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Peninsula economy better than anticipated

Posted: Tuesday, April 02, 2002

The Sept. 11 terrorist attacks in New York and Washington, D.C., raised fears for the economy among those in the Kenai Peninsula business community -- especially those in the tourist industry.

But the expected economic downturn never materialized, according to the latest quarterly report from the Kenai Peninsula Borough Community and Economic Development Division, which covers the period from Oct. 1 through Dec. 31, 2001.

"In talking with the tourist industry, they're seeing bookings coming up pretty solidly," said Jack Brown, business manager of the division.

Fears that the threat might cause travelers to stay home this summer appear to have disappeared.

"It seems the concerns we initially had were unfounded," Brown said.

Among the fourth-quarter positives noted in the report were Forest Oil's commitment of more than $150 million to bring the Osprey platform into operation by 2003, and planning by Marathon and Unocal to drill many as seven additional wells in the Anchor Point-Ninilchik area.

Other oil industry milestones included Unocal's King Salmon platform doubling its production rate, Phillips Petroleum's continued exploration near Anchor Point to reevaluate a 1967 oil find and the revival of the search for gas fields in the Cook Inlet Basin.

A new Alaska Industrial Hardware store opened in Kenai and the Aspen Hotel opened its doors in Soldotna.

Still other projects that should help boost the economy this year include road and walking path work in the Nikiski area and completion of an $11 million dock in Homer.

The quarterly report said gross sales during the fourth quarter of 2001 "showed remarkable strength" as sales were up 12.4 percent over the fourth quarter of 2000. Total sales reached nearly $447 million.

Manufacturing increased by more than 42 percent, while retail sales, the largest economic sector, rose more than 13 percent over the same quarter last year, reaching $160 million.

Gross sales rose for all of 2001, hitting an estimated $1.8 billion, with construction's 30.2 percent increase leading the way. Retail sales contributed to the overall rise, hitting $652 million for the entire year.

Two sectors had falling sales over the entire year, though each registered fourth-quarter increases. They were manufacturing, down 18.5, and AFF sales (agriculture, forestry and fishing), which dropped almost 30 percent for the year, despite a good showing during the fourth quarter, the report said.

Taxable sales for the entire borough in 2001, meanwhile, were 5.2 percent greater than sales during 2000, with all but the manufacturing sector showing solid sales gains.

The taxable-sales winners were Soldotna, up 7.7 percent; Kenai, up 6.9 percent; Homer, up 3.4 percent; and a category called "other," which includes areas outside city boundaries, up 5.4 percent. Only Seward and Seldovia saw taxable sales fall, by .7 percent and 2.6 percent, respectively.

Homer led the way in construction permit value, but that was to be expected because of the $11 million Pioneer Dock project. Permit values jumped from $7.1 million in 2000 to $19.8 million last year. Kenai and Soldotna permit values also showed healthy increases over the previous year, the report said.

No records are kept for areas outside the cities because building permits are not required. Still, Brown thinks construction is running apace in the unincorporated areas and contributing to the economy.

"My read of it is that there are a lot of construction projects outside the cities," Brown said. "It just isn't documented in the report."

Employment for the year showed a modest gain, adding 213 more jobs, while the average monthly labor force remained almost flat line, with an increase of only 15 people. With the number of jobs increasing faster than the increase in available labor, the borough recorded a lower annual unemployment rate, just 9.3 percent.

Population figures show peninsula residents are getting older on average. According to the latest census, there was a 15 percent drop in the 0-4-year-old age group, and a 23 percent fall in the age group 25-34 years.

Meanwhile, the percentage of people 85 years and older rose 167 percent, from 79 to 211 persons, the report said.

The median age for residents is 36.3 years. There also are more males than females -- 52 to 48 percent -- on the peninsula.

Brown said there is another encouraging trend, this one regarding the quarterly report itself, that indicates new businesses are eying the peninsula.

"We are getting increasing requests for these documents from potential investors looking at the peninsula," he said.

Brown also said that during his recent trip to eastern Canada for the Arctic Winter Games, where among other things he pitched the peninsula as a possible location for the 2006 games, he spoke with a fish-buying firm, Royal Greenland, which expressed some interest in buying Alaska salmon.

The Minnesota-based company has showed interest in a proposed new industrial park in Nikiski. Fastenal sells industrial supplies and management expertise, Brown said.

"I think the economy (of the peninsula) is not only stable, but it is growing," he said.

The peninsula data reflects the economy of Alaska in 2001.

The April issue of Alaska Economic Trends, published by the Alaska Department of Labor and Workforce Development, includes a year in review article. During last year, Alaska maintained a healthy growth rate.

It was the 13th consecutive year of job growth, the second longest period of expansion in the state's history, the Trends article said.

The oil industry added 1,000 new jobs. That followed 900 being added in 2000.

Alaska had its second lowest unemployment rate since statehood, just 6.3 percent.



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