Productivity, price recovery, capacity constraints and their financial consequences

Mining and fishing are both extractive industries, although one resource is renewable and the other is not. Miners and fishers pursue financial objectives, although their objectives may differ. In both industries financial performance is influenced by productivity and price recovery. Finally, in both industries capacity constraints influence financial performance, perhaps but not necessarily through their impact on productivity, and both industries encounter external as well as internal capacity constraints. The objective of this study is to develop an analytical framework that links all four phenomena. We use return on assets to measure financial performance, and the basic analytical framework is the duPont triangle. We measure productivity in two ways, with a theoretical technology-based index and with an empirical price-based index. We measure price change with an empirical quantity-based index. We measure internal capacity utilisation by relating a pair of output quantity vectors, actual output and full capacity output, and we develop physical and economic measures of internal capacity utilisation. External capacity constraints restrict the ability to reach full capacity output. The analytical framework has productivity change, price change and change in capacity utilisation influencing change in return on assets, the latter in two ways, directly and indirectly through its impact on productivity change