capital in the industry, 

 and a return of 20 percent to attract new 

 investment into the fishery. To realize 

 a 10 percent return on average investment 

 even before taxes, a vessel would have to 

 earn $22,500-$25,000 if it were of the 

 present-day large size, and $lli,500 if it 

 were of the smaller-size class now under 

 consideration. 



It was stated earlier that the average 

 annual overhead (not including bonuses to 

 officers) of a large otter- trawler was 

 about 565,000. It is estimated that the 

 overhead on a new vessel of the same size 

 would be from $71,000 to $80,500, provided 

 no subsidy were granted and no loan re- 

 course taken. ££/ Possible increased catch- 

 ing efficiency and lower maintenance costs 

 would be offset by higher depreciation and 

 hull insurance charges. 



It is anticipated that the overhead 

 on the smaller trawlers now being designed 

 would be about |6l,000. About $Lli,500 

 would be depreciation at 5 percent of orig- 

 inal cost J $16,200 for minimum insurance 

 (hull at 3 percent of vessel cost and P & I 

 at tSOO per man for a l5 man crew)j $L0,000 

 for gear and supplies, $10,000 for repair 

 and maintenance; $5,000 for payroll taxes 



and other vessel expense; and $5,000 for 

 administration. 



If abundance returned to the higher 

 levels e^qserienced before mesh adoption, 

 and if the new vessels had the same rela- 

 tive catching efficiency as the old, then 

 new large-vessels of the size now op)erating 

 could attain their profit objective at the 

 long-run price of 8^^ only if fleet effort 

 were cut back to nearly 75 percent of that 

 earlier termed normal, (table III-15, Part 

 A, and table III-16, Part I). The smaller 

 sized vessels now under consideration 

 could attain their desired return on in- 

 vestment if effort were to remain normal. 

 In both cases, however, profit maximization 

 for both the fleet and the individual 

 vessel would be at the much lower effort 

 levels indicated previously. 



It may be argued that these figures, 

 even as approximate as they are, are mis- 

 leading in the case of possible new ves- 

 sels as large as those now typical of the 

 fleet. While their overhead costs woiJ-d 

 likely be in the $70,000 to $80,000 range, 

 it is contended that their revenues would 

 be increased due to the incorporation of 

 inproved technology designed to increase 

 catch efficiency. United States Fish and 

 Wildlife Service experts foresee a 1$ per- 

 cent increase in ef ficienqr if such vessels 

 are built, £9/ if this should be the case, 

 such vessels could attain their desired 

 investment earnings return at a level of 

 fleet effort just under 100 percent of 

 normal. 



Ihese vessels would show this level 

 of earnings only if they did not constitute 

 a significant portion of the total fleet. 

 The increased catching efficiency of these 

 vessels would result in increasing the 

 efficiency of each day's fishing effort 

 and woiild mean that the fishery could 

 support fewer vessels were the fleet gradu- 

 ally to be composed of such craft. In 

 other words, if forty- four vessels fishing 

 in total 7,300 days now constitutes 100 

 percent or normal effort, the same niiraber 

 of newer, more technically efficient 



87/ Cf . Hearings before the Subcommittee on Fisheries and Wildlife Conservation on 

 HT!?. 5ii21, 86th Congress, 1st Session, April 28, 29, 30, June h and 11, 1959. 

 (Material submitted by U. S. Department of the Interior), pp. l5l and l52. 



88/ Ibid. 



B9/ Ibid. 



$1 



