269 



couturiers and editors, in this country and abroad. (Agreement, Art. 7.) The 

 Company's general program of advertising and promotion is, pursuant to Article 

 7, reviewable by the Contracting Officer upon request and the annual promotion 

 and advertising budget is subject to prior approval of the Contracting Officer. 

 In addition to sealskins owned by the U.S. Government, the Company also re- 

 ceives for processing sealskins owned by the Governments of Canada, Japan 

 and the U.S.S.R. as well as sealskins from South Africa and Uruguay. Audited 

 advertising and promotion expenditures for the past five years and projected 

 expenditures for 1971 are as follows : 



Calendar year 



1966 



1967.. 



1968 



1969.. _ 



1970.. 



1971 (projected) 



Neither the U.S. Government nor any other government subsidizes the ad- 

 vertising program. Advertising, like every other operation of the Company — 

 processing, research, auction — is paid for from the Company's share of moneys 

 generated through the sale of skins. The company receives raw skins from all its 

 shippers having a low value and for which there is little demand and produces 

 a finished skin having a high value because of the quality of the processed 

 skins and the demand therefor. It is from the increased value that the Com- 

 pany's overhead items, including advertising, are covered. 



Advertising and promotion are essential to maintain the image of Alaska fur 

 seal as a fashionable fur. The market for the finished product is dependent on 

 women's fashions and strong competition exists in the market among producers 

 and processors of mink. per.sian lamb and chinchilla to maintain an image. Every 

 fur group gives advertising or promotional support to retailers. Retailers will 

 advertise only if assured of support at the retail level and the backing of national 

 and international advertising and promotion. Were mink, persian lamb and 

 chinchilla advertised but not Alaska fur seal, it is inevitable that the latter 

 wouM quickly lose its position as a fashionable fur. 



Despite the contractual requirement that the Company develop the market 

 for processed sealskin the agreement itself also specifically provides that the 

 minimum number of sealskins is guaranteed. Article 1(a) of the Agreement 

 provides : 



Consistent with the proper conservation and development of the fur seal 

 herd or herds under its administration, subject to many factors not vdthin the 

 control of man, and with a view to promoting the optimum utilization of such fur 

 seal herds as a natural resource, the Government each year harvests in the 

 Pribiiof Islands or elsewhere such numbers for fur seals as are consistent with 

 the purposes of the [Fur Seal Act of 1966] Act. Because of fluctuations in size 

 of annual harvests, a minimum number of sealskins is not guaranteed, and the 

 failure to harvest any particular quantity of fur seals shall not constitute 

 breach of contract. 



3. Processing in Alaska. Processing of fur seal by The Fouke Company is a 

 there-month operation involving many steps not commonly used on other furs. 

 Such steps include unhairing. dehairing with highly specialized machinery, and 

 dyeing, the total process involving permanent de-kinking of the natural curly 

 fiber as well as imparting of luster. At Greenville the Company employs 239 in- 

 dividuals, well over half of whom fall into categories of skilled, semi-skilled, 

 supervisory, research, and managerial personnel. 



A study by a reliable management engineering firm in 1962 indicated that es- 

 tablishment of a processing plant in Alaska would be totally impractical. First, the 

 skins after processing must be transported from Alaska to tbe lower states any- 

 way, most for delivery in New York City where the skins would go to coat 

 manufacturers or be transshipped to European buyers. Cost of shipment of high 

 value finished skins would, in fact, be substantially higher than the cost of 

 shipping raw skins. Second, bulky supplies needed in large quantity for the 

 Fouke process are not available in Alaska and would have to be shipped at 

 great expense from sources mostly in the Eastern United States. Third, labor 



