Peninsula still riding upward jobs trend

Posted: Sunday, May 21, 2006

State labor analysts say the job growth streak Alaska has enjoyed for 18 consecutive years could reach the two-decade mark by the end of next year, and some of that growth should occur within the Kenai Peninsula Borough’s diverse economy.

Writing in the May issue of Alaska Economic Trends, state Department of Labor and Workforce Development economists Dan Robinson, Neal Fried, Neal Gilbertsen and Brigitta Windisch-Cole said in the short term, high oil prices, favorable national and international economies, and federal spending in Alaska “practically assure continued job growth over the forecast period.”

Tourism

One of the industries expected to do well on the Kenai Peninsula is tourism. Favorable exchange rates should help attract more foreign visitors and lead more Americans to travel domestically, Windisch-Cole said Friday.

“Overall, I believe tourism is still on the rise. I would expect a good tourism season should materialize,” she said.

Indeed, the leisure and hospitality sector added 2,800 jobs statewide between 2001 and 2005, and state data predicts 2006 will be another good year for visitors despite high gasoline prices. The peninsula should see at least some of that, in part because an increasing number of cruise ships are crossing the Gulf of Alaska to ports such as Seward and Whittier, the economists said.

Various industrial sectors will demonstrate different approaches to current economic conditions, and produce differing employment trends.

Oil and gas industry

For instance, some caution in the oil and gas industry is tempering the short-term prospects for job growth, the economists wrote. Citing past price volatility and Alaska’s high costs, oil companies have been modest with investment in exploration and development. While 500 oil and gas jobs were added in 2005, statewide totals remained 800 jobs fewer than in 2001.

Nevertheless, construction spending within the industry could grow by 19 percent in 2006. BP has announced it will hire up to 200 workers this year and Shell Oil is expected to begin drilling operations in the Beaufort Sea in 2007, they said.

Overall, the economists said, the sector is expected to create about 900 jobs by the end of 2007, which should help produce further growth of high-paying jobs in the general economy.

According to state figures, the average job in oil and gas extraction paid more than $139,000 a year in 2004, while the average job in oil and gas support services paid $80,000 a year.

Seafood processing

The seafood processing industry, which dominates the manufacturing sector, rebounded between 2002 and 2005 and added 1,000 jobs.

In 2005, the third largest salmon catch ever helped create many of those jobs. However, predictions suggesting somewhat fewer Cook Inlet fish this year are expected to generally flatten processor hiring.

“The largest single challenge to the long-term health of Alaska’s fishing industry continues to be competition from salmon farming,” the state economists said, “but the outlook is more positive than it was a few years ago thanks to a growing demand for wild salmon.”

Construction

Construction spending is expected to grow 13 percent during 2006 and add even more jobs, the state economists said. That industry has been growing at an average of 5.7 percent over the past five years.

The total value of construction permits issued on the Kenai Peninsula (only the cities require them) fell by nearly half in 2005 compared to the previous year, but that had much to do with the fact that several expensive projects were permitted in 2004. The actual number of permits rose by 7.4 percent last year over 2004, according to Jeanne Camp, economic analyst for the Kenai Peninsula Borough.

Borough data shows permit numbers grew significantly in 2005 in Kenai and Soldotna (by 13.9 percent and by 20.9 percent, respectively). Even Seldovia, which issued just four building permits in 2004, handed out 10 in 2005.

The largest volume of building permits were found in Homer, which saw a slight decline between 2004’s total of 108 to 2005’s total of 103. Homer, by far, had the most permits in each of those years.

Windisch-Cole pointed to some sizeable jobs on the peninsula that are contributing to construction employment, including current expansion of Central Peninsula General Hospital, impending expand South Peninsula Hospital and the Kenai River bridge project in Soldotna.

Government

One sector where growth is very slow is in local government, where only 300 new jobs were created statewide between 2001 and 2005. Boosted revenue sharing from the state this year could lead to more local government hiring this year and next, however, the labor economists said.



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