Construction holds steady in 2007

Experts expect to see slowing in 2008

Posted: Sunday, December 23, 2007

ANCHORAGE - With an estimated $7 billion in total spending for 2007, it was a banner year for the construction industry in Alaska.

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Privately funded projects accounted for roughly 65 percent of total construction spending in 2007, a 15 percent increase over 2006. Public construction spending - including highway, railroad and airport projects - totaled approximately $2.45 billion, down 6 percent from last year due to a slight decline in spending financed by the federal government.

The construction industry is the third largest in the state. It pays the second-highest wages, employs 21,000 with a payroll of more than $1 billion and accounts for 20 percent of Alaska's economy.

Alaska Department of Labor market data shows that 1,000 new construction workers will be needed each year until roughly 2014. State labor economist Neal Fried said construction peaked in 2005. It fell in 2006 and fell a little harder this year.

"We're still at high levels because we've been growing for so many years, but that trend of slowing down will continue," he said.

Even with the slight tapering off, construction maintains a positive image among Alaskans. According to a public opinion survey conducted this fall by Ivan Moore Research in Anchorage, nearly 70 percent of the 500 survey participants had "very positive" or "somewhat positive" views of the construction industry. The numbers have shown slight improvements over the past three years.

Participants were asked if they had a child between the ages of 18 and 23 who had completed his education, how positively they would view their child's choice to pursue a career in the construction industry. Roughly 35 percent of participants gave it a "very positive" rating. Only the oil industry was viewed more positively than construction.

The construction industry's high ratings can be attributed in part to the Associated General Contractors of Alaska's communications campaign designed to improve the image of construction in Alaska and encourage more young Alaskans to consider a career in construction.

The industry has worked to build education programs for young adults and high-school students in communities throughout the state, and several of those programs have waiting lists.

Now in its second year, the Anchorage Construction Academy is a unique partnership among six Alaska workforce-related agencies: the Anchorage School District, the Associated General Contractors of Alaska, the Anchorage Home Builders Association, Cook Inlet Tribal Council, Alaska Works Partnership Inc. and the Alaska Department of Labor and Workforce Development. Classes are held at King Career Center and at high schools in Anchorage and Eagle River.

While most of the large projects that have generated work over the past couple of years are nearing completion, retail chains opening up in Anchorage, Eagle River, the Mat-Su Valley, Juneau and Fairbanks could provide a boost to the construction industry.

"Construction is coming down, but retail could seen an increase," Fried said. "We expect to see sizable gains toward the end of next year and certainly in 2009 in the retail sector."

According to Dick Cattanach, executive director of the Associated General Contractors of Alaska, the industry's future currently relies heavily on the proposed natural gas pipeline.

A gas pipeline would provide the next economic explosion in the state. Construction of a pipeline would require more than 1,000 people to work over a number of years. A pipeline, in turn, would generate a host of other projects throughout the state.

Cattanach said it's not a matter of if the gas pipeline gets built but when.

"(The proposal) could go through as early as next month, or it could be a year or two from now," he said. "Once they've laid out a timetable, we'll experience the whole boom psychology that comes with it. Gas might not start flowing for 10 years, but you'll see businesses saying, 'We need a new store or hotel' or 'We need this or that,' almost immediately."

That's good news for the construction industry, which will need workers to build, oversee, upgrade and maintain these projects. That also affects infrastructure, since the state relies on petroleum taxes to fund those projects.

"If we can't rely on (oil and gas) to pay for infrastructure, the economics will be such that we'll see a smaller state," Cattanach said. "That means a smaller workforce in construction and almost everything else."

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