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◆ Anchorage Economic Development Corporation July 2000 ◆ Forecast Trims 2000 Job-Growth Count by 280 Jobs By Northern Economics, Inc. Staff updated forecast estimates that an average of 1,920 new The first six months of 2000 have brought jobs will be created in the year 2000. This revision is changes in a number of sectors of Anchorage’s economy. based on a review of actual employment numbers for Shortly after the Christmas shopping season, one of the first half of 2000 and significant events within the Anchorage’s top clothing retailers filed for bankruptcy sectors that may influence employment. protection. In spite of publicized school district layoffs, Mining employment increased in the government sector. In the AEDC’s year-end forecast included a loss of This UpDate funded by Chugach Electric Association Inc. oil industry, uncertainty related to the Arco Alaska, Inc. 280 jobs in the mining sector. At that time, British For permission to reproduce any portion of this newsletter, contact Ingrid Martin at 907-258-3700. sale was resolved. In the midst of national political Petroleum (BP) was attempting to purchase Arco pressures to lower the price of oil, the price for North Alaska Inc. Arco’s assets were ultimately split between Chugach Speaks out on Electricity Provider Choice in Alaska Slope crude continues to stay above $20 per barrel. Cargo BP and Phillips Petroleum and, contrary to initial By Phil Steyer, General Manager, Public Relations activity at Anchorage International Airport continues to expectations, the sale was consummated with no Chugach Electric Association, Inc. fuel growth in the transportation sector, while tourism immediate loss in jobs. Consumers in states across the country may and health care activities keep the services sector active. In This sector has been steadily losing jobs over soon have the ability to choose the company that the manufacturing sector, Alaska Seafood International the past 10 years. The updated outlook for 2000 revises provides their electric service. Chugach Electric has business activity has not met previous projections. the estimated job loss from 280 to 50 jobs. This been actively working for several years to make the idea Bjornstad noted. “They’ve seen the benefits of competi- Growth in 2000 and 2001 will reflect their future success. revision is due to the higher-than-expected number of a reality in Alaska. tion in other areas of the marketplace, and are ready for The year-end forecast presented in January jobs created in the first half of 2000. However, for In other words, Chugach believes that custom- it in the electric industry, too.” predicted 2,200 new employees for the year 2000. This 2001 the declining trend in the mining sector should ers should be able to make the same kind of buying While Chugach has been advocating for continue. 135000 decisions for electricity that they make for everything competition on behalf of customers for several years, to 133,220 Government else from phone service to groceries. date neither the Legislature nor the Regulatory Com- 131,300 The year-end forecast predicted “We think that customers deserve the right to mission of Alaska have approved proposals that would 130000 128,600 90 new jobs in this sector for 2000. choose,” said Chugach General Manager Gene Bjorn- open at least the Anchorage area to customer choice. Census activity has required more than 125000 124,000 stad. “That’s what customers are telling us, and that’s The House did create a Special Committee on Utility 400 new jobs. The Anchorage School 121,100 what we’ve been telling legislators and regulators.” Restructuring that has heard testimony on the issue. 120,200120,600 120000 District cut more than 150 positions this During the past several years, professional A number of states have already made it 117,600 spring, but only 50-60 individuals were possible for customers to choose their electric supplier. surveys of Anchorage-area residents have repeatedly 115000 113,800 actually laid off. 112,700 shown strong support for customer choice. The most A state-by-state summary and more information is 111,500 A proposition limiting the recent poll revealed that 93 percent felt customers available through Chugach’s home page at 110000 amount of tax municipalities can collect should have the right to choose their electric provider, www.chugachelectric.com. on real property will be on the ballot in 77 percent thought electric utility competition would *Conducted in March 2000; margin of error +/- 5 percent 105000 November 2000. If this tax cap passes, it result in lower prices, and 70 percent felt it would lead Chugach is the largest electric utility in Alaska is anticipated that Anchorage’s local to better services.* serving retail and wholesale customers throughout the 100000 government would lose approximately 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 “Customers show strong support for this idea,” Railbelt. Continued on Page 6

◆ Economic Development Issues and Trends ◆ ◆ Anchorage Economic Development Corporation ◆ ◆ Anchorage Economic Development Corporation ◆

Study Mulls Anchorage-Based Military Logistics Hub AT&T to Introduce New Digital Broadband Service By Carl Reed, General Manager By Larry Crawford Logistics Critical Success Indicators How Digital Broadband Works AEDC President and CEO AT&T Wireless Services Optimize cycle times – acquisition, supply, In our April newsletter, I discussed a promising Anchorage is poised to receive a new, high-tech Voice and data signals are transmitted maintenance, transportation and distribution home telephone service soon. AT&T Digital Broad- between nearby “base stations” and a small antenna initiative: the effort to establish a military logistics/ Manage the total life cycle through inte- forward mobility hub in Anchorage. This hub, located band, a division of the AT&T Wireless Group, is installed on the exterior of a customer’s home. Line- gration of acquisition and logistics process of-sight between a “base station” and customer’s off military land, would engage private firms in all Meet deployment and sustainment require- presently installing equipment in Anchorage that will home is not required. A wire connection is made aspects of transportation, management and operations. ments across the full spectrum of military deliver this new service. Anchorage is one of four cities Since then, AEDC has contracted with operations nationwide that will receive the service first. Dallas was from the antenna to a control unit in the home. PricewaterhouseCoopers to assess the potential of such Guarantee joint “total asset visibility” the first market to deploy; the other two will likely be The control unit is then connected to an existing a center, which could be through fully integrated, secure information on the West Coast. inside phone wiring jack and an AC power supply expected to reduce both systems AT&T Digital Broadband is a new radio outlet. the time to deliver Meet or exceed DoD logistics metrics and technology developed by AT&T to provide a high Customers taking advantage of the “always cost reduction goals supplies and the cost of capacity communications path to a customer’s home. on” high speed (up to 1MB) wireless data services Source: Defense Logistics Agency supply distribution for the The service will provide a wide variety of digital of AT&T Digital Broadband can have AT&T technicians install commercially available network U.S. Department of storage and transportation costs. Major resupply points communication services, including high-speed Internet Defense (DoD). The access and digital phone services. Customers will have interface cards in their PCs. Homes connected to will be identified and demand trends will be tracked. the service also have the capability of enabling a analysis is expected to take The analysis will spell out the benefits, risks the opportunity to subscribe to high-speed Internet four months; a final report service; voice access to local, long-distance and interna- Local Area Network (LAN) that can link up to five and economic impact to the Department of Defense of computers installed with compatible network is due Oct. 31. an Anchorage-based logistics hub. It will also recom- tional calling; and the flexibility to easily add phone The DoD lines (up to four lines available). Standard features with interface cards. Each computer can use the high- mend an optimal arrangement between a new military speed data connection to do everything from mission, in essence, is “To logistics hub and the current military supply and global each voiceline will include caller ID, call waiting and provide responsive and three-way calling. More features will be available for surfing the Internet to making a video call at the distribution system, same time. cost-effective support to Defense Logistics one component of additional charge. Although prices have not been set at ensure readiness and sustainability for the total force Agency Vision which is the Alaska this time, they are expected to be competitive with current wireline charges. areas where people live, and where little competition across the spectrum of military operations.” It is widely Best Item, Right Time, Command. exists today. agreed that this can best be carried out by partnering Right Place, Right Price, AEDC has The promise of the Telecommunications Act of Providing new communications pathways to with private industry. The Defense Logistics Agency Every Time … Best Value assembled a 14- 1996 was to bring people choices for communications Anchorage homes will provide citizens a true competi- (DLA) envisions Solutions for America’s member steering services. These include choices of new service providers tive alternative to the incumbent carriers, which rely Defense that “By 2006, the Warfighters committee to guide and choices in all geographic areas, and choices of new primarily upon wired pathways. We are fortunate that Transportation Vision joint logistics and oversee the study facilities, or additional communications pathways, to homes, small businesses, schools, libraries and so on. AT&T has selected ours as one of its pioneer cities for A world-class, globally process will be a process, and a list of key contacts to assist the contrac- this vital, new technology. capable, inter-modal highly efficient, tor in obtaining necessary data. Real, widespread competition in communications Additionally, customers selecting the high- transportation system integrated system In addition, consultant Paul Fuhs, AEDC services will bring significant benefits to consumers speed data service can make voice calls even when they that is responsive, effi- that ensures required Transportation Director Michael Kean and I have met while keeping services affordable. are surfing the Internet. This feature provides the cient, fully integrated, support to the with a number of key officials who will be influential in AT&T Digital Broadband is a major initiative and in partnership with flexibility sometimes required when they need to speak warfighter.” the decisions regarding an Anchorage hub. They to make this promise a reality. The project will expand industry – ensuring with a customer service agent as they shop online. The current include representatives of the Department of Defense, competition beyond the urban business districts to readiness, sustainability distribution system and quality of life. Defense Logistics Agency and Joint Chiefs of Staff; comprises depots, local military leaders; community and state leaders; and Midyear Economic Forecast jobs in the service sector. The average number of inventory control Alaska’s congressional delegation. Continued from Page 6 jobs in the first half of 2000 was less than predicted points, distribution sites and shipment centers both in We are encouraged by their interest and although less than occurred over the past several years, in the year-end forecast. the and overseas. The study will compare support for Anchorage’s potential role in fulfilling and less than predicted in the year-end forecast. We Health services have been the growth leader efficiencies of the current system with a distribution DLA’s “reinvention” goals. Along with resolving the are revising the 2000 outlook because of the lower- in this sector. Providence Hospital is expanding its hub hypothetically located in Anchorage, under both military’s longstanding concerns about cost-cutting, than-predicted number of jobs in the first half of facility. Alaska Regional began upgrade-expansion peacetime and wartime scenarios. more efficient infrastructure and improved cycle time, 2000. We project an increase of 250 annual average activities in July 2000. All classes of supply will be considered, from it will be a great opportunity to showcase our global jobs in 2000 over 1999. Look for a continuation of We have revised the year-end forecast to combat rations and gear, to ground support material logistics capability. Closer to home, establishment of modest growth into 2001. include an additional 800 annual average jobs in this and medical supplies. Local airlift and sealift capacity, the hub would be a significant benefit to the private Services sector in 2000. We expect a continued steady growth and respective delivery times will be noted, along with sector in Alaska. The year-end forecast predicted 1,030 new in jobs into 2001.

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Midyear Economic Forecast Staff Welcomes Research Director, Announces Moves Continued from Page 1 Our Thanks $63 million in annual revenue. to this year’s Midyear Economic Forecast Geoffrey (Jeff) Pokorny has joined the Carol Davis, who handled member relations The 10-year trend in this sector has been a Luncheon sponsors, who helped make Anchorage Economic Development Corporation staff as External Communications Specialist, has moved to steady increase in employment. Our updated forecast the July 26, 2000 event a success. as Research Director, effective July 5. Jeff succeeds Jon Colorado. She will move to in the fall to estimates an average of 100 new government positions. Providence Alaska Health System McCracken in that post. pursue new career interests. This is caused primarily by Census hirings. If the tax- Bagoy’s Florist Jon left Alaska in April to * * * cap initiative passes, we predict a job reduction in this Hilton Anchorage Hotel become an economist with Amy Ragula, who had been AEDC’s Execu- sector in 2001. We appreciate the interest and support of all who the U.S. Department of tive Secretary since December, has moved into the Finance, Insurance and Real Estate attended and participated. Special thanks to Agriculture in Washing- newly created position of Marketing Assistant, where The year-end forecast predicted no change for Northern Economics Inc., which prepared and ton, D.C. she will carry out member relations duties while also this sector. However, in the first six months of 2000, presented the midyear forecast this year. Jeff and his wife, assisting with publications, press releases, media the average number of jobs has been less than antici- Michelle, moved to relations, advertising, event coordination and other Anchorage from Biloxi, public relations and marketing projects. The search pated. Increasing mortgage interest rates caused see a continuation of the increasing employment trend. residential real estate sales to begin declining in 1999. Transportation, Communications and Utilities Miss., where he worked for Amy’s replacement is ongoing. for the Department of * * * National Bank of Alaska, Alaska’s largest bank, The year-end forecast estimated 480 new Marine Resources as a senior economic analyst. Mary Ruebelmann, who has worked as a is in the process of being sold to the Wells Fargo Bank. positions in the Transportation, Communications and Previously, Jeff was an Air Force electronic student intern for AEDC on several occasions, has Positions at NBA will be eliminated when the acquisi- Utilities (TCU) sector. In the previous 10 years, this warfare officer whose assignments included a two-year returned to fill in as secretary and receptionist for the tion is completed. sector experienced the largest annual percentage growth tour at Eielson Air Force Base. He spent four more summer. Mary, a recent graduate of the University of Our midyear revision changes the estimate for in number employed within the Anchorage workforce. years on and off Shemya, flying reconnaissance Dallas, will leave in September to work for the 2000 from no change in jobs to a decrease of an average The growth can be attributed to increased air cargo and missions in support of the Strategic Arms Limitation Archdiocese of San Jose, Costa Rica, Office of of 50 jobs. This revision is due to the NBA purchase communications activities. Treaty and the Strategic Arms Reduction Treaty. Immigration and Refugee Services. and higher mortgage interest rates. The outlook for The purchase of Internet Alaska by Alaska Jeff holds a master’s degree in managerial * * * 2001 is a continuation of job losses due to a continua- Communication Systems will transfer jobs from the economics from the University of Oklahoma and a Tim Borgstrom will be leaving AEDC as of tion of higher interest rates. services sector to the TCU sector. The new Alaska bachelor’s degree from the University of Nebraska. July 31. Tim has been with the AEDC for 4-1/2 years Manufacturing Sector CargoPort at Anchorage International Airport will * * * and is currently seeking other opportunities. The year-end forecast estimated an increase of facilitate the efficient transfer of cargo. Northwest 150 jobs in this sector. This estimate was based on Airlines will be adding two freighters to its cargo fleet expected hiring by Alaska Seafood International (ASI). this fall, and has applied for additional routes into Asia. In May 2000, ASI employed 125 people, with plans to The continuing growth in air cargo activity Airport Hosts Top of the World Air Cargo Summit 2000 expand shifts. ASI planned to be in full production in lends optimism to continued growth in this sector. The late 2001 and employ about 450 workers. year 2000 should finish with an average of 600 more Mark your calendar for the Top of the World the University of Alaska Anchorage will conduct a A low performer in the Anchorage economy, positions than existed in 1999 in this sector, 120 more Air Cargo Summit 2000, scheduled this year for global logistics workshop. In manufacturing employment has been declining over the than estimated in the year-end forecast. For 2001, we Aug. 22-25, at the Westin Alyeska Prince Hotel. addition, there will be two past 10 years. Due to ASI’s slower-than-projected project a continued increasing trend in employment. This annual event is designed for airport tours of the Anchorage Inter- growth and the 10-year trend, we have revised the job Trade decision makers and air cargo transportation profes- national Airport’s cargo estimate for 2000 from 150 to 50 new jobs. Numbers The year-end forecast predicted 520 new jobs sionals who are actively involved in air cargo trans- facilities. in 2001 will depend on ASI activities. in this sector in 2000. The actual number of jobs in portation, or those who intend to be in the near Registration fees are $475. Construction the first half of 2000 came to less than the number future. The summit is an opportunity to meet with Special hotel rates are available The number employed within this sector has anticipated. major air cargo airport representatives, carriers and for attendees. For summit been steadily increasing over the past 10 years. The A number of new participants entered the forwarders to discuss critical issues and ways to details and registration forms, year-end forecast predicted an annual average of 220 Anchorage retail market in 1999. That trend is not capitalize on the rapidly expanding air cargo market. visit http://www.aci-na.org/ new construction jobs in 2000. The federal budget expected to continue into 2000. After the 1999 This year’s summit will focus on airport cargo new_website/conference/anchorage.pdf. surplus, and Sen. Ted Stevens’ position on the Senate Christmas shopping season, one of Anchorage’s major marketing and development, air cargo airlines and In conjunction with the summit, the Appropriations Committee, have provided Alaska with clothing retailers, , filed for bankruptcy alliances, the airport-airline-forwarder relationship, Anchorage Air Cargo Association will host a golf abundant federal appropriations for construction protection. This news was followed by information that multi-modal issues, the impact of new technologies, tournament on Aug. 22, at O’Malley’s Golf Course. projects over the past several years. Another year of a California-based clothing retailer, Gottschalks, would global logistics, attracting business to your commu- For tournament information, call (907) 243-6150. federal budget surpluses will mean another year of be buying Lamonts. nity, and the China market. The 2000 summit is sponsored by Anchor- generous appropriations. This sector should continue to see a continua- There will be a delegation of high-level age International Airport, the Anchorage Economic For 2000, we maintain the estimation of 220 tion of growth in jobs for the remainder of 2000, Chinese officials from the Civil Aviation Administra- Development Corporation, Airports Council new jobs in the construction sector. In 2001, we should Continued on Page 7 tion of China, which deals with air cargo issues, and International and Cargo Airline Association.

◆ Page Six Page Three ◆ ◆ Anchorage Economic Development Corporation ◆ ◆ Anchorage Economic Development Corporation ◆ Red Dog, Northstar Module Projects Keep Builders Busy ‘24-7’ Snowmobiling Impact Study Makes Case By Ingrid Martin ment Corp., taking shape for Expanded, Year-Round Trail System PR/Marketing Director in April on a two-acre site By Ingrid Martin An aggressive push by VECO Corp. to bring adjacent to the Northstar PR/Marketing Director oil field module engineering and construction jobs yard. A recent study shows that Anchorage and the Mat-Su Borough could boost home to Alaska is evident this summer at the North The Red Dog economic activity related to snowmobiling by about $35.5 million annually, if a Star Terminal Stevedore Facilities in Anchorage. zinc-lead open pit mine is system of groomed and marked trails were developed throughout the area, and Nearly 500 workers are on the job at the in northwest Alaska, near related winter tourism activities were promoted. waterfront site, piecing together a variety of modules Kotzebue. Concentrates This boost would come from an estimated 12,000 additional visitors to the for two colossal projects – development of the North- are trucked to the port state each year, drawn to vacation here by such a trail system, and activities spurred star offshore oil field in the Beaufort Sea and expansion site on the Chukchi Sea, by a growing number of in-state snowmobilers. of the Red Dog lead and zinc mine near Kotzebue. stored until summer, then The study, “Economic Activity and Economic Impact of the Snowmobiling Northstar module work follows on the heels of lightered to ocean-going Industry on the Municipality of Anchorage and the Matanuska-Susitna Borough,” construction last year of the Miscible Injection Expan- vessels offshore. was conducted for the Anchorage Economic Development Corporation by senior- sion (MIX) module. The decision by owners to build Expansion will level students at the University of Alaska Anchorage, and completed in May. the MIX module in Anchorage was a departure from involve installation of a Already, snowmobiling generates nearly $56.2 million in annual economic having such work done in the Lower 48 states. seventh five-megawatt activity in the area, based on surveys of dealers and related businesses, data from the The project’s success in terms of both time- diesel generator in a International Snowmobile Manufacturers’ Association (ISMA), Department of and cost-effectiveness gave credibility to a new industry standalone powerhouse. Motor Vehicle records and resident responses. The survey examined sales of snowmo- for Alaska. The 1,000-ton generator biles, options, accessories and services, as well as related expenses, such as lodging, “Ten years ago, Alaskans were doing some field module will be barged to meals, insurance and registration fees. installations and other on-site work,” said VECO Vice Red Dog in September, According to the ISMA, more than 7,000 new snowmobiles have been sold President for Marketing and Business Development along with an 1,800-ton in Alaska during each of the past four years. The growing popularity of the sport is Tom Maloney. “Now we are performing engineering, Photo courtesy VECO ore processing module. certain to generate increasing levels of snowmobile-related economic activity, the procurement and construction for major sealift mod- Crews lift sections of the Red Dog Mine processing module into place earlier this month. The ore processing study said. Coupled with the development of groomed and marked trails, Alaska ules right here in Anchorage. module will comprise 12 May alone, VECO Construction spent more than could significantly increase the number of snowmobilers from outside the state. “The module construction activity requires mechanical flotation cells and four column cells, to $4 million in outside purchases on just the Northstar The study calculated that in 1999, based on average uses, Anchorage and highly technical craft and staff personnel to handle the maximize flotation capacity while also improving project. According to Maloney, 98 percent of these Mat-Su’s estimated 20,144 snowmobilers spent nearly $6 million in gasoline alone, many facets of engineering and construction activities. concentrate recovery and grade. expenditures went to other Alaska companies. to fuel transport vehicles and snowmobiles. The same year, they spent more than These are outstanding, high-paying jobs.” “Construction took place in the Philippines Employment at the Northstar construction $30 million on new snowmobiles and $1.7 million on used machines. Options, Building modules in Anchorage means lower for the original mine. Now we’re doing engineering yard will peak at about 400 workers this summer, accessories and services totaled $8.6 million. Lodging and meal costs totaled nearly costs and better quality control than would be possible and construction right here in Anchorage,” Maloney Maloney said. The permanent living quarters, utility $6.7 million. Snowmobile insurance and club membership fees totaled just over for on-site construction at the job site, according to said. module and tanks will be transported by a huge sealift $3 million. Maloney. Shipping time from Anchorage is also By working double shifts seven days a week, barge in July. The ISMA recorded 2.4 million registered snowmobilers in North America approximately two months less than from the Gulf crews plan to finish the job within five months, rather Next year, two oil process modules totaling in last year. The estimated additional 12,000 visitors to Anchorage and Mat-Su repre- Coast, where most modules have been built in the past. than a year. At its peak, up to 140 people will be excess of 7,000 tons, a 3,000-ton compressor module, sents one-half of one percent of that total. For economic impact analysis, an average The Anchorage work activity is a boon for working on the project in Anchorage. pumphouse, warehouse and office building module visit was conservatively pegged at five days, although half of those surveyed said they Alaska vendors and subcontractors. In the month of With the completion of the Red Dog work will be shipped. Collectively, the Northstar shipment would stay for more than seven days. this year and of the Northstar work in 2001, the will exceed 13,000 tons, five Again based on survey results, it was assumed that just over 84 percent challenge will be to keep the momentum of Alaska’s Firm Among Largest for Engineering, Design times the celebrated sealift of these visitors would rent snowmobiles, spending nearly $7.3 million. Lodging, sealift module-construction industry going, Maloney food, beverage and airfare average costs were calculated for all visitors, and totaled Engineering News-Record ranked VECO No. 50 in the country for last summer of the MIX said. $13.6 million. Using a multiplier of 1.7 to gauge the impact of this “new money” to engineering and design for 1999. VECO also was named No. 19 in indus- module. “VECO will continue to encourage resource the area, the total potential estimated future economic impact related to snowmobil- trial process and petroleum engineering, No. 14 in power engineering and VECO is also playing companies to bring more work home to Anchorage,” ing annually was calculated at $35.5 million, a 63 percent increase over current No. 23 in the international design category. a key role in the engineering, he said, “and take advantage of a highly skilled work- economic activity. “We will be moving up in rank for 2000, based on our existing design and construction of the force. The study was conducted by members of Professor Gary Selk’s “Entrepre- workload,” said VECO Vice President for Marketing and Business Develop- Red Dog VIP Mill Optimiza- “At the same time, those companies can neurship and New Business Planning” class at the University of Alaska Anchorage. ment Tom Maloney. tion Project for Cominco capitalize on the proximity and economies of scale that The team included Steve Fletcher, Lisa Kern, Leatha Merculieff, Carolyn Voss With more than 400 design personnel in Alaska and 70 registered Alaska. This project is a joint come with centralized operations in Anchorage.” and Linda Williams. For more information on the study, contact the AEDC at professional engineers, VECO is the largest design firm in Alaska. venture with NANA Develop- 907-258-3700.

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