Total spending within Alaska's construction industry will fall 3 percent compared to last year, to just under $7 billion, according a report released Feb. 3 by University of Alaska Anchorage researchers.
This drop is slight enough that John MacKinnon, executive director of the Associated General Contractors of Alaska, considers the change "flat," meaning the number hasn't changed to a significant degree. He said a result like that is considered good.
Overall private spending, which accounts for 63 percent of total construction spending, including hospitals and utilities, is slated to decrease by 1 percent, sinking to about $4.3 billion, said the report authored by Scott Goldsmith and Mary Killorin of the university's Institute of Social and Economic Research.
Public spending, including expenditures in such areas as the Alaska Railroad and national defense, will decrease by 5 percent to a total of just over $2.6 billion, the report said.
Oil and gas construction should remain relatively flat, at around $3 billion, despite the fact that none of the state's three major producers on the North Slope – British Petroleum, ConocoPhillips and Exxon – plan to explore this year, and all three will maintain smaller budgets. Still, Eni, Pioneer and Shell will all maintain large budgets as they pursue drilling and production projects.
Work continues on Eni's Nikaitchuq oil field, which, according to Eni Health, Safety and Environmental Manager Larry Burgess, will begin producing oil December. Pioneer will continue development of its Oooguruk field, and Shell plans to drill offshore in the Beaufort and Chukchi seas.
Mining projects should account for $307 million of construction spending, down 9 percent from last year's number. The report attributes this figure to the completion of a number of projects last year, though large-budget projects in the works are also mentioned, including plans to move Red Dog mine operations to the adjacent Aqqaluk site.
Hospital construction is slated to rise considerably, up 57 percent to a total of $221 million this year. Big projects in Anchorage, Nome and Barrow are said to lead the charge.
Though highway construction will take an 8 percent hit, it is still slated to see the most public-sector spending, at $610 million. The decrease is attributed to a small state capital budget in fiscal year 2010, though proceeds from a recent state transportation bond issue will be available for use.
Airports, ports and harbors are slated to see $323 million in construction, a decrease of 19 percent. Completion of upgrades at the Anchorage and Fairbanks international airports is blamed, along with a lack of project funding in the fiscal year 2010 state capital budget.
Track rehabilitation, siding extensions and upgrades, bridge replacement and upgrades, passenger equipment and a collision avoidance system should account for $43 million in spending from the Alaska Railroad, a decrease of 34 percent.
The Denali Commission is expected to spend $61 million on construction projects, down 32 percent from last year. Funding losses are expected to impact energy and health facilities the most.
National defense spending is expected to see a 9 percent increase this year, up to $548 million, with the largest share of new construction occurring at Eielson Air Force Base and Fort Wainwright. New facilities are often necessarily on local military bases to facilitate a growing number of active duty military personnel.
At a recent unveiling of the report, Goldsmith acknowledged that its findings are not necessarily iron clad, especially as factors not accounted for may affect spending.
Deferred maintenance legislation, for example, would be a boon to spending. So too would telecommunications grants, as well as a grant that would enable the construction of a large expansion to the Port of Anchorage.
According to the report, construction spending is a large boon to the state economy.
"The payrolls and profits from this construction activity support businesses in every community in the state," the report said. "As this income is spent and circulates through local economies, it generates jobs in businesses as diverse as restaurants, dentists' offices and furniture stores."
With 1.6 million jobs having been lost in the construction industry nationwide, Goldsmith said Alaska has been lucky despite small losses in employment and expenditure within the industry.
"We've been fortunate, and we have a pretty good year to look forward to," he said.
