Anchorage's economic soft spots are starting to recover

Cargo shipments up, could yield more jobs.

July 28, 2010 

Some troubled areas of Anchorage's economy have started to grow again after getting punched in the gut by the global recession last year, according to a revised job forecast from the Anchorage Economic Development Corp.

The AEDC and other local economic trend-watchers said this week:

• Cargo shipments at the Anchorage airport and the port have reversed their decline and are now increasing.

• Local builders are applying for more construction permits and the value of those permits could increase this year.

• Local restaurants and bars are hiring more workers.

• Though Anchorage lost jobs in the first half of 2010, the city could begin adding jobs in the second half.

Most of those statistics are included in the AEDC's midyear job forecast and three-year outlook published this week. The AEDC's mission is promoting Anchorage as a place to do business.

The AEDC expects jobs will start increasing this year mainly based on the assumption that increased cargo moving through the airport and the shipping port will create more demand for transportation jobs.

"It's not going to be hundreds and hundreds of jobs. But cumulatively, it will take us into positive territory," said Bill Popp, the AEDC president.

Popp presented the AEDC job outlook to a crowd of hundreds at a downtown business luncheon Wednesday.

The AEDC had predicted the city would shed 1,200 jobs this year. Now, it expects the city to lose 500 jobs this year -- a fraction of 1 percent of the city's jobs. Last year, the city lost 900 jobs, according to Alaska Department of Labor estimates.

CARGO GROWTH

One significant source of high-paying jobs in Anchorage -- the international air cargo industry -- suffered a massive downturn last year.

"It was down last fiscal year probably over 20 percent," said John Parrott, manager of the Anchorage airport.

But by April of this year, commercial freight tonnage at the airport had increased to 2008 levels, and by May, to 2007 levels.

Parrott said the air cargo shipments have recovered nearly to the peak levels seen in 2006 and 2007. The freight planes touch the ground only briefly while they refuel in Anchorage on their journey between Asia and the Lower 48.

The port of Anchorage is also reporting a boost in cargo shipments this year.

"Overall, we're up almost 4 percent over this time last year," said Steve Ribuffo, deputy port director.

That is due, in large part, to increased fuel shipments to the port this year, he said. But another factor is increased demand for construction materials, he said.

Last year, three ships delivered cement to the port for use in construction projects. This year, the port is back to normal in that regard: "We'll get five ships this year," Ribuffo said.

MORE HOUSES?

Anchorage Mayor Dan Sullivan said Wednesday that more builders are applying to build single-family houses and duplexes in Anchorage this year, but the overall value of building permits in the city is down by roughly 40 percent.

For example, Sullivan said, the value of new commercial building permits is down $62 million this year.

Popp said the decline is part of a cycle: Anchorage recently came off a high level of commercial construction that included large retail stores and hotels.

The McDowell Group, a consulting firm that worked on the AEDC economic outlook, is predicting a reversal of declining building permit values before the end of the year.

The firm predicts that building permit values will grow slightly this year due to the Providence Alaska Medical Center's $150 million project to expand its newborn, prenatal and cardiac surgery units.

The hospital project could begin receiving permits this year, according to the AEDC.

MINOR JOB GROWTH

While the job losses in Anchorage could end this year, robust growth could remain elusive.

In its forecast Wednesday, the AEDC predicted "mild" 1 percent job growth for the next three years.

So far this year, most job sectors in the city are down a little, and local oil-industry employment seems to be flat, said Neil Fried, a state labor economist.

One sector that is showing some new job growth so far this year is restaurants and bars, Popp said.

He said the Anchorage cruise ship port calls that began this summer appear to be having a "profound" impact on downtown eateries. The Holland America Amsterdam docks every other Monday -- the first large cruise ship to make regular calls in Anchorage in roughly 25 years.

Overall, the fluctuation in job numbers in Anchorage has been small. If the AEDC forecast of 500 lost jobs this year holds true, "it looks like a blip," Fried said.

With roughly 151,000 jobs in the city last year, a loss of 500 jobs this year is a decline of 0.3 percent.

"It's a big deal for the people who lost their jobs, but we have been definitely far better off than (most) communities across the country," Popp said.

"We have been saying all along that this is an extremely mild recession for Anchorage," he said.

The speaker at the AEDC luncheon on Wednesday, Joel Kotkin, a Lower 48 author and academic expert in economic and demographic trends, said the city can boost its prospects by embracing immigrants and people in their 30s-- major consumers. He also said the city also should pursue "first-class" engineering programs in petroleum and renewable energy.


Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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