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

McDowell Group, Inc.Tacoma-Pierce County Chamber

August 13, 2015

McDowell Group•Research and consulting since 1972•16 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• 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

Ex-ports

74,000

Natural Re-

sources39,000

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

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

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

Fish-ing

10,150

Pro-cess-ing

13,100

Govt/industry

650

Economic ImpactsJobs 24,000Labor Earnings $1.3 billion

2009 2010 2011 2012 2013$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Washington Revenue from Alaska Seafood

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

$Mill

ions

$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: 14,000

Alaska ferry passengers Economic ImpactsJobs 14,100Labor Earnings $554 million

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

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

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

Enpl

anem

ents

or P

asse

nger

s

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

19811983

19851987

19891991

19931995

19971999

20012003

20052007

20092011

2013 -

500

1,000

1,500

2,000

2,500

Petroleum Production: Alaska, Western Canada, and North Dakota

Alaska North Dakota Canada Oil Sands

Barr

els/

Day

(Tho

usan

ds)

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 tonnageEconomic 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 2,000

Alaska 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

OutlookDOWNSIDE/FLAT

• Declining oil production and prices (below $45/barrel)• Cargo, population, overall economic activity

• Alaska population projections modest at 1% annual• Seafood: strong US$ presents challenge; stable/slightly lower 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

• Recent T5 issue pushing AK-WA relations into spotlight

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

• Tribal ties• Additional ties• Impacts on Alaska• Available at

www.seattlechamber.com

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

McDowell Group, Inc.Tacoma-Pierce County Chamber

August 13, 2015