Fishing For Answers -- Pollock Season At Hand, But Factory-Trawler Fleet Is Facing Stormy Seas

After yet another rancorous skirmish, the commanders in Seattle's billion-dollar surimi war have moved their forces north to the Bering Sea.

The city's fleet of factory trawlers, 65 large vessels that both catch and process fish, are deployed north of the Aleutian Islands for the opening of the summer pollock season tomorrow.

They face a leaner year in the world's richest fishery because of the North Pacific Fishery Management Council's decision to guarantee, for the first time, that 35 percent of the pollock catch will be processed onshore in Alaska, compared with about 25 percent last year.

Another front in the battle was opened Friday in Federal Court. As expected, the American Factory Trawlers Association filed suit against the Commerce Department over the decision to shift the resource.

Other fishing groups are likely to enter the legal thicket over the allotment issue as well in the days and weeks ahead.

As the trawlers move into place in the Bering Sea, the shore-based processors - about 80 percent of whose capacity is controlled by Washington corporations owned by two huge Japanese fishing companies - have dispatched crews to five processing plants near Dutch Harbor in the Aleutians. A second fleet of generally smaller boats, most of which also are from Seattle, is standing by to provide fish to the shore plants.

The onshore plants and the boats that serve them stand to benefit from the same rule change that will hurt the trawlers.

Factory-trawler operators call the council's decision a politically motivated transfer of wealth from them to their land-based rivals in order to provide low-paying jobs in Alaska at the sacrifice of higher-paying jobs aboard their vessels.

The allocation plan will drastically cut their bottom lines while propping up onshore plants, they say.

A cost/benefit study for the National Marine Fisheries Service estimates the allocation plan could cause losses of $619 million to the trawlers over the next three years, transfer value-added processing work from the U.S. to Japan and lessen the international competitiveness of the U.S. fishing industry.

"We're getting screwed," said Steve Finley of Emerald Seafoods, a trawler operator.

"There are going to be bankruptcies, no doubt about it," said Robert Morgan, president of the American Factory Trawlers Association and part owner of Oceantrawl Inc., which he said has invested $160 million in three trawlers. "Whether it'll be 10 percent of the fleet or 80 percent, I can't say."

The Pacific Seafood Processors Association, the trade association for the onshore processors, says the study done for the fisheries service is fatally flawed, that the factory trawlers want all the catch to themselves and that they process the fish inefficiently.

The association also has argued that its operations contribute more than the trawler fleet to small Alaska coastal communities, a claim that proved highly effective in Alaska, perennially short of jobs.

"It's our position that the managers of the resource ought to look at how the resource is utilized to make sure we're getting the biggest bang for the buck," said John Iani, president of the onshore processors association.

Levis Kochin, an assistant professor of economics at the University of Washington retained by the onshore processors to analyze the cost/benefit study done for the fisheries service, said the authors of the analysis "generally cooked the books" by employing inaccurate data and applying differing standards to labor costs that were fundamentally similar for both at-sea and onshore processors.

"This study simply does not meet professional standards . . ." said another economist hired by the onshore plants, Professor Robert Higgs of Seattle University. "In my view this study was a joke."

Garry Brown, a Washington, D.C., economics consultant hired by the factory trawlers, said the analysis "was not rocket science" because it was an afterthought done by a small team working under tight time constraints months after the North Pacific Fishery Management Council had already made a decision to allocate the pollock catch.

The study is being rewritten and the fight over its validity will be renewed at a council meeting June 23 in Sitka, Alaska.

Then at a special meeting Aug. 3 in Juneau, the commission is scheduled to consider proposals for pollock allocations through 1995. That meeting is less than two weeks before the terms of commission members Larry Cotter and Ron Hegge, proponents of the onshore processors, expire.

Speculation is that the council will approve cutting the allocation to factory trawlers from 65 percent this summer to 60 percent next year and 55 percent in 1994.

The fundamental problem - one eventually reached in every open-access fishery - is too much expensive equipment seeking too few fish. Despite its amazing productivity, the Bering Sea pollock fishery, at current catch levels, just isn't big enough to support both the factory trawlers and the onshore plants to the extent each would like.

Pollock, small, codlike bottomfish, populate the floor of the Bering Sea in such profusion that it constitutes the world's richest single fishery. No one knows for sure how many pollock there are, which is part of the problem in managing the fishery, but current regulations set the annual catch at about 1.4 million metric tons, or more than 3 billion pounds. That's enough to provide every person in the U.S. a 4-ounce serving each day for 37 days.

Some pollock winds up in supermarket cases, and a lot more is sold as fish sticks, fish-and-chips and the fish sandwiches at fast-food restaurants.

But the bulk of it, whether processed by factory trawlers or onshore plants, is turned into surimi, most of which is shipped to Japan, where it is made into a variety of food products.

Although each side in the dispute is quick to cast aspersions on the other, both are sizable contributors to the Seattle economy.

The trawler companies list crews of about 10,000, about two-thirds of them from Washington state, and have payrolls that totaled $294 million last year. The trawlers also provide rents to the Port of Seattle and millions of dollars in annual repair and fitting-out work for boatyards.

Some trawler operators, notably Royal Seafoods and Arctic Alaska Fisheries Corp., process their products further in Seattle.

Royal, for example, employs about 400 people at its 7-acre facility at Pier 89. It produces fish sticks, entrees for Jenny Craig frozen meals and fish-sandwich fillets for every Burger King west of the Mississippi.

Royal President Stuart Looney said the Long John Silver fast-food chain - the largest single consumer of pollock fillets in the U.S. - has indicated it will seek other suppliers because of the uncertainties caused by the Bering Sea allocation battle.

The allocation plan is a double whammy for Royal Seafoods: Its trawlers will be hurt by lower catches, and its Seattle shoreside operations, unlike those in Alaska, will receive no benefit.

The onshore plants in Alaska owned by Seattle-area companies employ 3,500 to 4,000 people, many of whom are Washington residents, said Iani of the Pacific Seafood Processors Association. Seattle-based catcher boats working for the Alaska plants employ several hundred fishermen. Companies such as Trident Seafoods, the only one of the major onshore operators that is U.S.-owned, and Unisea also employ about 2,500 at their Seattle-area operations, Iani said.

Factory-trawler operators estimate that initially about 1,000 jobs may be lost to onshore processors in Alaska, with larger losses in subsequent years if their allocation is cut further.

Anyone who has eaten artificial crab knows what surimi is - and might well wonder how it could inspire acrid charges of political manipulation, economic "pre-emption," the giveaway of U.S. resources to a foreign country and Japan-bashing.

But this is fishing, where the commonplace expectations of landlubber business people rarely apply. In part, this is because anywhere there's a fish, there's bound to be a politician nearby.

The present Bering Sea fishery was created by politics. The 1976 Magnuson Act created a fishery management zone extending 200 miles off the U.S. coast, which was intended to "Americanize" a bottom fishery that had been developed by Japanese and other foreign fleets in the 1950s and '60s, when no one in the U.S. had an interest in pollock.

Not much happened for a few years. But when more valuable salmon and king crab fisheries began to decline, U.S. fishermen's interest in pollock increased. Seattle-area companies began converting vessels for the pollock fishery and for surimi production.

Factory trawlers are capable of catching vast numbers of fish quickly, and within just three years the fleet had grown to the point where too many boats were chasing too few fish. That left expensive vessels with high carrying costs tied up at docks in Seattle more than half the year because the year's allowable catch could now be landed in two seasons of about 2 1/2 months each.

The two Japanese conglomerates, Taiyo Fisheries Co. and Nippon Suisan Kaisha Ltd., decided to invest in onshore plants in Alaska, increasing Dutch Harbor's processing capacity by about 60 percent and greatly increasing the shoreside demand for pollock. The last of the plants came on line last year - after the factory trawler fleet had already grown to a size larger than the fishery justified.

With the fishery heavily overcapitalized, politics again entered the picture, and while the factory trawlers were cleaning up at sea they lost badly ashore.

The Pacific Seafood Processors Association complained to the North Pacific Fishery Management Council that its plants would be pre-empted by the factory trawlers unless the pollock catch was allocated.

In other words, the factory trawlers, which are able to catch and process the fish on the fishing grounds while the catch is freshest, were likely to win a competitive battle with onshore plants that must rely on catch brought to them over often considerable distances by catcher boats.

The council, which The Times reported last fall is dominated by onshore interests and riddled with conflicts of interest, accepted this argument and developed the allocation plan.

Alaska's congressional delegation - Sens. Ted Stevens and Frank Murkowski and Rep. Don Young, all Republicans of long seniority - carried the ball in Washington, D.C. They were helped by Charles Black of the high-powered public affairs firm Black, Manafort, Stone & Kelly and a key adviser to President Bush's re-election campaign. Black is the onshore processors' registered lobbyist.

The factory trawlers got strong support from Washington's Democratic congressional delegation, but none from Republican Sen. Slade Gorton, who maintained a careful neutrality, saying he had constituents on each side of the dispute.

Despite written opinions by the Commerce Department's inspector general and the antitrust section of the Justice Department that the allocation program was unjustified, the first year of the program was approved by John Knauss, undersecretary for oceans and atmospheres, on March 4.

The result, the factory trawlers argue, will be to strip public resources arbitrarily from more than 20 small U.S. companies who were there first to subsidize two large Japanese companies that made poor business decisions.

Having been thwarted politically, the factory trawlers are turning to the courts.

However, the trawler operators concede that the track record of challenges to fishery management decisions under the Magnuson Act has been poor. And if a court challenge fails, the way would be opened for them to be pushed out of the fishery altogether.