1. E B Dunne Consulting1 ECONOMIC VIABILITY OF INDIVIDUAL VESSELS AND FLEETS The Concept of Viability The Viable Vessel The Viable Fleet Some Hypothetical Examples

2. E B Dunne Consulting2 The Concept of Economic Viability Economic costs include all required returns to labour and capital. Normal profit is included in these returns. All inputs costs are covered and the two main factors of production receive the payment equal to the next best alternative or what is required to keep them in the activity. Must be sustained over the life of the assets. Regulatory regimes cannot guarantee viability of every participant.

3. E B Dunne Consulting3 The Viable Vessel Produces an annual catch that covers all costs and gives labour and capital their required returns. Determined by all fixed, variable and semi-variable costs of fishing operations. Costs vary by days at sea, days fished and type of fishing. Required annual revenue can vary by efficiency of individual enterprises.

4. E B Dunne Consulting4 The Viable Fleet The total number of enterprises that can cover all costs from available total revenues. Overall average cost structure of existing vessels is normally less than that of newly constructed vessels of the same size class. Larger replacement vessels means fewer can be supported or are necessary.

5. E B Dunne Consulting5

6. 6 Comments on Table Difference in required catches less than 15 %+/- because of fuel efficiencies and capital costs of 75 and 85 footers. Newly constructed 65 ft may have trouble making number of trips. 75 and 85 ft may have “design overcapacity” because of efficiencies in relation to required catches. Gross revenues influenced more by fixed costs (especially ROI) than most variable costs excepting maybe labour.