Skip to main Content

Craft beer, air cargo and new business: Looking beyond oil in Alaska's future economy

  • Author: Annie Zak
  • Updated: September 30, 2016
  • Published May 15, 2016

Craft beer exports won't replace oil in Alaska's economy. But they might be one part of an effort to make the state less reliant on crude.

The need to diversify Alaska's economy and wean it from dependence on the oil industry is a topic often discussed by politicians and the state's business community alike.

Now, a cluster of state and private entities in Alaska is brainstorming how, exactly, that diversification might happen.

The World Trade Center Anchorage, the Anchorage Economic Development Corp. and the state's Department of Commerce, Community and Economic Development are three groups that are looking for ways to boost business in Alaska outside of oil.

There aren't clear answers yet, and the question has come up many times before. Chris Hladick, commissioner of the Commerce Department, pointed out that conversations about trying to diversify Alaska's economy usually get louder as the economy gets worse, and tend to suddenly disappear once demand for oil spikes back up.

"Our history is such that, everyone talks about diversifying the economy when the price of oil is down," he said. "And as soon as the price of oil goes back up, happy days are here again."

Resource extraction won't go away in Alaska anytime soon, Hladick said, but the state still needs to become less reliant on it. Others agree.

"We are transitioning from the known and easy money of oil and resources, to a new kind of economy," Anchorage Mayor Ethan Berkowitz said at a press conference Wednesday. "That's going to require deliberation and thought and hard work and entrepreneurialism. It's going to require us to chart a course that is unknown to us so far."

Alaska currently has a budget deficit topping $4 billion, thanks to oil prices dropping precipitously since 2014.

To counter the drop, some want to attract more businesses and foreign direct investment to the state, export more goods or take advantage of Alaska's geographic position to boost business at the Ted Stevens Anchorage International Airport.

Toward that goal, the Commerce Department is putting together a first-of-its-kind statewide economic development plan for Alaska. In its early stages, the research behind that plan involves looking at what other states and countries have done to try to diversify.

Later, the state would determine which specific industries and programs to focus on to grow the most jobs.

Greg Wolf, the executive director of the World Trade Center Anchorage, wants to promote Alaska as a place to do business much in the same way it's been promoted as a tourism destination.

"The business case for relocating or expanding or setting up shop in Alaska, we haven't really fully made that case, I don't think," Wolf said.

Wolf has chatted informally with the state and organizations like AEDC to brainstorm how to best promote Alaska as a place to do business. He offered up as an example a Japanese company that currently does mining in Alaska, but that also has other lines of business elsewhere.

"If they're here already for one reason," he said, "maybe we should talk to them about other things that they could do here, show them the opportunities."

Those efforts might target resource development, or perhaps certain kinds of manufacturing, Wolf said.

Alaska might also look for new opportunities in exporting, said Gretchen Fauske, business development officer at the Commerce Department's division of economic development. That could include shipping out the state's craft beer to other countries where demand for those brews is growing, she said.

Other strategies for attracting revenue from outside the oil industry are already taking somewhat more tangible form.

Ethan Tyler, development manager with the Commerce Department's division of economic development, said the state is trying to attract foreign direct investment.

One example of that is making sure businesses know about EB-5, a federal program that administers visas to foreigners, in exchange for investment in a commercial enterprise in the U.S. (That program recently drew scrutiny at the federal level over cases of fraud and other issues, The New York Times reported.)

Meanwhile, the AEDC, along with the city of Anchorage and the Alaska International Airport System, recently launched what they've called the Alaska AeroNexus Alliance in hopes of drawing more businesses that rely on air cargo.

These efforts come at a time when much of the news about Alaska's economic future is full of doom and gloom: As oil prices have dropped, companies have pulled out of the state or trimmed operations here. The Alaska Department of Labor and Workforce Development predicted that 2016 will see the state's first annual job loss since 2009, directly linked to those low oil prices.

But discussions about how to change the shape of Alaska's future economy are largely still in the early, conceptual stages, and none would create an immediate shift.

"These adjustments don't come overnight," said Jeff Finkle, president and CEO of the International Economic Development Council, also at Wednesday's press conference. "There's no magic elixir. There's no silver bullet."

Local news matters.

Support independent, local journalism in Alaska.

Comments