Alaska’s Top Business Stories of the Year
By Melissa Campbell
Throughout much of the
year, Alaska’s economy felt strong. Unemployment rates were low and residents
felt good about spending their money. As interest rates dropped, mortgage loans
increased and hundreds more refinanced. Signs of construction were seen all
over–from private and residential to commercial and roads.
State economists say the
2002 economy was slightly better than last year while the rest of the nation
struggled with a recession. Thousands of workers in several different industries
across the Lower 48 lost their jobs. Americans worried about the war in
Afghanistan and of the looming conflict with Iraq.
Still, Alaska was isolated.
Locally, we paid little attention to proclamations that the gap in the state
budget was growing as pundits bickered over how to close the gap during the
legislative session. They’ve been doing that for years, after all.
Alaskans did, however, take
notice to a report warning that this year’s $1,500 Permanent Fund Dividend may
be the last of its four-figure size for some time.
The troubles in the Lower
48 hit home when the stock market plunged, nearly wiping out the fund used to
pay the annual dividend. In late October, banks declared that residents were
leaving their dividend checks in the bank rather than splurging on nonessential
items.
Market woes also struck
investment and retirement funds, forcing many in the working class to
re-examine, or postpone, dreams of retirement. While no official study has been
done locally, anecdotal conversations indicate residents across the state will
wait a few years to retire, hoping for a resurgence in the market.
Around the state, the
timber and fishing industries continued to look dismal, at best. The oil
industry remains in a state of uncertainty after the Conoco/Phillips merger and
announcements by other major oil players saying they will likely reduce
exploration this season.
The news wasn’t all bad.
After the terrorist attacks, those in the tourism industry feared people would
camp out in their back yards instead of venturing to the Great Land. It didn’t
quite happen that way. People did come–about the same number as last
year–however, this year’s round of visitors didn’t spend the kind of money as
their predecessors had.
The construction and health
care industries were the Alaska economy’s saviors this year. The state saw
nearly $5 billion worth of new and continuing projects, including schools,
airports, hospitals and roads.
Health care continued to
surge as nearly every major hospital has either expanded or is in the process of
doing so. And for the first time in recent memory, a medical facility has taken
the No. 1 spot on the most-employee list, a spot that had been held by Carrs/Safeway
grocer for years. (See related story on page XX)
Here’s a rundown of a few
of the top business stories of 2002:
Economy
Overall
While the rest of the nation dealt with a recession, Alaska’s overall economy
experienced a slight growth, state economists said. While growth was slower than
in previous years, it was still there, said Dan Robinson, an economist with the
state Department of Labor.
From August 2001 to August
2002, the state had an increase in employment of nine-tenths of a percent, the
fourth highest percentage in the U. S.
The state’s industries had
no major lay-offs, and some industries–most notably in construction–often had
trouble finding enough workers to fill the dockets.
But some economists believe
the nation’s troubles are about to converge on this typically isolated state.
“Alaska is having to face
up to the problems of an unbalanced state budget,” said Scott Goldsmith, of the
University of Alaska Anchorage’s Institute for Social and Economic Research. “We
are facing what could be a $1 billion shortfall. That will be coming to roost
fairly quickly. As the population continues to grow in the state, that could be
leading to additional pressure on the state and local budgets, and we need to
find additional sources to pay for that.”
The stock market problems
could add to that shortfall, he said, especially when it comes time for PFDs
next October.
“If there is no dividend
next year, that will severely impact us, particularly the low income people in
the state and on businesses, retail and service mostly,” Goldsmith said.
The economist predicts the
Alaska economy will be slow next year, as there are no major investments
pending.
One industry we continue to
count on is construction, which has seen a steady, continual growth for the past
decade. Nearly $5 billion in various projects were underway in 2002. The state
Department of Transportation worked on projects totaling around $457 million
this year on roads, airports and other state-owned facilities. Major road
projects started or continued along virtually every main highway in the state,
including the Dalton, Glenn, Parks and Seward.
In late October, the $80
million C Concourse at Ted Stevens International Airport was no longer just a
skeleton of metal. The first remnants of walls appeared just before the snow
fell. And the Alaska Railroad airport terminal will get the final touches this
winter for passenger use next summer.
Another huge chunk of
construction money came from the U.S. Army Corps of Engineers, which had about
$413.5 million in ongoing construction projects this year, including the missile
defense site at Fort Greely and on a new hospital on Fort Wainwright.
The bulk of the funding for
many of the state’s major projects was courtesy of the federal government.
Government spending in Alaska was up again this year, to $10,214 per capita,
compared to last year’s $9,496, according to state economist Neal Fried.
Virginia again came in second, with $10,067, up from $8,859 the year before. The
U.S. average in 2002 was $6,268, up from the previous year’s $5,740. Fried said
Alaska and Virginia are the only two states that rank in the five-digit range of
government spending.
Tourism
While the official numbers
weren’t in at press time, the Alaska Tourism Industry Association believed the
visitor numbers were flat or down slightly for the summer season. A survey to
convention and visitors bureaus, hotels and airports around the state indicated
that about 1.2 million visitors came to Alaska, about the same as 2001.
“The story could have been
worse, but the cruise ships do their own marketing,” said Ron Peck, ATIA’s
president and COO.
Alaska received about 1.5
million passenger visits in 2001 from cruise ships, and those in the industry
believe there were about 30,000 more visits this season. (Cruise ships mostly
dock in Juneau, Ketchikan, Sitka and Seward.) But the industry had to work for
those extra tickets.
From Sept. 11 to the first
of the year, cruise ticket sales were virtually dead, said Jim Jager, a
spokesperson for the Northwest Cruise Ship Association, and that’s usually the
time period when most people book fares. Cruise companies were quick to realize
people would steer away from flying, so executives reviewed their schedules and
redeployed ships to ports that were easily accessible by car. Companies also
offered big discounts, with some packages up to half off. They advertised travel
to Alaska, saying the 49th state was a safe haven, an exotic
destination that still is part of the United States.
While it appears more
tickets were sold, revenues appeared to be lower–both to the cruise companies
and to the destinations that service them. Firm numbers weren’t available.
“A lot of folks came to
Alaska who normally would not be able to afford a cruise,” Jager said. “They saw
the discounted tickets and said now’s the chance. But maybe that brought a
different group of tourists.”
Southeast economist Neal
Gilbertson, with the state labor department, said he’s heard from local shop
owners that visitors tended to buy the lower-cost items, such as T-shirts and
trinkets, and were waving off the pricier items, like carvings or flight-seeing
tours.
The upcoming winter season
may not fare any better. The Japanese economy, one of Alaska’s stronger visiting
winter groups, also is experiencing a recession. That could impact the visitor
numbers in Fairbanks, a popular Japanese attraction, to see the Northern Lights.
Natural Resources
Industries that tap the
state’s natural resources didn’t fare as well over the year. Drilling in the
Arctic National Wildlife Refuge was dropped this fall from the senate’s version
of a national energy bill. Democrats have long opposed drilling in the refuge. A
version of the bill that included drilling passed in the House in August.
Construction of a North Slope natural gas pipeline remained in the Senate
version of the bill after an October committee debate, however. The Senate was
to convene Nov. 12, but it was unclear at press time whether the energy bill
would be up for discussion.
Overall, timber and fish
were dismal again this year. Little timber harvesting took place, except for
some tree cutting of timber killed by spruce bark beetles in Southcentral.
Had the prices been right,
salmon fishing could have seen a banner year. The state Department of Fish and
Game forecasted 128 million fish would be caught, and fishers harvested about
129.3 million. But prices around much of the state for most species dropped so
low that hundreds of fishermen chose instead to stay home.
Up to a third of those
holding permits for the Bristol Bay area fishery didn’t fish this year. That’s
in addition to the roughly 15 percent who stayed home the year before. Of the
1,800 driftnetters permitted to fish Bristol Bay, about 700 stayed home, said
Chris McDowell, who is contracted to research fisheries for the Alaska Seafood
Marketing Institute.
Bristol Bay sockeye this
year brought in around 45 cents a pound, up from last year’s 40 cents. By
comparison, 1998 saw prices averaging $1.17 a pound. The Bay’s harvest of 22
million caught ranks at No. 15 in the past 100-year catch.
Pink salmon brought 7 cents
a pound, down from last year’s 9 cents, while chum averaged from 15 cents to 25
cents, compared to last year’s 30 to 40 cents a pound.
New Faces
A new chain opened in
Anchorage just in time for the PFD checks. The electronics store Best Buy has
been busy since its October grand opening weekend, which featured a visit from
Spiderman and thousands of customers.
Home Depot opened Feb. 28
in Fairbanks to a swarm of buyers. Items were bought faster than workers could
restock the shelves.
The company won’t disclose
sales figures, but spokesman Bruce Pozzi said the warehouse exceeded the first
year’s sales projections within eight months of opening.
The Anchorage store has
ranked among the company’s top 5 in sales every quarter since it opened. Look
for another Home Depot to open in the state in the next year or so.
Anchorage also has a new
newspaper. The Anchorage Chronicle is a weekly publication produced by Alaska
Newspapers Inc., which is mostly owned by the Native regional corporation
Calista. ANI publishes seven rural Alaska newspapers in eight regions across the
state.
