A superpower contest is ruthless. "This is the ruthlessness that Europe doesn’t get; how ruthless America is, and superpowers always are."
nationalpost.com
I have told this tale before but in sync with this article it is worth telling again.
When I got into the Alaska fishing business it was because the company I worked for wanted to take advantage of a boom that was going on. A new industry was being launched. A fish that the Americans hadn't considered worth harvesting as they focused on salmon, halibut and herring, was being caught offshore by the Japanese to make a traditional Japanese product and the market was worth billions. America, led by Ted Stevens decided they wanted to get in on the action. To do that it had to exercise its rights in its permissible Economics Exclusion Zone. America had been reluctant to do so because it was concerned that recognizing EEZs as legitimate might reduce America's Freedom of Navigation elsewhere. But the money and the political pressure was too much. This was the era of Bruce Willis and Nakasoni Towers and Sean Connery's Sensei. Japan was buying up large chunks of American opportunity and politicians were worried. Japanese fishing in America's backyard and filching American fish, even if Americans had no use for it, was not acceptable. Thus EEZs and public dollars invested in converting this scrap fish into something that foreigners would buy.
The Alaska fishery at that time was an inshore fishery. It was a seaonal fishery tied to the shore-bound canneries that anchored the small communities along the Alaska coast. And it was a small boat fishery.
It was also dominated by fishermen from Seattle who came up for the season and lived down south. That fishery was dominated by the Norwegian community. The Ballard district hosts the largest Norwegian Constitution Day celebration outside of Norway on May 17th every year. When this new fishery opened up it was natural that the Norwegians were going to get involved and as we see today the Scandinavians tend to cluster.
As I said, the Alaska fishery was a small boat in-shore fishery. The Japanese were fishing from deep water trawlers and processing the fish on-board. The Americans needed to recapitalize their fleet to catch this fish they were claiming as their own. This being America money was less of a problem than figuring out how to spend it.
The first problem they ran into was the Jones Act. Their new ships had to be built in America. But nobody in America knew how to build a deep water trawler. So the solution was to convert existing American hulls into factory trawlers. That was easier said than done. The solution came from the Seattle Norwegian community. Rather than trying to find a close match fromthe existing fleet and building something that would work they did the other thing.
Mud boats from the Gulf (Mexico/America) were bought and sent to Norway for conversion. The Norwegians knew how to build modren deep water trawlers and knew how to sail them, fish them and operate them. They also had the money to finance them. The American mud boats were brought to Norwegian yards and converted. Yards like those that built the Svalbard.
The conversions consisted of removing the superstructure and all the hotel space, removing the macinery, clipping the bow, removing the stern, and stripping the sides. They famously kept that portion of the keel into which the registration was stamped and Theseus built a new ship. They were longer, wider, drew more, displaced more, were more powerful and equipped with with every electronic gadget known to man. They could haer a pollock chirp at 200 miles. Their crew accommodations and galleys were bulit like a Scandinavian hotel. Complete with brass raile and potted plants.
They were expensive.
But the industry was lucrative.
Once the fish was brought on board four products were possible. Fish eggs, Fish meat, Fish oil and Dried Fish. There was a market for all four. But the Fish Eggs, the Roe was king. When I got into the industry I was selling equipment into a market where customers were buying $500,000 equipment based on a marginal return that resulted in a 2 to 5 year payback. When I did the math on what I was selling and saw that I could achieve a 2 year or better payback I assumed that I was going to be making lots of money.
I was wrong. That first year was pretty dry. The industry was taking that same 500,000 that I wanted and investing it in roe strippers. And getting payback in two weeks. Roe paid for the fleet.
The fleet and its new shore plants were also capable of producing meal, oil and fish meat (as fillets, mince or surimi)but roe was the targeted crop, The Japanese loved the stuff, would pay top dollar and didn't quibble over quality, unlike the secondary product, surimi.
...
Now every fishery has its limits, there are only so many fish in the sea so catches are regulated, especially in America. In Alaska the traditional regulatory system was the Olympic, or Derby system. It worked well for small boats delivering to shore plants. It turned out not to work so well for factory trawlers.
The Derby system, as in the Kentucky Derby, was a race. It was a race to see who could get the most fish before the season closed. It was also a race to get the most fish first. And this is wher my tale crosses with the article above.
As I said these ships had the ability to make many products from the fish. But they didn't. They only harvested roe and enough fish meat to look dignified. They burned the fish oil as fuel and discarded the rest of the fish. Typical yields in those early days were down around 9% - 100 lbs of fish brought on board and only 9 lbs delivered to market. The rest was disposed of to the atmosphere or overboard.
The reason was that ships sink when they weigh too much. The available tonnage was best filled with the most profitable cargo. The fishers did what they had to to keep the environmental regulators off their back, if not happy, but they did so reluctantly.
They filled up with roe.
....
Now the other part of this tale is the boom in the ships themselves. Those fancy new Norwegian ships needed paying for and there were lots of them. And the fish paid for them but, as said, there were only so many fish in the sea and all these ships were chasing the same number of fish allowed by the government. If no fish then no money. If no money then no boat. If no boat then no competition and more fish for the survivors next year.
So the other story told is that of beggar thy neighbour.
It was worth sacrificing recovery if it meant fishing longer and denying fish to your competitor so that they would go bankrupt and next year you had the fish they caught and probably their boat as well.
Ultimately the industry concentrated into three factions, one Japanese and two with Norwegian ties. Thee Norwegians dominated with two Seattle companies that ended up having a punch up in a parking lot over quota when the Derby system was abolished to discorage roe stripping abd encourage full utilization. Ships could then catch their quota at their leisure. Yields improved, the size of the fleet shrank and profitability improved.
Those two companies in the parking lot, on was run by a Norwegian American from Ballard who was instrumental in buliding the American surimi industry on the back of his existing on-shore assets and adding deep sea capabilities.
The other company was owned by a reputedly dyslexic Norwegian from the motherland that started his career as a high school drop out that got a job as a deck hand on Seattle crabber fishing King crab. And making a fortune. Which he promptly pissed away like every other rich teenager. And went back to sea a couple more times before wisening up and converting his wages into a boat of his own. Which went broke a couple of times. But perseverance and a good marriage saw him eventually build the largest, newest trawl fleet in Seattle and was fishing the Bering, the Ochotsk, the Barents, off NewZealand off both coasts of South America with ships built to his spec. He went on to buy the yards that built his ships and the bought American and Korean yards. Kjell Inge Rokke of Aker. He did a little time in a Norwegian clink for some white collar crime before selling off much of his holdings to Fincantieri. But that is kind of by the way.
The key point of my story is the beggar thy neighbour bit.
Winning is not just about doing better than the other guy. Sometimes active measures are necessary to ensure he doesn't do better than you.
Ruthlessness.
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And next time I will tell you a tale of a Norwegian, a Japanese delegation, a Goose, A gun and a skerry.
nunatsiaq.com
www.politico.eu
www.bbc.com
www.arctictoday.com
www.bankofcanadamuseum.ca
