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Flexibility pays

NORWAY - Companies that take uncertain times into consideration run well, independent of ownership in fishing vessels or fish farm, says Scientist John R. Isaksen.

The fishing industry is characterised by uncertainty in its access to fish. Fish migration and weather conditions make the catches unpredictable, and intense competition exists for raw materials. Large seasonal variations also mean that the need for a workforce can vary greatly.

Companies that manage to adjust to the uncertainties, have a better chance of succeeding.

Increased stability in the companies has thus long been a topic in the industry. Another good way to achieve this is through so-called "vertical integration", that is, the companies acquire ownership in fishing vessels or fish farms to have better control over access to fish.

Companies that do not have such ownership have to find other ways to acquire raw materials.

Should think alternatively

In a recently presented doctoral thesis, Scientist John R. Isaksen has analysed vertically integrated fishing industry companies and their profitability. He believes that alternative ways to organise the companies can be equally good.

"Flexibility is important to succeed. Companies that have good relationships with fishermen, can compete on price and quickly change their product spectrum, can be just as profitable as companies with ownership in vessels or fish farms", he says.

It is also important to have a stable workforce. If the companies can keep their employees by giving them other tasks during the off-season, for example, their chances for doing well economically will be good.

Ownership not crucial

Isaksen's analyses support Fiskeriforskning's earlier studies, which have shown that vertical integration is no guarantee for success. He also found that there is a big difference in how much fish the individual companies receive from the vessels and the fish farms they own.

"We still don't see any connection between the companies' profitability and their ownership in vessels or fish farms. If the companies have good profits, it's a good and flexible way to organise the company", Isaksen says.

The results appear in Isaksen's doctoral thesis, and the analyses are based on figures from Fiskeriforskning's annual Profitability Study for the Fishing Industry in the period 1977-2002.