2006 forecast for Alaska's key industries: corporate Alaska looks forward to another banner year.

• Author: Martin, Gary L.

This year should be another good one, according to most of Alaska's key industry leaders. When ANWR and the natural gas pipeline get approved, they will have a major impact on just about all of the industries in the Great Land. The same can be said about Alaska's two major bridge projects, but the question mark, regarding that topic, seems to be growing by the day.

Both the commercial and residential real estate sectors also will keep prospering, even with loan rates nudging up every quarter.

In the world of construction, both the civilian and military communities will continue to be very busy, and the shortage of skilled workers will remain a growing issue. In 2006, the Army Corps of Engineers will expect to get more money for capital projects.

The next three fiscal years looks exceptionally good for Alaska, in terms of government spending. This year and next, it is estimated that there will be $900 million spent in Alaska, and in 2008, that figure should jump to a billion dollars.

While Alaska's commercial fishing industry still faces some choppy seas ahead, it seems to have done a turnabout and is now headed in the right direction. Most of the experts attribute that to the industry's aggressive fishing revitalization strategy.

Although there may be a few cloudy spots in the old crystal ball, overall Alaska businessmen and women will continue to have plenty to smile about in 2006.

CONSTRUCTION (Civilian)

Truly a hot spot in Alaska's statewide economic picture, the construction industry will probably eclipse its 2005 record-breaking year, barring unforeseen negative factors, according to many industry watchers, experts and professionals who are involved in Alaska's new-stabilizing industry.

No, the construction industry itself is not new. Indeed, it is one of the foundations of Alaska legacy enterprise dating in the modern era from WWII days. What is comparatively new, however, is construction's stabilizing effect on the overall statewide economy. For the past 15 years, since 1989, the industry has continued to drive both employment growth and positive monetary impact.

Employment is still very seasonal and comprises only about 5 percent of total statewide employment, but average annual earnings are in the $50,000 range for full-time workers. Although construction jobs declined slightly last year, a modest 1 percent growth is forecast for 2006, bringing the total number of construction jobs to a potential 22,000.

Although construction of a new $93 million Anchorage Visitor and Convention Bureau is uncertain at this time, employment potential is not expected to decline. Direct employment in the industry could still have a positive impact on secondary employment for construction-related enterprises.

Long-time industry practitioner Jim Fergusson of Fergusson and Associates, an Anchorage construction consultant and builder, cautions that of the four primary sectors significant in construction-housing, general construction, government (including military) projects, and other potentials, such as pipelines and bridges, that housing could be most adversely effected by the cost of money (interest), shortage of development land, and what he calls the Katrina Factor that has driven up the cost and availability of building materials and delivery time required for projected single-family or multi-family homes all across America. When that happens, Maska is usually the hardest hit in such scenarios, Fergusson suggests.

CONSTRUCTION (Military)

The next three fiscal years will be even bigger for the U.S. Army Corps of Engineers, Alaska District, than the recently completed record-breaking fiscal year. In its biggest program ever, the district awarded 792.7 million in contracts in FY05. Of that total, 93.8 percent was awarded to Alaska businesses with 62 percent going to small business and 58 percent to small disadvantaged business.

Projections for FY06 and FY07 estimate that each of these years will total close to $800 million. FY08 could possibly be more. These figures include military construction, civil works projects, environmental projects, and operations and maintenance of existing projects, as well as administrative services.

Military projects to support Army Transformation and Air Force realignments and re-stationing account for the largest increase in the Corps' construction program.

To keep up with the rapid influx of soldiers, the Corps completed $48.3 million of temporary modular housing on Fort Richardson and awarded a similar $9.8 million project for Fort Wainwright. Permanent facilities to replace this housing will follow in fiscal years '07, '08, '09 and '10.

The Corps continues building permanent housing on Army Richardson and Wainwright forts and dormitories at Elmendorf and Eielson Air Force bases. FY07 projects to be advertised for bid and/or proposals this summer include two 120-room dormitories at Elmendorf, a 288-person barracks, Whole Neighborhood Revitalization, family housing, and replacement family housing projects at Fort Richardson, and two 90-unit family housing projects at Fort Wainwright.

Support for the C-17 aircraft on E1mendorf Air Force Base began with award of a $7 million Flight Simulator Facility. An F/A-22 simulator will be added in the next few years.

Other upcoming projects include a C-130 hangar upgrade at Elmendorf, ammunition supply point at Fort Richardson, and a library and education center at Fort Wainwright. Two range projects at the Donnelly Training area are also in the program.

ENVIRONMENTAL

Alaska's environmental outlook for 2006 and beyond holds great promise. Both the commercial and Department of Defense markets continue to show strong momentum in the coming year. Alaska's mining industry has hit new benchmarks with the potential development of Pebble by Northern Dynasty. The largest gold/copper deposit in North America has already enlisted the services of multiple engineering firms, laboratories and specialized consultants. The rising cost of fuel also may lead to the design and construction of the Alaska natural gas pipeline. This $20 billion pipeline would be one of the biggest private projects in U.S. history. The DOD market is very strong with the Alaska District of the Corps of Engineers reporting it's "the largest workload in its history."

The FUDS program currently stands at $30.4 million in Formerly Used Defense Site cleanup projects. In addition there are $600 million in military projects and $77.6 million in civil work projects. In 2007, the Air Force plans to add two squadrons to Elmendorf and develop a "Fighter Town" on the eastside of the north-south runway. The program is budgeted at $265 million to $325 million. With the onset of multiple large-scale environmental projects, the generation of massive amounts of data is inevitable. In '06, we will see an increase in the use of automated, on-demand tools to facilitate project management and successful execution. These tools will allow data to be uploaded to secure online portals that incorporate automated compliance screening. The ability to share single, quality data sets across project teams will dramatically increase project efficiency and accuracy. In tandem with Web-enabled GIS and robust reporting capabilities, we will see a new standard set in the environmental field. Alaska's environmental industry has a very bright future that will incorporate many dynamic and cutting-edge solutions.

FINANCE

We expect heightened activity in the importation of money for capital projects in 2006.

Here in Anchorage, funds will be raised ($100 million) for the new Anchorage Convention Center. Additionally, we expect to see additional funds raised for utility development. Alaska Housing Finance Corp. can be expected to continue issuing bonds for ongoing housing and the Alaska Railroad is progressing toward raising funds for rail and economic associated projects.

Part of the huge state surplus can be used as reserves to lever additional financing in...