Anchorage Daily News

In light of a souring global economy, how will Alaska's economy fare next year?

Whether Alaska industries will be able to avoid severe problems -- layoffs or shutdowns, for example -- depends on how long the recession lasts, an economist told a group of Alaska business leaders Thursday.

Tourism and companies seeking to explore new mining and oil prospects will likely suffer next year, said Jonathan King, a senior economist at Northern Economics, an Anchorage research firm.

Some mineral-exploration companies working in Alaska might even go bankrupt, he said.

Other than that, next year doesn't look so bad for Alaska, King told the audience attending the Resource Development Council's annual conference in Anchorage.

Alaska has one of the lowest foreclosure rates in the nation. Housing prices haven't declined substantially.

"We're still living off the fat," King said.

The state government and the bigger companies operating in Alaska have plenty of cash, thanks to several years of high prices for North Slope oil and metals from Alaska mines, he said.

Elsewhere in North America, low metal prices have prompted some metal mines to shut down.

King doesn't expect shutdowns at Alaska's five main metal mines. "We think that production will remain stable if this downturn isn't too terribly long-lived."

TOURISM

The typical, affluent Alaska tourist is exactly the kind of person who is cutting expenses and worrying about the declining value of retirement savings.

"If you look at who we've tried to bring to Alaska, (they are) a little more affluent. It's the people who are close to retirement ... looking at their 401(k)s," King said.

He doubts that those people will feel good about driving or flying to Alaska next year, and as a result, predicts a tough year for Alaska-based tour companies.

Visitor spending probably will fall next year even if the industry's biggest customers, cruise-ship passengers, arrive in the same numbers as they did this year. Those trips will be steeply discounted and the passengers will be more budget-conscious, King said.

Also, the value of the dollar is strengthening in relation to foreign currency, reducing Alaska's attractiveness to international travelers, he said.

If Alaska tourism, overall, remains flat next year rather than declining, it will be "a major victory," King said.

MURKY PROSPECTS

At Thursday's conference, the business leaders didn't just worry over the economy -- they also discussed whether recent federal decisions to protect polar bears and Cook Inlet beluga whales will hurt their projects, and they discussed the controversial Pebble copper and gold prospect in Southwest Alaska.

They reviewed the recent growth of Native corporations and the recent role that foreign-owned companies have taken in the state's seafood and mining industries.

Anglo American, one of the companies that spent more than $100 million last year exploring Pebble, began building mines in South Africa 90 years ago and is now based in London.

The company's Alaska representative, Paul Henry, told the audience Thursday that despite the troubled economy, the demand for metals -- such as the copper Anglo hopes to dig at Pebble -- will increase as more developing countries improve their standards of living.

Greg Baker, the president of Westward Seafoods Inc., praised the Japanese seafood giants that own his company, which runs a massive processing plant in Dutch Harbor and another large operation in Adak.

"Just in Dutch, there is one-half to three-quarters of a billion dollars invested there," he said.

He suggested a litmus test for Alaskans to use when choosing whether to work with foreign investors.

The key elements: their integrity and the commitments they are willing to make to Alaskans when they seek state approval for their project, he said.

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

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