Understanding the military’s role in Alaska’s economy

  • An F-22 Raptor refuels over an Alaska winter landscape.

On May 13, 2005, Fairbanks residents awoke to a startling possibility: the loss of as much as a third of the borough’s population.

The reason?

The Department of Defense Base Realignment and Closure Commission, also known as BRAC, proposed to withdraw 2,821 troops from Eielson Air Force Base and transfer the aircraft of the 354th Fighter Wing to Nevada, Georgia, and Louisiana. This would mean an exodus of families, civilian employees, contractors, and the closure of untold numbers of businesses.

BRACs are used by DoD to reorganize its bases for increased operational readiness and efficiency; Eielson made the list because of high operating costs. But Alaskans had long been told that our bases play an essential role in the nation’s defense strategy for the Pacific Region due to the ability to rapidly deploy to hotspots and were surprised that the military was changing course.

The idea that Eielson AFB, which at the time of the proposed closure had been part of the Fairbanks area for 60 years, could be reduced to a skeleton military crew with what felt like a swiftly-made and ill-reasoned decision, was shocking. It spurred the community to action.

Fairbanks Economic Development Corp. President and CEO Jim Dodson helped lead the effort. Back then, he was a local businessman who had been raised with an appreciation of the military, attending “in the home” military appreciation dinners as a young man and eventually hosting his own. He also served in the Special Forces during the Vietnam War, giving him perspective about how the military functions as an organization.

Recognizing that his hometown’s economy would be devastated by the BRAC, Dodson and then-Mayor Jim Whittaker created a team to fight the closure, and enlisted Sen. Ted Stevens, Gen. Mark Hamilton (retired from the military, Hamilton was the president of the University of Alaska at the time), and other Alaska leaders in the fight.

“I knew that if the BRAC went through, you’d see this community dry up and go away — 30 percent of the population, 38 percent of our payroll — that’s just too much of our community to lose,” Dodson said. “You would see businesses close, homes being foreclosed on. I didn't want that to happen to Fairbanks.”

As part of the BRAC process, the commision in charge held a series of public meetings in communities with military bases on the realignment and closure list. The first meeting was in Fairbanks, where the commissioners were greeted by a crowd of more than 3,000 people, all wearing red T-shirts emblazoned with “America Needs Eielson.”

The Pentagon, under intense pressure from the community and the congressional delegation, announced that fall that Eielson AFB would remain open.

“We changed their minds,” Dodson said.

Today, it’s a victory to look back on —  a story told to show how a small community fought for their future —  and won. Dodson says that the borough changed for the better after 2005.

“Before, Senator Stevens was really the one making sure the military was in Alaska,” Dodson said. “But after the ‘Save Eielson’ campaign, we all recognized that Eielson AFB, Fort Wainwright, and Clear Air Force Base are a huge part of our economy. Since then, we have been very proactive in supporting the military’s presence in Fairbanks.”

Although many Alaskans have been slow to recognize the importance of the military to Alaska, the economic impacts stretch back before statehood.

During World War II and the early-Cold War, Americans migrating to the territory of Alaska reshaped the pre-statehood economy. By the mid-1950’s, as much as 40 to 45 percent of Alaska’s population was tied to defense operations as active duty, civilian support, contractors, and dependent family members.

The military built roads, airfields, and ports still in civilian commercial use today, and invested heavily in scientific research at the University of Alaska. Prior to North Slope oil production, the military’s economic role dwarfed all other private industries, including mainstays like mining and fisheries.

“The military drove the economy of Alaska in the ‘50s and ‘60s to an even greater degree than oil and gas does today,” says Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development. “The economy completely centered around military in those days. People who came for mining and fishing lived the sourdough lifestyle — off the grid, single men for the most part. The military brought families to the state, and with them, mainstream America came to Alaska. They wanted housing, neighborhoods, schools, places to shop, and entertainment.”

Today, Alaska’s economy and population are more diverse, but the military still plays a major role. The roughly 29,000 active duty, National Guard, reserve, and defense civilian personnel is the equivalent of about nine percent of the state’s workforce, though official employment figures do not generally count service members. In the 2017 Fiscal Year, the DoD spent more than $4,000 in Alaska for every resident — more than double the amount of the 2019 Permanent Fund Dividend.

And yet, there’s still opportunity to grow the relationship for the benefit of all involved.

Klouda is leading a study funded by the DoD Office of Economic Adjustment to better understand the role of the military in Alaska’s economy, and the opportunities on which Alaskans have yet to capitalize.

The Alaska Defense Industry Resilience Initiative will identify barriers and vulnerabilities to defense sector firms; help decision-makers and community leaders better understand community sensitivities to changes in defense activity; identify types of assistance needed by defense firms; and identify assets, resources, and stakeholders to support resilience of defense firms.

“"The military is a huge investor and employer in the state, and we need to remember that when we think about economic development strategies." says Klouda.

Dodson agrees.

“It’s one thing to get a military mission, but then you have to figure out how to make the most of it economically,” Dodson said.

Although past military impacts were often seen in funding large-scale infrastructure improvements — rebuilding the railroad after WWII and building the Parks Highway to connect Anchorage and Fairbanks — today, technology offers additional economic opportunity.

Nationally, the military has been a patron of technology development; the first computers and the internet are just two critical examples. More recently, military technology focused on unmanned aircraft systems, or UAS, has spurred business and educational opportunities in Alaska, along with the creation of the Alaska Center for UAS Integration at University of Alaska Fairbanks.

Similarly, military research can spur innovation. Dodson points to the new Long Range Discrimination Radar, or LRDR, at Clear Air Force Station as an example. An LRDR is capable of detecting ballistic missiles en route to targets in the US or allied nations. It will also be gathering non-missile information, 99 percent of which will not be classified, according to Dodson.

“There’s an opportunity for UAF or others to use that information to help Alaska understand weather patterns in the Arctic, migration of waterfowl, and more,” says Dodson. “It could have tremendous impacts to aviation. What if someone in a remote part of Alaska knew what the weather was going to be before they took off? It could really increase safety.”

The DoD also provides funding to incentivize new technology, like the Small Business Innovation Research, or SBIR, grants for research and development, a boon for tech entrepreneurs. Alaska company Triverus has been part of the Navy R&D process for more than 15 years, beginning with a SBIR grant award in the early 2000s to develop a Mobile Cleaning, Recovery and Recycling System, or MCRRS.

With support from the Navy, multiple iterations of the product were designed and tested before the final design was approved. Today, the Palmer-based company employs 22 people and was awarded a contract from the Navy to deliver 43 MCRRS units, each valued at $850,000. In addition to the military, the company also serves the aviation, oil and gas, and construction industries.

“The military has to stay at the cutting edge, and constantly look for new solutions. That's a great thing if you're a tech-focused entrepreneur in Alaska,” says Klouda.

Dodson also sees opportunity in increasing the number of Alaska companies supplying the military with goods and services, especially with two squadrons of F-35s (46 aircraft) coming to Eielson AFB. The first F-35 is scheduled to arrive April 2020, with the rest following over the course of two years. He estimates an increase of around 5,000 people once families and civilian contracts are factored in.

Almost 15 years after the fight to save Eielson AFB succeeded, the future is bright. Instead of a dwindling population and crippled economy, the borough is buzzing with activity.

“Eielson is going to be 50 percent larger than it was,” says Dodson. “That’s good economic impact, but you have to manage it right,” Dodson says. “It’s pretty huge.”

12/16/2019 - 4:00pm