Alaska's key industries: 2005 forecast: corporate executives project another bullish year.

• Author: Martin, Gary L.
• Position: 2005 Industry Forecast

This year should be another excellent year for Alaska's business community. After compiling the input from leaders of the major state industries, two words come to mind for 2005--"Great expectations."

COMM-TECH

Chris Mott Western U.S. Region Account Manager Stratos Global Corp.

Given the size and rugged nature of the terrain in Alaska, it isn't surprising that satellite communications are popular in the state. Satellite telephones operating on various platforms are already common with businesses and individuals who need to stay in touch beyond the reach of telephone lines and cellular towers, whether on land or at sea.

Because of their established popularity, it's unlikely that 2005 will see a large increase in satellite telephone penetration within Alaska. Instead, the majority of the satellite communications growth that can be expected in Alaska for 2005 is likely to be in data services.

Generally, as is happening in other markets throughout the world, the satellite market in Alaska is in the midst of a transition from voice-centric to data-centric products and services. In 2005, as more users discover the data capabilities of satellites, both for land-based and maritime applications, it is likely that this transition will continue to gain momentum.

CONSTRUCTION [CIVILIAN]

Terry Fike President Associated General Contractors of Alaska

As one of the largest employers in the state, the construction industry expects continued growth in the coming year. For a variety of reasons, commercial construction in Alaska tends to dwarf residential construction and is balanced between the public and private sectors.

In 2005, Alaska expects to undertake $450 million in highway transportation projects, including work on the Kenai River Bridge on the Kenai Peninsula, the "C" Street Extension in Anchorage, the Tok Cutoff, and Valdez road construction.

Due to the importance of air travel in Alaska, upgrades will continue at many of the airports throughout the state. FAA funding will contribute more than $200 million to statewide airport construction and rehabilitation projects. In addition, continued improvement to the Ted Stevens Anchorage International Airport includes runway upgrades and completion of the Concourse B, and the Field Maintenance Facility.

The private sector will continue to be dominated by investments on the North Slope by the oil industry. The oil industry, led by BP and ConocoPhillips, anticipates a combined capital budget of approximately $1.5 billion. Other private-sector companies will expand their Alaska bases as Safeway, Fred Meyer, Wal-Mart and Home Depot open new stores and upgrade existing facilities. Spending by the mining industry--on exploration, development of new mines, and upgrading existing mines-will be strong this year compared with the trend. The Pogo mine, outside Fairbanks, is under development at an estimated cost of $250 million, to be spent over the next two years.

CONSTRUCTION [MILITARY]

Col. Timothy Gallagher Commander U.S. Army Corps of Engineers, Alaska District

Two large military projects in Alaska and a transformation of the Army have more than doubled the U.S. Department of Defense's current construction budget for the 49th state. The program that the Army Corps of Engineers is managing in Alaska is at historic heights. For the last 10 years, the Corps has awarded an average of $200 million to private contractors in Alaska. In federal fiscal year 2004, which ended Sept. 31, it awarded about $300 million. And throughout fiscal year 2005, it is expected this district will award another $444 million.

According to Jim Hannon, chief of construction for the Corps' Alaska district, the money spent statewide last year fell short of what the agency had planned. At least $100 million in projects earmarked for that year were shifted to this year's fiscal budget. It will be used for such projects as a power plant and added security and communications systems for Fort Greely.

Another large military project driving the Corps' construction spending in Alaska is the Air Force's plan to station the new C-17 cargo planes at Elmendorf Air Force Base in 2007. Military construction projects related to that new aircraft includes building a dual-bay hanger and flight simulator, as well as utility and site upgrades.

The current Army transformation is also bringing millions of construction dollars to the state. It will be transferring 2,400 Stryker brigade troops and their families from the Lower 48 to Alaska. This will require new housing and operational facilities at forts Richardson and Wainwright.

As the Army shifts some of its focus from Europe to Asia, an increasing number of troops are being stationed in Alaska. Alaska has an abundance of land to accommodate the Army's need for training ranges. So there should be similar construction spending in Alaska through 2006, but that is only speculation at this time.

ENVIRONMENTAL

Larry Bethel General Manager Environmental Management Inc.

Predictions are difficult. But if one wants to predict the future, stay attuned to what is happening in the marketplace, the business community and the political landscape.

Large projects require significant environmental documentation prior to start and oversight during construction. Part of any Alaska project are numbers of workers employed in hazardous work conditions. These workers require significant training in all areas of health and safety. Environmental sampling, instrumentation, laboratory analysis and fabrication of...