2008 Forecast for Alaska's key industries: many business leaders project banner year for corporate Alaska.

• Author: Grenn, Ben
• Position: Industry overview

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Forecasting the economic future and predicting weather are much alike. There will be sunny days for industries, and there will be businesses that will see stormy weeks before rebounding and showing promise. Generally, like the weather for seven to 10 days out, making a dependable, solid prediction about economic boom or bust is relatively safe. But when looking ahead a year at a time, the fortunes of economies, like the weather, can change and change in a hurry.

Alaska Business Monthly did not consult the 2008 Farmer's Almanac nor test the weather gods by wetting our index fingers, pointing them into the winds and using them as our barometer to predict what might happen in the coming year. ABM also has not conferred with any noted meteorologist to get the correct spin on the weather or what the industry trends, moves, or market pitfalls for the new year might be. Our weather vane also is moving in all directions.

Instead, ABM has contacted many of the state's established and prominent industry leaders and compiled their prognostications for 2008. This marks the fifth anniversary of this ABM annual feature. Except for an occasional fortuneteller, no one can really look into a crystal ball and predict with any measurable accuracy just what lies ahead. So, with our collective panel of experts in place and leading the way, here is a look, albeit, non-binding, as to what may shape Alaska's fortunes.

COMMUNICATIONS AND TECHNOLOGY

What incentive does a company needing high speed Internet have to set up shop in Alaska? While the rest of world is taking strides toward faster, more affordable broadband, Alaska still has slower, less affordable connections--primarily for the upload process.

Both corporate and individual Alaskans are becoming accustomed to the high speeds that broadband has to offer, but Alaska still needs to take steps, starting in 2008, to remain at least on par with the Lower 48 and the ever increasing globalized web of commerce and communications. In many places around the world, especially in developing countries, cell phones, not traditional landlines, are the norm. The United States and Alaska are just starting to see that.

Alaska needs to expand its business focus to include using its isolated location to communicate with the world and keeping it connected. Alaska cities don't lend themselves to large-scale manufacturing and fabrication. Yet, Alaska does have cottage industries that can take advantage of Internet sales.

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Companies that do file transfers or need to meet regularly without high physical-travel and time costs need a high-speed broadband communication infrastructure and faster Internet speeds that can be delivered for reasonable prices. It's becoming clear that communications within and across company divides will be accomplished more efficiently through Internet live meetings, virtual whiteboards and similar immersive virtual meeting rooms. Alaska will need to upgrade its infrastructure and do more to remain competitive, especially because of its remote location.

Alaska already has taken great strides to remain competitive in the global marketplace, but to mature the state's economy and integrate additional diversified and technology-based components into our portfolio of businesses, Alaska needs to accomplish higher upload speeds that are more affordable. These attract industries that do not rely on geographic location.

COMMUNICATIONS AND TECHNOLOGY (CONT'D.)

Matanuska Telephone Association's core service areas continue to grow. With 33 percent of the Mat-Su valleys' population commuting to work in Anchorage, customers demand convenience and technology that makes their lives easier--broadband services coupled with mobility.

MTA is making the fulfillment of this demand the strategic focus of its network investments now and in the future. This translates to a wireless broadband network and a broadband fiber-optic network that supports the delivery of fixed and mobile broadband services. Customers are commuting further and further to work, and this is prompting MTA to provide broadband services and innovative business services that allow employees to work from home.

Telecommunications continue to become faster, more mobile and interactive, helping MTA customers and businesses compete in today's economy. Every day, people are finding that a broadband connection to the Internet brings more value and convenience to their lives. This increase of Internet use across America is also an effort supported by local and national government agencies wanting to provide more services to the public via the Internet, as well as ensuring that broadband access is equitable across the country.

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In rural America, the equity of access is even more important. It is in rural Alaska that MTA plays a vital role in delivering broadband services to our customers. Entertainment services are a big part of people's lives, and consumers increasingly want access to innovative services such as IPTV (Internet protocol television), DVRs (Digital Video Recorders) and VoD (Video on Demand). These advanced services are delivered over the customer's existing phone line and bring new experiences and capabilities to television viewing.

Mobile services, and the convenience and safety that these services give customers, is highlighted by the strong trend of younger and younger children using cell phones, in most cases provided by busy parents that have grown accustomed to the convenience and safety that wireless technology provides. Also, accessing data, Web browsing, and entertainment via one's wireless device is rapidly becoming commonplace. The convenience that mobile wireless service provides and the need to stay connected to a broadband network is driving more customers to demand broadband connections in a mobile environment.

Consumers, more than ever, want easy access to information and knowledge--a trend that will continue to grow in 2008 and beyond, causing leapfrog advances in exciting new technology to meet this demand. Hyperconnectivity and increases in bandwidth have become the natural migration of consumers' communications needs. Communication companies, such as MTA, are focusing on the delivery of these features in order to attract and retain their customers, and to enhance the communities they serve.

CONSTRUCTION (MILITARY)

Overall, the Alaska District Corp of Engineers' fiscal year 2007 workload was $666.6 million for military, civil works, regulatory, environmental and interagency and international services programs. The FY08 program amount, estimated at $496 million, will be determined by the president's budget and congressional legislation.

The Alaska District's military construction program is one of the top three placements in the U.S. Army Corps of Engineers worldwide.

In FY07, the District awarded 28 military projects for the Army and Air Force totaling $536 million. The military construction forecast for FY08 is 22 projects at $413 million, including $124 million "Grow the Force" projects that were moved from other years to FY08. The Army seeks to increase the number of its soldiers with the GTF program.

Most FY08 military contracts will be awarded between January and March, after Congress passes the military appropriations bill. The military construction program will decline for a few years, and then rebound in FY10 through FY12 with projects for the Fort Wainwright Aviation Task Force and the Fort Richardson Airborne Brigade.

The FY07 civil works program was $70.3 million. The FY08 program is estimated at $55.3 million including, planning, construction, operations and regulatory spending. The District's Formerly Used Defense Sites program executed $21.1 million worth of work in FY 07, compared to an FY08 projection of only $14.1 million. With less money coming to Alaska, it will take even longer to clean up the 134 remaining projects. The District has completed 177 projects and has formally closed down 39 of these projects.

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The Corps of Engineers' civil...