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Japan earthquake effects ripple through Alaska economy

Elizabeth Bluemink

Alaska fishermen are poised to dip their nets into the biggest harvest of Sitka herring since statehood, but it's not clear if their only customer -- Japan -- has any appetite for the high-end product.

The multimillion-dollar herring fishery is just one of the numerous examples of how the deepening humanitarian, economic and nuclear crisis is likely to affect trade relations between Japan and the U.S. in the coming year.

Japan is Alaska's biggest trade partner, receiving $1.2 billion-worth of Alaska products -- mostly seafood, liquefied natural gas and minerals -- last year. Also, Alaska is a major destination for Japanese tourists in the summer and winter months. Some Japanese tourists have canceled their trips to Alaska in recent days, Alaska tour operators said.

Alaska firms have struggled to contact their customers in Japan since the massive earthquake and tsunamis last Friday, said Greg Wolf, executive director of the World Trade Council Alaska.

"Right now, our biggest concern is humanitarian," Wolf said, noting that Alaska's ties to Japan go back decades. After World War II, Japan's first overseas investment was in Southeast Alaska's former pulp mills. In the 1960s, Japan was the first foreign nation to open a trade office in Alaska, he said.

Japan's Alaska consul, Hideo Fujita, said it is impossible to guess at the trade consequences for his country and Alaska until all the damage is calculated.

"It's the largest natural disaster we've ever experienced," he said.

FISH RIPPLES

Japan is a nation of seafood lovers and as much as 75 percent of its seafood comes from overseas. Japanese firms have been importing Alaska seafood since the 1970s and are a major player in Alaska's seafood processing industry, according to Bob Nickinovich, who has worked in Alaska seafood for more than 30 years, including under Japanese owners.

He said Japan's hard-hit Sendai area is one of the major ports for Japanese fishing fleets and an important reprocessing area for Alaska seafood. Tokyo and Osaka are also major destinations for Alaska seafood imports, he said.

An undetermined amount seafood in cold storage in northeast Japan was destroyed during the earthquake or tsunami and will have to be replaced, possibly boosting Alaska seafood sales, said John Sackton, the editor and publisher of Seafood.com, a Massachusetts-based trade publication.

But Japanese owners of Alaska seafood plants are still trying to account for their own employees, Sackton said.

"I don't think they are thinking about the business side of things," he said.

Though he thinks some Alaska fisheries may benefit from increased Japanese demand, Sackton believes that the market for Alaska pollock roe and herring roe may be in trouble this year due to the disaster. These are high-end products that may not get much interest during hard times. On the other hand, the roe can be stored frozen for as long as a year, industry officials said this week.

Seattle-based Ocean Beauty seafood executives said they are worried about the well-being of their Japanese customers and employees. The company has a seven-person sales office in Tokyo. So far, these workers are OK, according to the company, which processes seafood in Cordova, Naknek, Kodiak and Southeast Alaska.

Ocean Beauty said it is also trying to figure out how to plan for Alaska's upcoming harvests, such as the Sitka herring fishery, which could begin in less than 10 days.

"It would be foolish not to be worried," said Chip Treinen, an Anchorage commercial fisherman who participates in the Sitka fishery.

"I think the long-term issue involving fisheries is (Japan's ability) to get this nuclear situation under control," Sackton said.

Fear of radioactive contamination could cause some to stop buying fish, he said.

CANCELED TOURS

The last seasonally-chartered Japan Airlines jet carrying Japanese tourists home from Fairbanks departed a couple days before the massive earthquake last Friday.

This week, Masa Ando, an Anchorage tourism operator who grew up in central Japan, is coping with cancellations for his business, Hai Shirokuma Tours, which organizes trips around Alaska for Japanese residents. But worse than that is the toll of not knowing if all of his friends in Japan are OK.

"Just thinking about that makes me emotional," he said.

Though the winter travel season is mostly over, some Japanese tourists were still either in Alaska at the time of the earthquake or were booked to come soon, he said. In recent days, cancellations have been trickling into Ando's Anchorage office. One group shortened its trip, he said.

"We had several people here from Japan during the earthquake. Some of them went back. None of them were from the affected areas," he said.

Ando expects more cancellations when Japan's communication networks are restored. Many Japanese travelers will not be mentally prepared to go on vacation anytime soon, he said.

His company usually works with about 1,000 Japanese travelers per year. "We might suffer but we'll be OK," Ando said.

MONITORING NATURAL GAS

Conoco Phillips plans to mothball its liquefied natural gas export plant in Nikiski at the end of the month. The plant's only customers are Japanese utilities, which are struggling to secure LNG supplies in the wake of the devastation. Conoco said it doesn't plan to delay the closure.

However, the company's Alaska spokeswoman, Natalie Lowman, said Conoco is closely monitoring conditions in Japan to see if it can assist the country's utilities with their short-term needs.

The last LNG shipment from Nikiski is expected to go out sometime later this month, she said.

Earlier this year, Conoco decided to close the plant after it failed to secure new supply contracts. The plant was the largest consumer of Cook Inlet natural gas and it is the only LNG export terminal in the United States terminal allowed to ship overseas.

Other major Alaska exports to Japan include metals such as zinc and lead produced at the Red Dog Mine near Kotzebue and the Greens Creek Mine near Juneau.

A Red Dog official noted this week that no shipments from the mine occur at this time of year and couldn't say if future shipments will be affected. A Greens Creek manager could not be reached for comment on Wednesday.


By ELIZABETH BLUEMINK
ebluemink@adn.com