Ties that BindThe Enduring Economic Impact of Alaska on the Puget Sound Region

McDowell Group, Inc.Seattle Propeller Club

March 18, 2015

McDowell Group•Research and consulting since 1973•15 professional staff•Offices in Juneau, Anchorage, Bellingham•Areas of expertise: mining, oil & gas, tourism, seafood, transportation, health care, education

• Services: economic and socioeconomic analysis, surveys, market research, feasibility studies, community planning, program evaluation

About Ties That Bind•Previous reports: 1985, 1994, 2003• Six counties: King, Kitsap, Pierce, Snohomish, Skagit, Whatcom

• Sources: government agencies, industry‐specific impact reports, McDowell Group data, interviews, business survey

• IMPLAN for economic impact analysis

SponsorsPresenting Sponsor• Alaska Airlines   Gold Sponsors• Lynden Transport, Inc. • Port of Seattle • Port of Tacoma• Shell Oil Company• Totem Ocean Trailer ExpressSilver Sponsors• Alaska Oil & Gas Association• Banner Bank • Foss Maritime Company• GCI ConnectMD• Jones Stevedoring Co.

Bronze Sponsors• Alaska Railroad• At‐sea Processors Association• Manson Construction• Port of Anchorage • Schnitzer• The Wilson Agency / Albers & Company, Inc.

• Transportation Institute • U.S. BankSupporting Sponsors• Alaska Salmon Alliance• Fifth Third Bank• Nexus NorthwestCo‐Presenters• Seattle Metropolitan Chamber of Commerce• Alaska Chamber of Commerce• Tacoma‐Pierce County Chamber of Commerce

Economic Impact

• Includes direct, indirect, induced impacts

• Alaska “exports”: 74,000 jobs • Puget Sound goods/services provided to Alaska

• Natural resources: 39,000 jobs • Fishing, processing, petroleum, tourism

Exports74,000

Natural Resources39,000

Economic ImpactsAlaska‐Related Jobs 113,000Alaska‐Related Labor Earnings $6.2 billion

Impact Trends

LaborEarnings

Jobs

$4.3 billion

$6.2 billion

103,500

113,000

(+12%*)

(+9%)

*Adjusted for inflation.

2003

2013

2003

2013

Ties that Bind: Sectors• Cargo/freight• Seafood• Passenger transportation/tourism• Petroleum• Maritime support• Health care• Education

Freight and Cargo

Freight and Cargo• 3.4 million tons moved between Puget Sound and Alaska in 2013

• 80% northbound, 20% southbound• 97% water, 2% truck, 1% air

• Trade with Alaska accounts for over 80% of domestic containerized shipments at Ports of Seattle and Tacoma (20% of total)

Economic ImpactsJobs 5,500Labor Earnings $450 million

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Alaska‐Washington Waterborne Cargo (Tonnage)

Northbound Cargo Southbound Cargo

Seafood• Largest Alaska‐Puget Sound Sector• Three components: 

• Commercial fishing• Seafood processing • Government & industry orgs.

• Puget Sound residents own nearly 1,000 vessels participating in Alaska commercial fisheries

• 36 processors based in Puget Sound account for 82% of first wholesale value in 2013

Seafood Impacts• Commercial fishing

• 10,150 jobs• $600 million in labor earnings

• Seafood processing• 13,100 jobs • $690 million in labor earnings

• Government/industry orgs• 650 jobs• $50 million in labor earnings

Fishing10,150

Processing13,100

Govt/industry650

Economic ImpactsJobs 24,000Labor Earnings $1.3 billion

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2009 2010 2011 2012 2013

$Millions

Washington Revenue from Alaska Seafood

WA‐Based Processors (Less Fish Cost) Gross Fishing Earnings ‐ WA Residents

$2,074

$619

$818

$2,462

Transportation & Tourism• Sea‐Tac: 1.1 million Alaska‐bound air passengers 

•Port of Seattle: 430,000 Alaska cruise passengers 

•Alaska Marine Highway: 14,000Alaska ferry passengers 

Economic ImpactsJobs 14,100Labor Earnings $554 million

 ‐

 200,000

 400,000

 600,000

 800,000

 1,000,000

 1,200,00020

04

2005

2006

2007

2008

2009

2010

2011

2012

2013

Enplan

emen

ts or P

assengers

Air and Cruise Passengers: Sea‐Tac & Port of Seattle

Enplanements to Alaska from Sea‐Tac Cruise Passengers from Port of Seattle

Petroleum• Five refineries in Puget Sound: Ferndale (2), Anacortes (2), Tacoma

• Alaska is #1 supplier of crude to Puget Sound’s refineries (46% of their volume)

• 265,000 barrels/day

Economic ImpactsJobs 12,000Labor Earnings $780 million

 ‐

 500

 1,000

 1,500

 2,000

 2,500

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Barrels/Da

y (Tho

usands)

Petroleum Production: Alaska, Western Canada, and North Dakota

Alaska North Dakota Canada Oil Sands

Maritime Support• Services include ship construction, repair, maintenance, supply of marine‐related goods and equipment, & manufacturing

• Vessels from Washington represent 56 percent of Alaska fleet’s gross tonnage

Economic ImpactsJobs 5,300Labor Earnings $390 million

Health Care• Many services not available in Alaska• Shared providers: Providence, Providence/Swedish, PeaceHealth, Universal

• Shared expertise: 10% of Alaska physicians report WA address; WWAMI program

• Puget Sound facilities served over 2,000Alaska residents in 2013 at 33 different facilities (inpatient only)

Economic ImpactsJobs 1,200Labor Earnings $100 million

Education• Washington is #1 state for Alaska students attending out‐of‐state

• 600+ Alaska students at Puget Sound institutions

• 35 different Puget Sound institutions 2005‐12

• Programs: WUE, WWAMI, Alaska scholarships

Economic ImpactsJobs 250Labor Earnings $11 million

Tribal Ties• Five regional ANCSA corporations operate 14 subsidiaries in Puget Sound

• Subsidiaries represent a range of sectors: engineering, construction, security, timber, consulting

•850+ people employed in WA•$51 million+ in direct payroll in WA

Additional Ties• Federal government

• NOAA/NMFS• EPA Region 10• Military

• Business/professional services• Finance/banking/accounting• Public relations• Engineering• Law• Consulting

OutlookDOWNSIDE/FLAT

• Declining oil production and prices• Cargo, population, overall economic activity

• Alaska population projections modest at 1% annual• Seafood: stable value for 2015 (pending salmon season);

Alaska‐based processors growing• Limited cruise growth capacity

UPSIDE• Potential big projects: gas pipeline, OCS oil and gas development• Seafood: Long‐term upside due to resource size, management, & branding• Maritime services: aging Alaska fleet needs replacement• Tourism: will grow along with nationwide economy• Strong Puget Sound economy and population growth

• Alaska‐Puget Sound ties will continue to strengthen as economies and populations grow

More in the Report!•Overview of each economy•Additional detail on each sector

• Trends• Outlook 

• Impacts on Alaska•Available at www.alaskachamber.comwww.seattlechamber.com  

Ties that BindThe Enduring Economic Impact of Alaska on the Puget Sound Region

McDowell Group, Inc.Seattle Propeller Club

March 18, 2015