Growth in Alaska's first quarter exports could lead to record year

Posted: Tuesday, June 15, 2004

The world economy is expanding, and Alaska is benefiting from that growth. Alaska's natural resources are the primary inputs for many booming industries. Demand and prices are increasing for our main international exports: seafood, minerals, fertilizers, energy and precious metals.

Gov. Frank Murkowski's administration is working to guarantee that Alaskans benefit from this positive change by ensuring there is a predictable regulatory environment that attracts foreign companies to

trade and invest in Alaska. This effort brings billions of dollars of "new" money into the state and provides high-paying, career jobs for our residents.

The encouraging recent cooperation to resolve differences at the Pogo gold mine and applications for constructing a natural gas pipeline demonstrate that these efforts are having a positive effect. The Pogo mine agreement saved hundreds of Alaska jobs and the natural gas pipeline has the potential to create thousands more.

Natural resource jobs are by far the best paying in Alaska. The oil and gas industry pays an average salary of $96,000 a year. Mining is second at $64,000 and construction third, providing a comfortable $51,000 annual income. This is compared to a statewide average of $37,000 for all jobs.

In the age of global trade, the challenge is to make sure Alaska's industries and products can compete in world markets. A second priority for the Murkowski administration is expanding access to our resources. Improving infrastructure reduces shipping costs and increases the quality and timely delivery of our products.

Significant improvements are being made to airports, roads and harbors throughout the state. This helps local businesses and improves the quality of life for residents by lowering shipping costs.

The numbers speak for themselves. In 2003, international trade from Alaska expanded 9 percent over the previous year for a total of $2.7 billion in exports. This phenomenal growth has continued into 2004. The first quarter results show exports expanded by 23 percent or $147 million above the first three months of 2003.

Asia remains our principal export market, with Japan, Korea and China consuming more than two-thirds of our products. Japan is by far our largest customer, purchasing more than $1 billion in products from Alaska last year.

That nation's economy is beginning to show positive signs of recovery from prolonged stagnation and deflation. Japan's gross domestic product, or GDP, has risen sharply in the last six months, with consumer confidence and private consumption rebounding. A sustained Japanese economic recovery bodes well for Alaska exports.

Our Canadian neighbors purchased $231 million of Alaska products last year. Canadian companies have made significant direct investments in our state. The potential link of the natural gas pipeline and the Alaska Railroad to Canadian infrastructure give numerous reasons to believe

this cross border trade will expand to new heights in the future.

Europe also is showing great promise as an export destination, representing 13 of our top 20 trading partners. Seafood accounts for a majority of European purchases. The diversity of countries buying fish from Alaska demonstrates that we are effectively penetrating new markets.

More consumers in Europe and all around the world are realizing the superior quality and taste of natural fresh Alaska seafood over the lower priced foreign farmed fish. This product differentiation is

beginning to allow Alaska fishermen some pricing power, not only with the high-end restaurant buyers, but also in the broader seafood markets.

This opinion is supported by the expansion of seafood exports in the first three months of 2004. Seafood exports were $122 million higher than the first quarter of 2003. Strong sales of pollock roe, frozen cod and crab led the way. Early season reports of salmon prices up by $1 to $1.50 over this time last year is another positive signal.

The seafood industry also has been buoyed by the governor's $50 million fish revitalization strategy, which includes direct aid to communities and individual fishermen, funding for economic development projects throughout coastal Alaska and an aggressive salmon marketing campaign.

The impressive growth in international trade, the commitment of the Murkowski administration to support natural resource industries, the global economic expansion and the recovery in Japan all lead to a prediction that 2004 will be a very successful year for international trade and for Alaskans.

Mark Edwards is an economist for the Alaska Department of Community and Economic Development.

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