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2005 construction roundup: construction is steady across the state, with 2,500 new jobs projected for the construction industry by 2012.

Defying its history of boom and bust, the construction industry in Alaska is sliding into yet another year of steady growth--busy around the state on projects ranging from the Anchorage Port expansion to an $87 million new hospital in the Mat-Su to a newly completed $28 million bypass road in Ketchikan. Of course, on the horizon is a world-class gasline construction project that will tilt the scales of the construction economy.

Bounding back slow and steady from the mid-80s recession, construction jobs have gently increased through trends of low interest rates (and the corresponding jump in residential building) and the inflow of federal monies for capital improvements in Alaska. What's ahead for the industry in the long run largely depends on continued federal political support for Alaska projects, including the natural gas pipeline; continued reasonable interest rates; and a steady flow of short-term build outs, such as military expansion and visitor-related growth.

PIPELINE IMPACT

The assumption that construction of the Alaska natural gas pipeline will occur within the next decade gives economists and industry watchers, alike, faith to project a positive forecast ahead for Alaska construction. Overall, Alaska jobs in general are expected to jump by some 43,000 for the 10-year period from 2002 to 2012, according to a report by State Economist Jeff Hadland and Research Analyst Jack Cannon in the September 2004 issue of Alaska Economic Trends, a publication of the Alaska Department of Labor and Workforce Development. Of that number, some 2,500 of the jobs are projected for the construction industry.

"The construction industry will grow at about the same pace as the Alaska economy as a whole," Hadland and Cannon wrote. "It will be affected by two major factors: overall federal construction project funding and initial construction activity of the gas pipeline." The proposed 3,500-mile natural gas pipeline linking Alaska's North Slope to the Lower 48 is estimated to cost in the arena of $20 billion. Its construction would span a decade and ultimately result in shipment of an estimated 4.5 billion cubic feet of gas daily. Discussion and debate concerning state access and would-be operator controls are already well in play, as the Federal Energy Regulatory Commission met with oil and gas giants in Anchorage in December.

In related news, Alaska Gov. Frank Murkowski announced in December that road construction will play a key role in his aggressive 2005 energy agenda to improve and expand oil and gas development across the state. Included in his energy plan is a requested $20 million of state transportation funds to pay for road projects promoting oil and gas development. This includes continued analysis of a Prudhoe Bay to Point Thomson road. "We want to build roads that lead to jobs, whether the jobs are on the North Slope or downtown Anchorage," Murkowski says.

STEADY GOING

Meanwhile, non-gasline-related construction activity will "level off or slow as defense projects and major roads and bridges are completed," according to Hadland and Cannon. "Overall, Alaska's share of the federal construction project spending pie is expected to decline by the end of the forecast period." But before that happens, Alaska will benefit from a long list of federal and state capital improvement projects. This could include projects like the massive Ketchikan-to-Gravina Island bridge effort, new roads and schools, and dock and airport improvement projects around the state--maybe even a good start on a shiny new state capitol building, if the Capitol Planning Commission has its way.

VITALIZED DOWNTOWN AND PORT

Anchorage's economy has enjoyed a positive boost from construction in recent years and looks to continue that trend, with a number of projects on tap. Last autumn, Anchorage Mayor Mark Begich unveiled that city's Destination Downtown vision (a combination of private and public projects) to a packed town hall. The list of downtown improvements and new construction constitutes several hundred million construction dollars. Projects include the $100 million expansion of the Anchorage Museum of History and Art (in the design phase), an estimated $20 million renovation of the historical landmark Holy Family Cathedral over the next decade or two, two new city parking garages, new luxury condominiums, improvements to the current McKay Building to include apartments and assisted living space, and Alaska Railroad Corp. projects (to include depot, tracks, parking garage). This combination of improvements, along with a recently announced library in the old city hall building, is intended to spur pedestrian growth and increased activity downtown, project leaders told the audience.

Anchorage will also continue to enjoy the bubble of activity surrounding its port's three-phase intermodal expansion effort, which includes an extension of the road and rail system, a new north terminal, and expansion of the docks.

Plus, Anchorage organizations were named often in the government-spending bill that eventually passed Congress with monies for various parks and sports-related projects in the city.

BITS AND PIECES

In other construction headlines, building continues at the Pogo gold mine in Northwest Alaska, where work began last February and was delayed by causes both natural--wildfire--and bureaucratic--environmental appeals. Completion of the gold mine project is set for December 2005, several months earlier than the original March 2006 date, according to press reports. Construction last year included a year-round road to the mine site.

Though, while it's the big projects like ports, mines and the gasline that garner the headlines, the construction industry largely subsists from the bits and pieces of smaller projects.

Projects like a new hospital. The Mat-Su Valley is seeing construction of its new $87 million, 74-bed medical facility take shape on the fast track. The last steel beam was placed on the hospital structure in December. By late this year or early 2006, more than 100 physicians will be working out of the new facility, located on a 30-acre site near the Glenn-Parks interchange.

In Fairbanks, the site of the old Fairbanks Hotel is morphing into a new six-story building over the next several years, after the site was purchased to Mr. McKinley Bank, according to reports in the Fairbanks Daily News-Miner. Other Fairbanks construction projects include the recent addition of a Lowe's Home Improvement Warehouse on the Johansen Expressway.

In the works for North Pole is a $75 million, 60-megawatt power plant, contracted by H.C. Price for Golden Valley Electric Association. The project is fast-tracked, with an original start date of 2005 that was accelerated by several months. The plant is projected to be operational by April 2006.

Last year saw the completion of a $28 million, 1-mile stretch of road in Ketchikan, culminating four years of effort-and 25 years of discussion. Gov. Murkowski, originally from Ketchikan, was on hand for the ribbon-cutting in July, and likened it to another community milestone: the opening of the downtown tunnel a half-century ago. Contractor SECON won the bid and started construction in 2000 under the governorship of Tony Knowles. The project was temporarily halted in 2001 for redesign and, now finished, offers residents an alternate route to congested Tongass Avenue, which essentially has served as the single road through town.

And in Ketchikan, several school construction projects continue to lead local discussion: completion of the longstanding Schoenbar Middle School rebuild, and continued efforts for White Cliff Elementary School. That city also announced in December it would replace its familiar wooden dock along Front Street with a concrete deck, after the timber structure was earlier deemed unsafe for heavy loads and the seasonal crush of tour bus traffic related to visiting cruise ships. The city council had earlier awarded a $600,000-plus design and engineering contract to kpff Consulting Engineers for the berth rehab and update effort.

In Juneau, the local planning commission in 2004 approved a proposal from Goldbelt Inc. to quarry rock for the three-mile Cascade Point Road that will carry Kensington gold mine workers. Blasting would occur over the next several months, according to an Associated Press report. The road would link to a proposed ferry terminal for the mine. The initial bid meetings saw substantial participation from construction firms.

Also in Juneau, the region's Juneau Access Project, intended to link Juneau and Skagway, received $2 million from the $388 billion federal spending bill passed by Congress last fall. Department of Transportation officials say the money will likely be used for the environmental impact statement and initial construction phases.

The same bill saw $1.2 million for capital improvements at the Juneau International Airport; $500,000 for improvements at airports on Prince of Wales Island; $2 million for development of a Skagway bus terminal; $1 million for roads in the area of Craig, Prince of Wales Island; among other projects.

Also on tap for Southeast is a proposed new hydroelectric project for the tiny town of Gustavus. The Federal Energy Regulatory Commission voted in October to allow the town to build a hydro project in Glacier Bay National Park, prompting a flurry of criticism from environmentalists. The project is dependent on the state and park system trading some 1,000 acres of wilderness along the proposed site, Falls Creek.

And a Juneau-based family center also is among recipients of federal construction monies flowing into Alaska. The Juneau Family Birth Center, a nonprofit operation providing pregnancy and childbirth classes and nutritional information for pregnant women, is raising funds to build an 8,600-square-foot community center. The project earned $300,000 from federal sources this winter, taking the organization to nearly one-fifth of the estimated $2.9 million needed for the new construction, the Juneau Empire reports.

Of interest to contractors, Juneau City spent several months in 2004 crafting new ordinances that seek to increase home density and building options in the capital city and to simultaneously ensure protection of area open space and lands for community use or conservation. One ordinance sought to protect undivided open space and allow for areas of denser housing. Another ordinance seeks to allow areas of "cottage" housing on smaller-sized lots.

BIG PICTURE HITS AND MISSES

Beyond the nitty-gritty of regional construction projects, the industry also saw a variety of big-picture hits and misses during 2004.

On the down side, skyrocketing steel prices hit Alaska contractors--and those nationwide--hard, jumping project costs from an estimated 17 percent to 20 percent, industry officials report. Items particularly struck by price increases: railroad rail, steel fencing, steelwork on large construction projects. The exact cause is difficult to pinpoint, though contractors point to a general drop in steel production in the U.S., with increased steel required elsewhere in the world, driving up costs. Several Alaska companies got caught in the middle last year, forced to rework bids--or to honor existing contracts, despite the increase in cost of materials from steel suppliers. Though leveling a bit, industry watchers say the steel prices will likely flow through to another year of uncertainty for Alaska contractors.

On the positive side, increased military spending and presence in Alaska has reportedly doubled the U.S. Department of Defense construction in the state. According to the Associated Press, the U.S. Army Corps of Engineers will award some $400 million to private contractors in Alaska through fiscal year 2005. That's a jump from the $380 million for fiscal year 2004--and the long-standing average of $200 million per year for the past decade. The impetus behind the spending includes projects like Fort Greely's ground-based defense system, a military power plant and various smaller systems, and also construction related to stationing new C-17 cargo planes at Elmendorf Air Force Base. And with the influx of Army families associated with the incoming Stryker brigade troops, housing and related building is expected to jump.

Finally, to ensure that Alaska's construction trades continue strong--and meet the market dynamics of supply and demand-a new construction career academy is proposed for the Matanuska-Susitna School District, planned in conjunction with the Associated General Contractors of Alaska. Targeted for 2007-08, the academy would focus on a curriculum of construction-related trades and skills and feature slots for 80-plus students who are interested in a career in the industry.

Given that Alaska continues to build up and outward at a steady pace, such programs could arm today's students with the necessary skills to build tomorrow's roads, bridges and pipelines.
Construction Employment

An important slice of Alaska's economic pie

Trade 14%
Hospitality 9%
Services 12%
Construction 5%
Government 28%
Information 2%
Ed. & Health 10%
Fin/Ins/R.E. 5%
Trans/Util 7%
Nat. Res. 4%
Manufacturing 4%

Source: Alaska Department of Labor and Workforce Development, Research
and Analysis Section

Note: Table made from pie chart.

Construction

A growth star over the past decade

 Percent growth in
 jobs 1992-2002

Services 31%
Retail 27%
Construction 50%
Air Transportation 27%
Communications 52%
All Employment 19%

Source: Alaska Department of Labor and Workforce Development, Research
and Analysis Section

Note: Table made from bar graph.
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Title Annotation:Building Alaska
Author:Bonham Colby, Nicole A.
Publication:Alaska Business Monthly
Geographic Code:1U9AK
Date:Feb 1, 2005
Words:2124
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