Borough sales top $2 billion

Posted: Thursday, April 14, 2005

Business was good in the Kenai Peninsula Borough last year, a period in which gross sales grew by 7.3 percent over 2003 and broke the $2 billion mark, and taxable sales jumped 6.1 percent, according to the latest borough quarterly economic report.

"Those are good numbers," said Jack Brown, business manager of the borough's Community and Economic Development Division. "Things are starting to pop around here."

The latest economic data was published this month in the borough's Quarterly Report of Key Economic Indicators, which covered the last quarter of 2004, but also includes a look at the entire year and compares it with records 10 years back. The report is produced by borough economic analyst Jeanne Camp.

Mining and the gas industry led the way in pushing the economic activity, Camp said in the report. However, coupled with other events, the year presented a kind mixed bag.

New discoveries left the gas industry with greater known reserves at year's end than were known when the year began, and the general consensus is that the Cook Inlet area holds plenty of gas yet to be found, Camp noted.

The relief that followed a settlement reached between Agrium and Unocal over gas supply disagreements was short-lived, Camp said, when Agrium announced it would close its Nikiski fertilizer plant by October 2005, when Unocal's gas-supply contract expires.

Though still years away, the labor and supply needs of a successful Pebble Mine project across Cook Inlet nevertheless hold the possibility of a strong impact on the borough economy in the relatively near future.

Gross and taxable sales saw gains in the fourth quarter of 2004, with gross sales jumping 16.7 percent and taxable sales up 3.7 percent over fourth quarter 2003 numbers.

Taxable sales gained 6.1 percent for the year, totaling $777.6 million. Of that, about $216.8 million in taxable sales were conducted in the borough's broad unincorporated area. The city of Soldotna produced the second largest sum, $199 million, followed by Homer and Kenai, which were nearly equal at $139.7 million and $138.9 million, respectively.

Jobs were more plentiful in 2004, too. According to the borough data, the monthly average labor force increased over 2003 levels by 556 people, while jobs grew by 799 positions. As a result, the annual average unemployment rate — 12.3 percent in 2003 — dropped to 10.9 percent in 2004. A monthly average of 20,221 people held jobs last year.

Brown remembered how things were not that long ago.

"When I first moved here (in 1979), there were less than 20,000 people living in the borough," he said. "Now there are more than that many people working."

Even fourth-quarter labor figures show improvement over the same period a year earlier. Typically a time of slow employment, December 2004 saw 559 more people working — 18,338 total — than December 2003. The labor force itself (the number of people available to work) also grew by 166 people to 20,803. At 11.8 percent, December 2004's unemployment rate was 2 percentage points under that of 2003, and nearly three points lower than December 2002, Camp said.

"An increase in the labor force is positive when new jobs are available for each person added to the labor force," Camp said.

Brown predicted 2005 would be another good year for business on the peninsula, in part because there are some big players on the move.

"There are lot of things staring us in face," Brown said. "Chevron Texaco (which just bought Unocal for $16.4 billion in cash and stock) will be more aggressive and invest more money on peninsula. I think we will also see Marathon (Oil Co.) investing more money."

Real estate is growing in interest on the peninsula, as well, he said.

"We are seeing people buying property in the borough. (The number of) phone calls from potential investors has escalated since February," Brown said. "I'm not ready to mention names, but a new, small, telecommunications company is moving in. The new Kodiak-Kenai fiberoptic cable will be finished by the end of the year, and once it's in place, we may see something similar to what happened in Northern Ireland with an influx of technology companies."

That may be slow at first, Brown said, but interest in the peninsula among tech companies should only grow.

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