SI At* 
 
 INVESTMENT 
 OPPORTUNITIES 
 in / 
 
 SOUTH 
 CENTRAL 
 
 ALASKA 
 
 
 U.S. DEPARTMENT OF COMMERCE / Area Redevelopment Administration 
 
Digitized by the Internet Archive 
 
 in 2012 with funding from 
 
 LYRASIS Members and Sloan Foundation 
 
 http://archive.org/details/investmentopportOOecon 
 
INVESTMENT OPPORTUNITIES 
 
 in 
 
 SOUTH CENTRAL ALASKA 
 
 Prepared for ARA by Economic Associates, Inc. 
 
 and William P. Rock Associates 
 
 under a technical assistance contract 
 
 March 1965 
 
 U.S. DEPARTMENT OF COMMERCE 
 John T. Connor, Secretary- 
 Area Redevelopment Administration 
 William L. Batt, Jr., Administrator 
 
 For sale by the Superintendent of Documents, U.S. Government Printing Office 
 Washington, D.C., 20402 - Price 35 cents 
 
FOREWORD 
 
 The basic responsibility of the Area Redevelopment Administration of 
 the U.S. Department of Commerce is to help revitalize the economies of 
 American communities suffering from chronic unemployment and underemployment. 
 
 One vay of assisting a community is to determine the kinds and the 
 magnitudes of its economic problems and the possible solutions. ARA helps 
 do this through its Technical Assistance program. 
 
 This publication is a product of a technical assistance contract with 
 Economic Associates, Inc. and William P. Rock and Associates. Mr. Rock 
 participated in the field survey and in the preparation of preliminary 
 drafts of Fairbanks, Valdez and Cordova. Mr. George Perazich, of Economic 
 Associates, directed the project, prepared drafts of all other communities 
 and wrote the final report. 
 
 This study cites promising investment opportunities in the south central 
 Alaska area and recommends projects which could assist individual communities 
 in creating new jobs to take up the economic slack expected after the post- 
 earthquake reconstruction program terminates. It could be of value to 
 investors seeking areas of opportunity, as well as to any area seeking to 
 improve its economy. 
 
 William L. Batt, Jr., Administrator 
 Area Redevelopment Administration 
 
SECTION I. SUMMARY AND RECOMMENDATIONS 
 
 This report summarizes certain findings and recommendations which 
 were developed during the 3-week field survey of South Central Alaska by 
 a two-man team in September of 1964, The purpose of this survey was to 
 identify promising investment opportunities in this area, establish the 
 rationale for each project, and recommend those projects which could assist 
 individual communities in creating new jobs to take up the expected slack 
 after the post-earthquake reconstruction program had been completed „ (The 
 earthquake occurred March 27, 1964, resulting in 114 deaths and $750 million 
 damage.) Initially, six communities were selected for study, but at the 
 request of local officials visits were made to several others,, 
 
 Introduction 
 
 After conferences with several business, banking, and shipping leaders 
 in Seattle, and similar meetings with government officials in Juneau, each 
 of the communities was visited and extensive discussions were held with 
 city officials, business men, labor leaders, bankers, and prospective in- 
 vestors in local enterprises „ Some of these were group conferences, some 
 were informal talks with specially-designated committees, but most often 
 the discussions were held with selected individuals, Frank opinions were 
 sought from each participant regarding economic problems in his community, 
 and his recommendations for new industries, ports, services, and other 
 facilities were carefully examined. Background data were collected from 
 state and Federal officials, who were also helpful in providing general 
 information about the local economy. 
 
 In all these discussions emphasis was placed on restoring the economic 
 activities destroyed or damaged by the earthquake s as well as creating new 
 jobs in industries which did not exist before, but which, because of favor- 
 able resources or markets , would have an opportunity to grow and thus add 
 to local employment. In discussions with local officials and business men, 
 promising investment opportunities in relatively small, short-range projects 
 were especially stressed, because it was felt that these could be started 
 quickly and would not require large amounts of scatce capital and time for 
 
their practical realization. Altogether, about a hundred individuals 
 participated in these discussions, during which the merits and shortcomings 
 of several dozen projects were examined. 
 
 Summary 
 
 Reconstruction activity was in evidence in each city and town visited* 
 Most of the rebuilding contracts were financed by the Federal disaster 
 relief funds available under Public Law 375. First priority was given to 
 projects for restoring essential public services, most of which were well 
 under way. But throughout the region the most frequent need for new or 
 expanded facilities to which local officials and business leaders referred 
 was more fish freezing and cold storage plants Considering that a good 
 portion of the entire state is covered with snow and ice, this interest in 
 "ice boxes" was quite surprising to the survey team. Yet, as will be explained 
 in more detail in the sections to follow, since fishing is one of Alaska's 
 leading industries, lack of sufficient freezing and cold storage facilities 
 is by the same token one of the serious problems inhibiting its economic 
 growth. 
 
 Construction of freezing and cold storage plants, both shore-based and 
 floating types, together with the development of new technologies for 
 packaging, transportation, and marketing of salmon and other sea food products, 
 is one of the highest priority problems that must be solved in the immediate 
 future. Expansion of docking facilities to accommodate the expected growth 
 of sea food processing industries is another critical need for a number of 
 the communities surveyed Small-boat repair yards are also needed and would 
 contribute significantly to the stability of the fishing industry. 
 
 Next to fishing, agricultural development commands the next order of 
 priority, but lumber and fur industries also appear to have considerable 
 potential for growth in some communities. With the newly discovered natural 
 gas in the Kenai peninsula and Cook Inlet areas, such energy-dependent 
 activities as cement production, greenhouse gardening, and fertilizer 
 making might take on added feasibility. Better marketing methods, and 
 improved quality control to meet FKA specifications on the part of local 
 lumber mills would be of considerable help in stimulating the growth of 
 
this industry. With the enormous timber stands in South Central Alaska 
 there should not be any need to import construction lumber from the Pacific 
 Northwest, as is being done at present. In general there are a great many 
 '•small things" that could be done to reduce both the cost of living and of 
 construction, and to avoid paying some of the large transport costs involved 
 in all imported products. 
 
 Recommendations 
 
 As will be seen in Section III of this report, many specific recommenda- 
 tions are made for each community,, Their employment-creating potential 
 in the post-earthquake reconstruction period will, of course, vary considerably, 
 Moreover, our major assignment was to establish the rationale and identify 
 promising investment opportunities, but all of the suggested projects must 
 be carefully studied with respect to their economic feasibility. To acquaint 
 the reader with the nature of these projects and their recommended order of 
 priority we list them below numerically under each community: 
 
 Anchorage : 
 
 1. Expansion of local port facilities. 
 
 2. Development of a feed- and fertilizer-mixing plant. 
 
 3. New trading facilities at the International Airport. 
 
 4. Construction of a portland cement plant in the Tyonek Village 
 area on the Cook Inlet. 
 
 5. Organizing a firm of business consultants. 
 
 6. Development of a fur processing and wholesaling center. 
 
 7. Greenhouse for tomato growing. 
 
 Palmer 
 
 1. Construction of a food freezing plant. 
 
 2. Organizing a corporation for large-scale hay raising. 
 
 Fairbanks 
 
 1. Development of electronic parts manufacturing and 
 servicing operations. 
 
 2. Constructing a center for Alaska's Centennial Celebration in 1967. 
 
 3. Development of a small gold mining enterprise. 
 
Valdez : 
 
 1. A new sea food freezing plant to use the most advanced technology, 
 
 2. A floating small-boat repair shop. 
 
 Cordova 
 
 1. New city-owned cold storage facilities 
 
 2. Improvement and expansion of the local machine shop. 
 
 Seward : 
 
 1. New sea food freezing plant. 
 
 2. Barite processing operation. 
 
 3. Specialty food processing. 
 
 Kodiak : 
 
 1. A new passenger ferry dock. 
 
 2. Modern small-scale beef slaughtering facility. 
 
 3. Expanded municipal pier. 
 
 4. A small-boat repair yard. 
 
 5. A marine sciences research institute. 
 
 Ke nai Peninsula : 
 
 1. A new saw mill. 
 
 2. A greenhouse for tomato growing. 
 
 3. Fish freezing and cold storage plants, either new or expanded 
 
SECTION II. THE ROLE OF SOUTH CENTRAL REGION IN THE ALASKAN ECONOMY 
 
 Like many other large geographic areas which stretch over several 
 time zones, Alaska is not an economic entity, but is composed of several 
 economically independent regions. There are also great variations in cli- 
 mate, in material resources, and in proximity to outside markets. While, 
 as the saying goes, every one of the 250,000 Alaskans can have "his own 
 river, lake, mountain, fjord, and ten acres of glacier," over an area of 
 more than half a million square miles, there is a considerable unevenness 
 in the distribution of these and similar resources. 
 
 General Characteristics 
 
 As we see it, Alaska's small population, its climate, and remoteness 
 from world markets are its greatest impediments to economic growth. Climatic 
 conditions have largely caused the concentration of population in two major 
 areas. Both the South Eastern and South Central regions, in which perhaps 
 nearly three-fourths of all the people in the state live, are located along 
 the coastline, which is washed by the warm Japan Current and therefore has 
 a climate more amenable to economic activities than that of areas further 
 to the North. 
 
 Despite many basic differences between regions in climate, distances, 
 and resources, their economies have certain striking similarities. All 
 areas, from Ketchikan to Nome, depend heavily on Federal payrolls. Approxi- 
 mately 48 percent of Alaskans derive their livelihood directly from Federal 
 civilian and military activities. Counting the indirect benefits, such 
 dependence is estimated to be close to 80 percent. 
 
 Another striking similarity between regions is that nearly all economic 
 decisions are made outside the state, either in Washington by various 
 Federal agencies, or in Seattle or San Francisco by business, shipping, and 
 banking interests. Decisions to reduce or increase the very substantial mili- 
 tary personnel in the area, or the number of civilians in the Bureau of 
 Indian Affairs, Federal Aviation Agency or other agencies can have a drastic 
 effect on Alaska's economy. Economic decisions made by the preponderantly 
 absentee ownership of oil, copper, timber, paper, fishing, and fish-processing 
 enterprises can similarly affect the economy. 
 
As a result of such outside influences there appears to be a shortage 
 of the kind of dynamic local entrcpreneurship found elsewhere in the United 
 State? and considered essential for stimulating economic growth. Except for 
 the high wage rates, caused in part by strong unions and by highly seasonal 
 activities, the operation of Alaska's economy is reminiscent of that of a 
 semi -colonial country. 
 
 Another serious obstacle to economc growth, partly deriving from lack 
 of local decision fnaking, is the lack of permanence. There is a large turn- 
 over of people. Many go to Alaska as seasonal workers. While a few of 
 these remain, most do not. More than a third of all "peak-month" fishermen 
 and well over a half of the salmon cannery workers, for instance, are residents 
 of the Pacific Northwest. Even the old Alaska residents, we were told, 
 maintain their cemetery plots "back home in the States." Because of the 
 constant departures, and arrival of new people, the makeup of nearly all 
 the civic and business committees changes so frequently that lack of 
 continuity presents a problem. 
 
 The South Central Region 
 
 1 . Population 
 
 The general characterization of the entire state given above applies 
 equally to the South Central region. The Anchorage Metropolitan Area and 
 the other communities covered by this study (not including Fairbanks) had 
 over 120,000 people in the early fall of 1964. The total regional popula- 
 tion is estimated at close to 140,000 or about 56 percent of the state's 
 total. Moreover, between 1960 and 1964, this area's population has grown by 
 about 20 percent, as against less than half this amount for the state as a 
 whole. 
 
 2 . Resources 
 
 Many of the major coal resources and some 27 percent of the estimated 
 prime hydroelectric power potential are found in South Central Alaska. Major 
 oil and gas fields, as well as large deposits of iron ore, are also located 
 in this area. The richest agricultural land and some of the principal 
 sea food resources provide other economic advantages. Although the region 
 
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possesses large forest resources, they are minor in comparison with the 
 enormous timber stands of the South Eastern area. 
 
 3. Major Products 
 
 Nearly 80 percent of all mineral output in the state and a similar 
 proportion of the state's food output are produced in the Anchorage area, 
 but only about 5 percent of Alaska's timber production comes from the South 
 Central region's forests. Of some $97 million of the state's fish products 
 in 1960, more than $41 million came from this region; and of 2.6 million 
 cases of canned salmon pack in the state as of September 13, 1964, about 
 1.1 million were produced in that area. 
 
 4. Prospects for Future Growth 
 
 As has been often emphasized in previous studies, the development of 
 mineral, hydroelectric power, and timber resources holds promise for long- 
 term economic growth. But what is frequently overlooked is that these are 
 largely extractive industries, which would create relatively few jobs. 
 For example, exports of liquefied gas to Japan or establishment of a large- 
 scale iron-ore reducing facility in the Cook Inlet area, using natural gas, 
 with the output also destined for export, would likely bring in substantial 
 income to Seattle or San Francisco business firms, along with some income 
 to Alaska. However, since these are largely mechanized industries, new 
 local job opportunities would be limited. 
 
 The question is often asked, and seldom answered, as to whether the 
 exploitation of mineral, power, and timber resources would in fact be able 
 to compete with those of other areas serving the same markets, so as to 
 make their development in Alaska attractive to potential investors. Because 
 of the huge investments that would be needed, and the (Considerable lead 
 time required for completing such large facilities, it is felt that, for 
 short-term economic development, other types of projects should be empha- 
 sized. In the words of a keen observer of the local scene, with whom'. we 
 agree, "What Alaska needs for its Short-term econom-bc. jgtfowth is not; tlae 
 Rampart Dam or other equally grandiose projects which require huge capital 
 outlays and take years or decades to complete but a great variety of small 
 projects that can be quickly started and completed and require relatively 
 small investments." 
 
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The recent discoveries of natural gas introduce a new element into the 
 economic planning of this region. Natural gas offers potentially low-cost 
 fuel that can be used to a considerable degree to offset the climatic 
 difficulties. Such new technologies as the construction of buildings under 
 large gas heated plastic tents, successfully tried in Anchorage, should be 
 further developed. Availability of low-cost natural gas could stimulate local 
 cement production and thus substantially lower the cost of construction. It 
 could also assist in the development of a local fertilizer industry and in 
 other agricultural operations. There are, no doubt, other applications of 
 natural gas which could stimulate small manufacturing activities in the 
 area, such as small ceramic plants and similar endeavors. There does 
 seem a genuine need in South Central Alaska for the development of new 
 technologies to utilize more fully its natural gas potential. A study of 
 this problem is recommended. 
 
 In line with the "need for a variety of small projects that require 
 modest .investments" and can be completed in time to take up the expected 
 slack in employment opportunities after the post-earthquake reconstruction 
 has been completed, we have identified some of these projects. They are 
 briefly described in the following pages for each of the communities covered 
 by this study. 
 
SECTION III, INVESTMENT OPPORTUNITIES IN, SELECTED COMMUNITIES 
 
 While the development of such major South Central Alaska resources men- 
 tioned in the preceding section, such as oil and gas, iron ore, and timber, 
 can in the long run have an important impact on the economic growth of this 
 region, our major task here is to identify the short-run problems and suggest 
 investment opportunities which might be realized within the next two to three 
 years. Creation of new job opportunities to take up the expected slack in 
 the post-reconstruction period is the immediate need for the communities 
 damaged by the March earthquake. 
 
 In this section, the extent of such damages, as well as recent recon- 
 struction efforts, will be briefly described. Recent trends in the local 
 economy will also be described and impediments to future growth identified. 
 From among many investment opportunities suggested by public officials and 
 business executives in each community visited, those that appear to offer 
 the greatest stimulant to economic growth will be systematically examined 
 in this section. Individual projects are numbered and described according 
 to their priorities. 
 
 Anchorage 
 
 In mid-1964 the greater Anchorage area had about 100,000 people re- 
 presenting roughly 40 percent of the state's population., It is the fast- 
 est growing region in the state, as well as its major commercial and 
 banking center. The area was damaged seriously by the last earthquake, 
 with the major destruction of its central business district along Fourth 
 Ave. in the K-L Street area. One hundred commercial buildings were de- 
 stroyed and many others severely damaged and 95 percent of the high-rise 
 apartments had to be condemned. Damages to water, sewer, power facilities, 
 and other public utilities were estimated at $31 million; to streets, ports, 
 and other transportation facilities, $13 million; and to city-owned public 
 buildings, another $11 million. 
 
 At the time of our visit in mid-September most of the damaged areas 
 were cleared and much new building construction and repair were in process. 
 With substantial Federal disaster-relief funds available under Public Law 
 
875, the local economy was buzzing with activity and there was an air of pros- 
 perity and affluence in the region. But there was also a concern for the 
 future. The recent reconstruction activities have attracted hundreds of new 
 construction workers to the area, some of whom will probably remain in the 
 community after the reconstruction activity has been completed. These will 
 aggravate the area's own long-term unemployment problem because as of April 
 1964, nearly 10 percent of the area's civilian work force of 30,000 was un- 
 employed. Further, the recent growth of military and defense establishments 
 has been tapering off and there are indications that some of these activities 
 may actually begin to decline in the near future. 
 
 To assist the area in meeting future job requirements by suggesting new 
 business opportunities, interviews were conducted with some two dozen in- 
 dividuals representing public, labor, and business organizations. In dis- 
 cussing various manufacturing, commercial, and service possibilities, every 
 effort was made to identify projects which can be started and completed in 
 a relatively short time, require only modest investments, and have certain 
 competitive advantages in the area, so that they appear to offer fair return 
 to potential investors. As indicated earlier in this report, the supporting 
 facilities of the rapidly growing oil and gas industry will come more or less 
 automatically without requiring extensive promotion and, while important, are 
 not emphasized here. Among the many additional projects considered for the 
 Anchorage area the following appear to represent promising investment oppor- 
 tunities. 
 
 1 . Port Facilities 
 
 A planning study by an engineering firm for the expansion of Anchorage 
 port facilities is now under way and the final report and recommendations 
 are expected to be completed by the end of 1964. Two types of facilities 
 are being considered: a) construction of a permanent petroleum unloading 
 installation and b) extension of the dry-cargo pier for about 300 feet to 
 accommodate another ship when needed, especially for use of the oil-drilling 
 boats operating in the Cook Inlet. area, which need occasional docking to 
 take on supplies and equipment. This extension is also required to alleviate 
 present queuing in the harbor for dock space. The Sea-Land Shipping Company, 
 
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which has recently chosen Anchorage as a port of call, according to local 
 port operators, expects to keep the harbor free of ice on a nearly year-round 
 basis, thus substantially enhancing its value. Total cost of this port ex- 
 pansion is estimated at about $2 million, which is expected to be financed by 
 Federal grants. 
 
 Expansion of port facilities could stimulate economic development of the 
 entire metropolitan area. Even in its present shape the dry-cargo tonnage 
 handled by Anchorage port has been rapidly expanding, from 38,000 tons in 1961 
 to an estimated 350,000 tons in 1964, and is projected at about 550,000 tons in 
 1965. With the recent completion by leading oil companies of two new tank 
 farms in the port area, the volume of petroleum products handled by existing 
 facilities has also risen from 1.4 million barrels in 1963 to an estimated 
 4.8 million in 1964. According to the port director, total revenues also rose 
 from about $450,000 in 1963 to an expected $760,000 in 1964. The contemplated 
 expansion would considerably increase the volume of goods which could be hand- 
 led by this municipally" owned facility, and is expected to create between 20 
 and 30 additional jobs in the dock area alone plus many others in trucking 
 and servicing operations., 
 
 Since Anchorage is expected to take over a considerable portion of ocean 
 freight formerly going through Seward and Whittier, and as the fastest growing 
 area in the state has considerable potential for wholesale trade as well as 
 for movement of feed and agricultural chemicals to the Matanuska Valley farms, 
 it appears that this port expansion will stimulate economic growth of the 
 entire South Central region. As the economy grows it will be expected also 
 to generate return cargo for the ships now bringing in supplies from the out- 
 side. While its operation is now only nearing the break-even point, in time 
 the port could become an important income-producing facility for the city. 
 Both the city manager and the port commission are behind these port improve- 
 ments. We recommend favorable consideration by appropriate public agencies 
 in securing funds for the port expansion. 
 
 - 11 
 
2 . Feed- and Fertilizer-Proce ssing Faciliti es 
 
 This type of enterprise should also be located in the Anchorage port area 
 to serve principally the Matanuska Valley farmers ? but also eventually the 
 Kenai peninsula region, where agriculture is expected to grow rapidly. Except 
 for hay, practically all the cattle and poultry feed, as well as chemical 
 fertilizers, now consumed in the South Central regionare imported in bags from 
 Seattle and sold to the consumers at much higher costs than those charged 
 Washington State farmers. Both handling costs and freight rates add as much 
 as 50 percent to the Seattle price level, so that Alaska dairies and egg pro- 
 ducers have difficulties in competing with imported milk and eggs sold on the 
 local market. 
 
 These high feed costs are an imporcant impediment to the growth of egg 
 and milk production* A local feed mill and mixing plant would in all likeli- 
 hood reduce such obstacles and expand production of these products. Properly 
 financed and managed, such an enterprise could import bulk grains and other 
 ingredients, as well as utilize the very substantial local calcium and pro- 
 tein sources, like crab shells and other fish by-products, to prepare low- 
 cost poultry and cattle feed. Although it is realized that the present 
 market could support only a relatively small feed mill, the demand should 
 expand rapidly as costs are lowered. At present only about 10 percent of 
 all food consumed in the Anchorage area is raised there, so that opportuni- 
 ties for agricultural growth are substantial. „ 
 
 By combining the feed-processing facilities with those for mixing ferti- 
 lizers - where handling, storage, utilities, and certain other operations 
 might be performed by the same equipment - additional economies of scale are 
 possible. Currently, bagged fertilizers, containing at best 30-40 percent 
 of plant food, are imported. It should certainly reduce the cost to local 
 farmers if, instead, anhydrous ammonia containing 80 percent of nitrogen 
 plant food were imported in pressurized tankso It could either be stored 
 and distributed in this form or In bags when mixed with local fillers. This 
 in turn would enable them to compete more successfully with imported pro- 
 ducts. Distribution of agricultural lime, which could be produced in con- 
 
 - 12 - 
 
nection with the proposed cement plant at Tyonek, might also be added in time. 
 Eventual production of ammonia from local natural gas is another possibility. 
 A feed- and fertilizer-processing operation combined with wholesale distribu- 
 tion may offer an attractive investment opportunity. A more detailed feasi- 
 bility study of this project is recommended. 
 
 3. New Trading and Promotional Facilities at the International Airport 
 
 The passenger traffic at the airport, which is served by several inter- 
 national air lines using the Polar route, has been rapidly growing and in 1964 
 was expected to reach the half-million mark. Frequent stop-overs of business 
 and government officials from both European and Asiatic countries, and especi- 
 ally the recent influx of the Olympic athletes going to and from Tokyo, has 
 caused the city of Anchorage to plan the creation of new and improved airport 
 facilities. There is an active airport committee which, among other things, 
 is attempting to promote a "Reception Center" and a series of exhibits called 
 "Hall of States" for the purpose of introducing international travellers to 
 the U.S.A. Thus far the emphasis has been placed on public relations which 
 is useful and should be supported. 
 
 But we believe that the improvements in airport facilities could be 
 broadened to include new business activities which would stimulate the local 
 economy and also advertise the resource potential and other business oppor- 
 tunities in the state. Since many of the international travellers after 
 some 7-8 hours in flight may desire to stop over night at the airport, hotel 
 or motel facilities are needed. These, together with food and drinking 
 establishments, would offer attractive business and employment opportunities. 
 With the expanded gift shops, luxury-type goods stores, Alaskan art and sou- 
 venir items, etc., the possibilities of extending free-port privileges to 
 international passengers purchasing tax-free liquor, jewelry, textiles, and 
 similar items should be examined, because these could also be developed into 
 substantial new businesses. Wider advertising of current privileges offered 
 by some foreign airlines for off-season, round-trip fares from eastern U„S,A. 
 areas via Alaska to Europe and back across the Atlantic, for only a small 
 addition in cost over what the same trip would cost both ways to Alaska, 
 would stimulate tourist trade. 
 
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For advertising economic development opportunities of the state, a promi- 
 nent place in the "Hall of States" should be devoted to exhibits of Alaskan 
 resources. Foreign visitors should be encouraged to ask questions of a well- 
 informed staff and learn more about prospects for Alaskan business and in- 
 dustry. We recommend that the city of Anchorage prepare a feasibility study 
 of different economic development opportunities in the expansion of its air- 
 port and request its planning department to make a preliminary sketch design 
 of the desired facilities. With such a design and an attractive prospectus, 
 the promotion of the project could be undertaken and firm commitments obtained 
 from business enterprises and government agencies to build or rent 'space in 
 the new airport facilities. 
 
 4. Portland Cement Plant 
 
 A feasibility study for a cement plant in the Anchorage area is now under 
 way by the engineering and economics departments of the University of Alaska. 
 Preliminary results show that currently the state consumes approximately one- 
 half million barrels of cement per year, which is just about the threshold 
 for a unit of a minimum economic size. With the recent discoveries of natural 
 gas along the Cook Inlet, this feasibility study is expected to show that a 
 modern plant located near the wellhead can produce cement at costs comparable 
 to those in the Seattle area. Because of the heavy transportation costs which 
 raise Alaskan cement prices by more than 60 percent above those in Seattle, 
 the contemplated plant appears to represent an attractive investment oppor- 
 tunity. Some $4-5 million is expected to be needed for a plant of 800,000 
 to 1,000,000 barrels annual capacity. By reducing the cost of the cement 
 needed for building roads, stores, factories, and homes, not only would such 
 a plant provide 200-300 direct and indirect jobs with an annual payroll of 
 $1.5-2.0 million, but it would considerably stimulate general economic growth. 
 
 Tentative location for the plant has been selected in the Tyonek village 
 area on the Cook Inlet, adjacent to available limestone deposits and only 
 10-15 miles distant from operating gas wells. With special port facilities, 
 such a plant could use low-cost barge transport to distribute its products 
 to the Anchorage area - only about 40 miles distant - and from Anchorage by 
 
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rail northward to Fairbanks. The entire South Central region could also be 
 served from this contemplated site by low-cost water transport. 
 
 Since lowering of construction costs would tend to stimulate new building 
 programs, this proposed cement plant could be an important factor in the 
 growth of Alaskan economy. Local groups currently interested in developing 
 this project appear to possess technical capability in the design and con- 
 struction of the plant but lack operating and marketing experience. In the 
 past the Permanente Cement Corp. of California, which operates large distri- 
 bution facilities at the port in Anchorage, has expressed interest in con- 
 structing a cement mill in Alaska and a combination of Permanente and local 
 interested parties should be given serious consideration. 
 
 5. New Business Services 
 
 According to the information obtained in our survey, the entire South 
 Central area has but one business consulting firm, staffed by only one man 
 and specializing principally as financial advisor to the Alaskan State 
 Development Commission and to various municipal governments. Yet with 
 recently acquired statehood, and with the needed emphasis on development of 
 new local enterprises, of activities related to oil and gas resources, of 
 Japanese trade, and of other emerging economic opportunities, the require- 
 ments for new business and economic advisory services are quite substantial. 
 What appears to be needed most is a firm of economic and business consul- 
 tants who would make their services available both to local business and 
 industry and to government agencies. Staffed by an experienced business 
 economist with one or two junior assistants, such a firm should be able to 
 perform various marketing and feasibility studies and develop the project 
 prospectuses needed for urban planning, industrial promotion, and for obtain- 
 ing investment money. It should also develop and help assemble the govern- 
 mental and private economic data normally required in a rapidly growing 
 under-developed area. Excluding the large, omnibus-type studies which will 
 continue to be performed by outside consultants, the estimated annual value 
 of business for such a local firm might initially range between $50,000 and 
 $75,000 with considerable growth potential. 
 
 - 15 - 
 
We are of the opinion that a private firm with experience in, and emphasis 
 on, practical business and governmental problems would best suit the present 
 needs of the Anchorage area. But an institute- type organization linked with 
 the University of Alaska and staffed with at least one full-time person ex- 
 perienced in applied economic research might also meet the requirements. While, 
 because of predominance of Federal agencies, we were told that Anchorage ranks 
 only after Washington, D.C., in ratio of college degrees per 1,000 population, 
 it nevertheless has a serious shortage of "know-how" in practical matters of 
 economic development and business management. 
 
 6. Fur Processing and Wholesaling Center 
 
 This is another resource-oriented industry which would seem to favor an 
 Anchorage location, preferably near the International Airport. It appears 
 that it could be developed into a profitable enterprise, subject, of course, 
 to a detailed feasibility study to determine both the scale of operation and 
 cost of production and marketing. As in the case of the feed and fertilizer 
 enterprise described above, this establishment would also need to combine, at 
 least initially, the processing and wholesaling operations. The collection 
 of raw furs and marketing of the finished products are its most important 
 elements . 
 
 From an initial survey of the availability of fur-bearing animals and of 
 fur markets, determination should be made with regard to the types of furs 
 that should be handled. The next stepwould be the organization of collection 
 points, as ;7ell as of native trappers and hunters, and the setting of prices, 
 standards, and specifications for the type of animals to be trapped. Once 
 the skinning facilities under skilled supervision have been organized at the 
 major collection points, arrangements could be made with local airlines to 
 bring the furs to Anchorage. Since most airplanes return empty, favorable 
 freight rates should be possible and special small craft which can land on 
 the many lakes in the area might even be used to pick up loads at the less 
 accessible stations. On a small scale, and based on seal skins, this prac- 
 tice is already in use. Eventually fur farms might also be considered, to 
 take advantage of the favorable climate. 
 
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Tanning and other operations should be done in modern facilities located 
 in Anchorage, in accordance with the highest standards required by leading fur 
 markets, A study of Canadian and Russian experiences would in all probability 
 be useful. With modern equipment and expert management, fur processing as 
 such should not present serious dif f icultieSo 
 
 For successful operation of a local fur industry, marketing and distri- 
 bution are most important. Arrangements for handling Alaska furs muse be made 
 at the outset with the distributors in all major fur-market centers. Some dis- 
 tributors may be invited to participate as shareholders in an Alaskan fur 
 enterprise, contributing both capital and expertise to a competent marketing 
 and promotion organization,, With the growth of the fur business and with 
 imaginative promotion efforts,, Anchorage could become an outstanding fur auc- 
 tion and style center. Some elements of such an operation are already in 
 existence but are apparently carried on on a very small scale and without ex- 
 pert management. What is required is investment funds and experienced manage- 
 ment to pull together present efforts and establish a solid basis for growth. 
 With a worldwide market for furs and excellent air freight connections with 
 leading U„S„ cities, these are the type of exports where Alaska's remoteness 
 becomes relatively unimportant. With careful planning, opportunities for 
 profitable investment in such a project seem to be promising. 
 
 7 . Greenhouses for Tomato Growing 
 
 Because of the short growing season tomatoes cannot be raised outdoors 
 in the Anchorage area and are imported at a cost to the housewife of about 
 50 cents per pound. Assuming the average annual U.S. consumption of 13 pounds 
 per capita, the potential market in this metropolitan area comes to 1.3 
 million pounds. According to present greenhouse practice in the Cleveland, 
 Ohio, area, and with a fall and a spring crop only, to raise this quantity 
 would require some 10 acres of land under glass. 
 
 We suggest a project of one acre under glass or plastic cover with two 
 crops annually. According to estimates furnished us in Alaska , this would 
 produce roughly 250,000 pounds of tomatoes or about one«fifth of the poten- 
 tial demand. With recent natural gas discoveries in the area and with 
 
 - 17 - 
 
negotiated bulk-use prices, heating costs may not be excessive, Even assuming 
 double labor rates and quadruple fuel costs in comparison with Ohio, each of 
 these two items would represent less than 10 percent of the selling price. 
 With an estimated investment of some $200,000 for structures, heaters, and 
 other equipment, and interest at 8 percent, the labor, fuel, and capital charges 
 would come to about $60,000 per year or about 25 cents per pound. If tomatoes 
 were sold to retail outlets at 35 cents per pound, there would still remain a 
 margin for local distribution and profit of 10-15 cents per pound. With arti- 
 ficial lighting the yield and the profit might be increased. An additional 
 profit could also be derived from raising setting plants for late spring plant- 
 ings by local farmers, thus further increasing local tomato supplies. Includ- 
 ing distribution, the greenhouse would employ 8-10 people. We feel this pro- 
 ject represents an interesting business opportunity and warrants a detailed 
 feasibility study by prospective investors. 
 
 Palmer 
 
 Located in the Matanuska Valley some 50 miles northeast of Anchorage, 
 Palmer is the major agricultural center in Alaska. In April 1964 the city's 
 population was estimated at 1200 and that of its larger trading area at about 
 5200. As was the case with Fairbanks, this town was not damaged by the March 
 earthquake. However, it has been included in this study because its economy 
 is closely related to Anchorage markets. According to data supplied by the 
 Alaska Employment Security Division of the State Department of Labor, in 
 August 1964 total employment in the Palmer labor market area (not as large 
 as the trading area) was about 2000, of which some 1300 were engaged in non- 
 agricultural activities. Of these, nearly 500 people were working in various 
 governmental agencies, including the well-staffed U.S. Agricultural Experi- 
 ment Station and similar state and Federal activities, a little over a 
 hundred each in coal mining and transportation, and over 200 in construction. 
 Unemployment was at a very low level. Most of the 700 agricultural workers 
 were engaged in milk and a few in egg production. In 1963 these two commodi- 
 ties represented 50 percent of the total value of the state's agricultural 
 output, of which the Matanuska-Anchorage area contributed nearly 80 percent, 
 valued at about $2,0 million. 
 
 - 18 - 
 
3eside agriculture, coal mining is the only other major economic activity 
 in the area, employing in August 1964 some 110 workers, A large proportion of 
 this coal is consumed by the military installations in the area, principally 
 for space heating. With recent discoveries of natural gas there is some appre» 
 hension in the community that this new and potentially low-cost fuel may 
 adversely affect the coal mining industry. Construction of a mine-mouth 
 electric generating plant is being considered which would give the needed 
 stability to this industry* 
 
 In a conference with some dozen agricultural and civic leaders in the 
 community various projects were discussed for stimulating local economic 
 growth. The following appear to offer promising opportunities . 
 
 1 . Food Freezing Plant 
 
 In the past, several proposals have been considered for establishing a 
 food freezing enterprise in Palmer. Application for an Area Redevelopment 
 Administration grant for a feasibility study by the U.S. Agricultural Experi- 
 ment Station has been pending for some time, but it was agreed that the 
 original proposal was somewhat unrealistic and that the project should be 
 scaled down to include only four or five types of products. These are the 
 T,V, dinners, stew-pack, peas, broccoli, and cauliflower, A very large 
 Anchorage food distributor is expected to become one of the principal in- 
 vestors in this enterprise, so that effective marketing channels are al- 
 ready assured. Several local farmers would probably also become shareholders 
 and it was generally agreed that local meat and vegetable supplies were more 
 than adequate. 
 
 According to United States Department of Agriculture experts, the mini- 
 mum economic size plant for frozen T.V, dinners is about 2 tons or 4500 
 units of finished products per day, requiring about 14 production workers 
 working on a single-shift basis, Total investment for such a plant in Ohio 
 is roughly estimated at about $75,000, of which heating and cooking equip- 
 ment would be $20,000, the freezing unit $12,000, and a heated building of 
 12,000 sq. ft, at $l5/ft. about $18,000. In Palmer these costs would be 
 perhaps 20-30 percent higher, A plant of optimum economic size would be able 
 to produce 8 tons or 18,000 units per day. 
 
 - 19 - 
 
The Anchorage area market, with current population of more than 100,000, 
 could certainly support the minimum size plant and might even in a short time 
 sustain the optimum size unit. With the stew-pack and other items suggested 
 above, with adequate raw food supplies, and assured distribution channels, it 
 seems clear that the suggested food freezing plant in Palmer would offer a 
 promising investment opportunity. As the initial step, the community is ex- 
 pected to obtain a modest technical assistance grant to hire the U.S. Agricul- 
 tural Experiment Station to prepare a quick feasibility study and determine 
 the scale and the profitability of this proposed food freezing enterprise. 
 We strongly recommend its prompt approval. 
 
 2. Hay Raising Operation 
 
 Hay and other cattle feed are major cost factors in local milk produc- 
 tion and their price to Matanuska Valley farmers vitally affects the growth 
 of the dairy industry. According to information supplied by local farmers, 
 imported hay prices in the area range between $65 and $90 per ton, some $30 
 of which represents transport charges by hay barge between Prince Rupert and 
 Anchorage. The short Alaskan grazing season, in addition, requires much 
 larger hay and feed consumption per cow than in the Northwest, which com- 
 petes for the Alaskan milk market. While transport costs are expected to 
 decline in the future, even a $10 per ton hay price differential between 
 Seattle and Palmer, on top of other cost factors, would make it difficult 
 for Matanuska Valley dairymen to compete with imported products. 
 
 Because of the short growing season and drying problems, present small- 
 scale hay production in this area is very expensive. Even a relatively large 
 farm of, say, 300 acres needs much specialized equipment which can be used 
 only for a small part of the year. As a result the ratio of capital invest- 
 ment per bale of hay is very high. The high capital requirement, coupled 
 with an 8 percent interest rate, makes it difficult for local farmers to com- 
 pete with imports, even with the high transportation charges on the latter, 
 thus impeding the growth of Alaska's agriculture. To alleviate this situ- 
 ation consideration is being given to the organization of a local corporation 
 in which shares will be held by Matanuska Valley farmers, the State of Alaska, 
 
 - 20 - 
 
and other investors. This corporation would assemble a large tract of land, of 
 about 5000 acres, buy modern equipment, and begin hay raising and processing 
 operations on a factory scale. While a great deal of study is needed to ascer- 
 tain the feasibility of this operation, especially with the possibility of 
 using local coal or piped natural gas for drying purposes, and agreements on 
 the form of management, most of the dairy farmers we talked to seem to feel 
 that this might solve their feed problem. Since any stimulant to the growth 
 of local agriculture would bring material benefits to both employment and in- 
 come in the Palmer area, this type of enterprise merits support. 
 
 Fairbanks 
 
 In April 1964, according to University of Alaska estimates, Fairbanks had 
 15,000 people within its city limits and some 40 $ 000 in its larger trading 
 area. Although not located in the South Central region affected by earthquake 
 damage, it was included in this survey because existing railroad connections 
 link its economy closely to the South Central region. It is, moreover, the 
 second largest population center in the state, with high and persistent un- 
 employment problems. In April 1964 more than 10 percent of its civilian labor 
 force was unemployed. About half of some 11,000 jobs in its labor market area 
 were provided by various government agencies. Among the non- governmental 
 activities, manufacturing and mining each provide less than 5 percent of total 
 jobs. Trade provides most jobs, with services and transportation next in im- 
 portance. 
 
 In interviews with about a dozen community and business leaders, includ- 
 ing the University of Alaska president and two of its professors, the follow- 
 ing projects were identified as meriting serious considerations. 
 
 1. Electronic Parts Manufacturing and Servicing Operations 
 
 Because of the extensive military communication system in this Arctic 
 Circle area, involving hundreds of millions of dollars of electronic equip- 
 ment, the Radio Corporation of America is the largest civilian employer in 
 the state. Its 4000-odd labor force is engaged principally in the instal- 
 lation and servicing of different communication systems, Both the Federal 
 Aviation Agency and Weather Bureau also maintain extensive communication 
 
 - 21 - 
 
systems and, of course, household radio and TV sets provide additional markets 
 for parts and technical repair services. 
 
 There is a small business in Fairbanks, now servicing household radio and 
 TV sets, which desires to expand its operations by purchasing grinding equip- 
 ment for optical parts, machines for rewinding motors, test instruments for 
 radarscope calibration and other specialty devices. They need some $75,000 
 for this modest expansion, which would provide an additional 5-10 jobs. Sub- 
 ject to market, product and cost analysis and to managerial competency of the 
 company, we recommend that this financial assistance be provided. 
 
 But, in light of the very large opportunities for manufacturing simple 
 replacement parts and providing service skills, a much more ambitious oper- 
 ation is recommended. Some professional back-stop for such an operation 
 appears to be readily available among the engineering faculty at the University 
 of Alaska. Since electronic parts, repair and maintenance could develop into 
 a major industry, the necessary import of special technical and managerial 
 skills would not be expected to present a serious problem. Full cooperation 
 of different Federal procurement agencies is, however, essential to the suc- 
 cess of such an operation. 
 
 The following steps in appraising the feasibility of this project are 
 suggested: 
 
 a) From various parts catalogues and parts replacement 
 information available from Federal procurement agencies select 
 a few simple components such as resistors, condensers, coils, 
 and similar items and ascertain their types, sizes, and current 
 volume of consumption in Alaska. 
 
 b) Using the same sources also ascertain the current 
 volume of repair and servicing business provided by outside 
 concerns . 
 
 c) On the basis of such market information determine the 
 scale and type of operation that should be undertaken initially, 
 and the amount of investment and skills needed. 
 
 d) Prepare a prospectus on the feasibility of such an 
 enterprise, obtain conditional commitments from procurement 
 agencies regarding the type and volume of business they would 
 
 - 22 - 
 
provide, and apply for private or government loans needed to 
 finance the operation. 
 
 2. Center for Alaska's Centennial Celebration 
 
 The occasion to be celebrated is the UoS, purchase of Alaska from Russia 
 in 1867 for which center the land has been already purchased by the Frontier 
 Society. A state bond issue of $1.5 million to construct a permanent build- 
 ing is now being planned. The Dean of the School of Mines of the University 
 of Alaska and other key men in the community are actively behind this project,, 
 A series of temporary exhibits and a permanent museum are being planned. For 
 various permanent installations the committee in charge of this centennial 
 expects to seek financial assistance from public and private agencies. A work 
 force of about 20 will be needed to man the permanent exhibit and museum 
 facilities relating to various Arctic sciences, which being at the gateway to 
 Alcan highway are also expected to attract additional tourist trade. In addi- 
 tion, during the celebration it is expected that several hundred temporary 
 jobs will be created. As a lasting contribution to the local economy, support 
 of these endeavors is recommended. 
 
 3 . Gold Mining Enterprise 
 
 An experienced mining engineer has done a great deal of research on new 
 gold mining methods in the Chandler area north of Fairbanks. Claims are made, 
 and apparently supported by the Dean of the School of Mines, that these new 
 methods could become profitable even though large-scale gold mining in Alaska 
 has practically ceased. A great deal of money is reported already to have 
 been invested in exploration work. To get the project underway some $750,000 
 more will be needed. We recommend that a detailed feasibility study be under- 
 taken to assess the profitability of this project. 
 
 Valdez 
 
 Valdez is located in "Alaskan Switzerland" which is in the northeastern 
 corner of Prince William Sound. It is a small fishing port with a year-round 
 population of about 600. The town was severely damaged by the March earth- 
 quake, and entire dock area was submerged, with a loss of 30 lives, The 
 entire harbor and half of the downtown business district were devastated. 
 
 - 23 - 
 
The small -boat harbor, fuel storage tanks, the piers, and nearly the entire 
 fishing fleet were also destroyed. Recent studies by U.S. Corps of Engineers, 
 indicating that further sinking of the coastal area is probable, caused the 
 abandonment of the present site and a plan to relocate the entire town along 
 the coast some 4% miles to the north. According to the U.S. Office of Amer- 
 gency Planning, nearly $6 million in Public Law 875 funds are expected to be 
 made available for essential public facilities at the new townsite, and an- 
 other $2.2 million for building a new small -boat harbor. 
 
 There are no separate statistics for the town, but average 1963 employ- 
 ment in the Valdez-Chi tina-Whi ttier Labor Market Area, according to data from 
 the State's Employment Security Division, was about 900. Of these, nearly 
 700 were engaged in non-agricultural operations and 370 worked for various 
 government agencies. About 9 percent of the area's labor force was reported 
 as unemployed. Although manufacturing employment for 1963 averaged only 
 about 30, in June there were 100, and in July and August about 200 such jobs 
 available in this area, nearly all in the fish processing industry. For the 
 salmon season, about an equal number of fishermen were also engaged. 
 
 Fishing and tourism appear to be the most promising opportunities for 
 the future economic growth of Valdez. In conversations with local officials 
 and business men, it was found that detailed plans have been developed for 
 building the entire town. The most prominent structure will be a large 
 hotel, designed in the style of a Swiss chalet, and located on a rise com- 
 manding a beautiful waterfront view. It will be a major local tourist 
 facility and is expected to provide, during tourist season, up to 50 new 
 jobs. Among other projects designed to create new jobs and discussed with 
 local business men and public officials, the following appear to be most 
 promising? 
 
 1 . Sea Food Freezing Plant 
 
 As in every other fishing area in Alaska, sea food processing facilities 
 are essential for the growth of local economies. Freezing plants and cold 
 storage facilities would not only extend the length of the normal fishing 
 season and create more jobs, but by permitting the catching of a variety of 
 
 - 24 - 
 
other fish besides salmon, which is now usually canned by non-resident seasonal 
 workers, and by providing storage facilities, they would also tend to stabilize 
 fish prices.. This price stability is regarded as an important economic gain 
 to fishing communities, because it would ease the pressure on local fishermen 
 who are often forced to sell at whatever price the buyer offers or take the 
 risk of their entire catch being spoiled. 
 
 The Valdez group interested in constructing the sea food freezing plant 
 is considering using a new "liquid nitrogen process, " involving the use of a 
 Cryo=Vac unit for quick-freezing fish under high vacuum in plastic bags to 
 form a second skin. By instant "flash" freezing at temperatures below=300 F 
 and in association with liquid nitrogen it is claimed that frozen fish filets 
 retain their freshness and would command premium prices. Part of the facility 
 is also expected to be used for storage purposes as well as to manufacture ice 
 to be sold to local fishing boats. Tentative estimates by prospective in- 
 vestors place total investment needs at $200,000 with a potential labor force 
 of about 10. A detailed feasibility study to ascertain markets, scale of 
 operation, and profitability of the enterprise is strongly recommended. A 
 modern sea food processing plant in Valdez is essential to replace the facili- 
 ties destroyed by the earthquake. 
 
 In addition to freezing and cold storage plants, small-boat repairing 
 facilities are essential for all fishing areas in Alaska. Without such 
 facilities any boat that has its gear or engine damaged has to sail or be 
 towed to Seattle for repairs., Considering that it takes two weeks* time to 
 make the round trip s this represents a serious economic loss to the fisher- 
 man, especially during seasonal fish runs. Local boat repair facilities 
 would reduce such losses 9 create new job opportunities, and bring additional 
 income to the community. 
 
 A Tacoma, Washington, firm which specializes in small-boat repairs has 
 designed a completely integrated floating repair shop and is interested in 
 locating a branch in Valdez. -Equipped with all the necessary machinery, 
 supplies., crew 9 and office facilities, such a shop could accommodate 
 
 - 25 » 
 
several small boats at a time. It would operate in several fishing communities 
 in the Prince William Sound area and is expected to maintain year-round employ- 
 ment. Preliminary estimates indicate that the total investment would be around 
 $300,000 with 20-30 new jobs. With proper planning of the work load in differ- 
 ent fishing areas and close cost control, this could become a profitable enter- 
 prise and its support is recommended. 
 
 Cordova 
 
 Situated on the eastern shore of the Prince William Sound, Cordova is 
 also a small community with a year-round population of some 1200, where fish- 
 ing and sea food processing are the mainstays of the economy. The March earth- 
 quake caused the shoreline to rise by about six feet and the tidal wave 
 inflicted severe damage to salmon canneries, boats, sea food processing plants 
 and other dockside installations. Because of the land rise, the Orca Inlet 
 channel for a time became too shallow to handle large boats and the 100-boat, 
 small-boat harbor also became unuseable. But the U.S. Corps of Engineers has 
 restored all harbor facilities and four of the five major sea food processors 
 were back in operation at the time of our visit at the end of September of 1964. 
 
 Salmon and Dungeness Crab are the major sea food resources in this area 
 and the five processors who handled these products had peak-summer employment 
 in 1963 of about 300 workers. Total summer-season employment in 1960 was 
 close to 600, of which sea food processing represented about 50 percent, while 
 the three major wholesale groups - retail trade, services, and transportation 
 and utilities each employed some 10 percent. Because there is practically 
 full employment in summer season average annual unemployment is difficult to 
 estimate. The 1960 Census reported 59 jobless out of a total work force of 
 550. 
 
 As in most other fishing communities in South Central Alaska, there is 
 urgent need for expanded cold storage and boat repair facilities. From our 
 discussions with leading businessmen in the town, these two projects represent 
 interesting investment opportunities and, if realised, would make a signifi- 
 cant contribution to the future economic growth of the area. 
 
 - 26 - 
 
1. Cold Sto rage Plant 
 
 At the time of our visit, leveling of the site was in progress at the 
 northern end of the existing canneries. Plans were underway to provide sev- 
 eral acres of land as a site for the city-owned cold storage plant and allied 
 facilities and to induce private intrepreneurs to manage and operate them. 
 Since Cordova is a major fishing center, a fairly large plant is being con- 
 sidered, with an estimated total cost of over one million dollars, which 
 would result in total direct and indirect employment in excess of 100 workers. 
 An initial grant to the city for a feasibility study is recommended. Such a 
 study should not only consider the immediate economic impact of these proposed 
 facilities on the community but also look into long range prospects for in- 
 creasing local fishing and sea food processing operations and for stabilizing 
 prices. Possible effects of the proposed cold storage plant on lengthening 
 the fishing season is another important aspect of such a study. 
 
 2. Machine Shop 
 
 For a large fishing community a well equipped and efficiently managed 
 machine shop is essential, not only to repair boat engines and gear, but also 
 to service the neighboring salmon canneries and sea food processing plants . 
 With an active airport serviced by a variety of freight-handling devices, 
 road building equipment, a sawmill, and some agricultural machinery in the 
 general area s there appears to be enough local business to support a modern 
 machine repair shop. Present inadequate facilities should be expanded to 
 provide these services. 
 
 Availability of such local facilities would lessen Cordova's dependence 
 on the Pacific Northwest or on Anchorage, where costly delays due to poor 
 communications are frequently experienced. With the expected growth of the 
 sea food processing industry in this area, the suggested machine shop re- 
 presents an interesting investment opportunity. In addition to contributing 
 to the stability of the local economy, it would also provide 10-15 new jobs. 
 
 27 
 
Seward 
 
 Seward is located on the northern shore of Resurrection Bay, a part of 
 the Kenai Peninsula. It has a year-round ice-free harbor and is the southern 
 terminal of the Alaska Railroad. An 80-mile paved highway links it to the 
 north with Anchorage. Before the earthquake the mainstay of its economy was 
 ocean and rail transportation and fishing and sea food processing. Both of 
 these sources of jobs were wiped out by the March earthquake and, except for 
 reconstruction work, the local economy is almost completely paralyzed. 
 
 The earthquake caused massive destruction, resulting in 13 deaths. All 
 the fuel oil storage tanks were destroyed and submarine landslides dumped 
 some 4000 feet of waterfront, including almost the entire dock area, small- 
 boat harbor and fish processing facilities, into the Bay. Alaska Railroad 
 docks, roundhouse buildings, locomotives, and nearly 100 freight cars were 
 washed away by 30-foot tidal waves. Total damage to publicly -owned state and 
 local facilities was estimated at $11 million, and to private industries and 
 homes at $4.5 million. Among the publicly-owned facilities, damages to port, 
 streets, utilities, and public buildings was estimated at $8.5 million. Near- 
 ly all of these facilities are eligible for repair and replacement funds under 
 Public Law 875. 
 
 In 1963, some 3000 people resided in the Seward trading area. Seward 
 has a much higher summer population because the area is used as the recrea- 
 tion center for the U.S. Army and U.S. Air Force establishments in the state. 
 In 1963 some 35,000 visitor days were provided by military personnel. The 
 population of the city proper actually declined between 1950 and 1960, from 
 2100 to 1900. In August 1964 the Seward Labor Market Area provided about 
 1200 jobs, or practically the same as in the preceding year. Composition of 
 employment was, however, quite different. This year (1964) there were some 
 340 more construction workers than in August 1963 engaged principally in re- 
 building the waterfront. And because of cessation of all transportation 
 activities, there were 250 fewer transportation jobs available. Government 
 employment of 330 was up by 60 in comparison with that of 1963, and in August 
 of 1964 represented a third of all non-agricultural wage and salary workers 
 in the area. 
 
 - 28 - 
 
At the time of our visit in September 1964, reconstruction was going on 
 at a fast pace* Repairs to the city f s hospital and public schools were nearly 
 completed and much activity was in evidence in connection with water, sewer, 
 and street repairs. Although, in comparison with 1963, retail business de- 
 clined by 50 percent, unemployment was at a low level, principally because 
 all dock and transportation workers left the area and the high level of con- 
 struction provided jobs for others. 
 
 But in the post=reconstruction period the prospects for new jobs are not 
 promising. Some of the oil companies have already built new storage facili= 
 ties in Anchorage and are not expected to return. Since the earthquake, all 
 ocean freight formerly going through Seward has been diverted to Whittier and 
 Anchorage and part of it is not likely to return. Moreover, the new port 
 facilities will be likely to mechanize many jobs which were formerly held by 
 dock workers, so that future longshore employment is expected to be cut in 
 half. Reconstruction of Alaska Railroad facilities with an estimated $10 
 million in expenditures will continue to provide many jobs for the next 2-3 
 years, but after this is completed many fewer jobs than formerly are expected 
 to be available for the operation and maintenance of these facilities, because 
 modern technology will have made such jobs obsolete* A local orphanage, called 
 The Jesse Lee Home, which provided about 15 jobs is expected to move to Anchor- 
 age o 
 
 For the purpose of identifying the type of activities which would stimu- 
 late economic growth in the post-reconstruction period, meetings were held in 
 Seward with the local chairman of the Overall Economic Development Committee 
 as well as with businessmen, bankers, and city officials. Several projects 
 were mentioned as offering promising investment opportunities including a 
 paper mill, smelter , food specialties, tourism, barite processing plant, small- 
 boat repair facilities, and a sea food processing planto 
 
 Tourism appears to be especially promising, but new facilities are needed 
 to accommodate the visitors. Expected reconstruction, with modern facilities, 
 of the Air Force Recreation Center will probably provide about 20 year-round 
 jobs and 40-50 at the peak summer months. But new fishing and fish processing 
 facilities, according to all those interviewed in Seward, seem to offer the 
 
 - 29 - 
 
most promising job opportunities. A small barite processing operation which 
 was planned to be constructed before the earthquake also seems like a good 
 possibility . 
 
 1. Fish Freezing Plant 
 
 The tidal wave wiped out a modern freezing plant jointly owned and 
 operated by the Halibut Producers Cooperative and the Alaska Shrimp Co., Inc. 
 All of the equipment and buildings were swept out to sea together with the 
 piers and no trace of the former processing facilities are now visible. The 
 plant employed between 100 and 150 seasonal workers in its processing and 
 storage facilities. About the same number of fishermen were also employed in 
 catching the fish which was processed at Seward. This enterprise had devel- 
 oped the so-called frozen "shrimp loaf" which was especially suitable for use 
 in Chinese food outlets. The "loaf" was successfully marketed through a large 
 Biloxi, Mississippi, shrimp distributor and appeared to have considerable po- 
 tential for expansion. Besides shrimp, the plant also handled halibut, salmon, 
 and other catches. 
 
 At the time of our visit we were informed that the Halibut Producers Co. 
 has applied to the Small Business Administration for a "disaster loan" and 
 plans to come back to Seward. By re-establishing their former operations in 
 modern facilities this enterprise will be expected to provide over 100 jobs 
 which would be a major contribution to the local economy. Speedy rebuilding 
 of the municipal pier on which this freezing plant will be constructed, and 
 the raising of some $500,000 of needed investment funds to purchase equipment 
 and construct buildings are essential if Seward is to regain any semblance of 
 a viable economy. 
 
 2. Barite Processing Plant 
 
 As the major ice-free port in South Central Alaska, connected by a paved 
 highway with the oil fields some 50-80 miles distant in Western Kenai and 
 Cook Inlet areas, Seward appears to possess locational advantages for a year- 
 round barite processing operation. A substantial market for drilling mud is 
 already available in this area and trucking it from Seward to various oil 
 fields would not appear to present a problem. The Alaska Barite Inc. which 
 
 - 30 - 
 
is planning to build the processing facilities expects to import the raw ore 
 from South Eastern Alaska, do the milling and processing in Seward, and dis- 
 tribute its products to various drilling contractors. Processing and truck- 
 ing operations are expected to provide 20-30 new jobs. As these jobs would 
 be quite important to the local economy this project should be given serious 
 consideration. 
 
 3. Food Specialties Enterprise 
 
 According to local business men the availability of wild berries in the 
 Kenai Peninsula, and the possibility of preparing special varieties of smoked 
 salmon, deer meat, moose sausage, and other types of game, offer another oppor- 
 tunity for a profitable enterprise. It is believed that a small-scale opera- 
 tion producing exotic food products for the high-price trade could be success- 
 fully organized and operated on a year-round basis. With the eventual 
 availability of frequent sailings from Seward and expected low return-cargo 
 freight rates, exports of such specialties to all U.S. markets would appear 
 to be feasible. Further study of this project is recommended. 
 
 Kodiak 
 
 The city of Kodiak is located on the northeastern shore of Kodiak Island 
 overlooking Chinook Bay, some 250 air miles southwest of Anchorage. As it lies 
 in the path of the warm Japan Current, the average temperature of January - its 
 coldest month - is about 30 F and of August - its warmest month - 55 F. This 
 relatively mild climate distinguishes Kodiak community from most other South 
 Central areas and permits many more year-round economic activities than can 
 be carried on in any other city covered by this survey. Fishing, sea food pro- 
 cessing, and beef-cattle grazing can be carried on for 10-12 months of the year. 
 Its tourist season is also longer than that of other communities in this part 
 of Central Alaska. 
 
 In addition to its climate and a beautiful natural setting, probably com- 
 parable with the most attractive tourist spots in the world, Kodiak is the home 
 port of the famous King Crab and is claimed to be in the center of the richest 
 sea food resources found anywtiere. Halibut, shrimp, clams, herring, and a 
 
 - 31 - 
 
large variety of bottom fish have been found in this area in enormous quantities. 
 A large airport located only a few miles from the city provides easy transpor- 
 tation to both Anchorage and Seattle, with a good schedule of service to both 
 cities. 
 
 During the March earthquake the city was severely damaged, with 19 persons 
 dead or missing. Underwater seismic shocks caused the land mass to sink by some 
 five and a half feet, and a 30-foot tidal wave, according to a report by the 
 Office of Emergency Planning, "flung fishing vessels over the harbor's stone 
 jetty, and sometimes two or three blocks into the city. Benson Avenue, Kodiak's 
 main street, was a jumble of overturned boats and crippled buildings. Shore 
 roads, canneries, processing plants, harbor and dock facilities, public build- 
 ings and utilities were damaged .... Only 41 out of the fleet of 100 fish- 
 ing boats have been accounted for and 12 of these were damaged beyond repair." 
 
 Damage to private property was estimated at $2.75 million and involved 
 36 residences and 67 commercial establishments. An additional $3.2 million 
 in damage was inflicted on public facilities eligible for repair and replace- 
 ment under Public Law 875. Because of excessive damage to the Central Busi- 
 ness District, present urban renewal plans call for the development of some 
 35 acres. Approximately 140,000 sq. ft. of commercial floor space will be 
 developed, of which 93,000 sq. ft. will be for replacement of existing or 
 damaged facilities and the rest will be for future expansion. A new 65-room 
 hotel is included in the proposed community renewal plan. 
 
 The city's population, excluding military personnel, has grown from 860 
 in 1939 to 2630 in 1960, and, according to the city manager's estimates, was 
 about 3500 in September 1964. In the entire trading area, which comprises 
 Election District #11, the growth has been from 2100 people in 1939 to 7200 
 in 1960, and probably about 8000 in 1964. 
 
 Total non-agricultural employment in August 1964 in the Kodiak Labor 
 Market Area, according to the State's Division of Employment Security, was 
 2560, up about 120 from August 1963. An increase of 180 construction workers 
 engaged principally in the rebuilding of the town, and a slight decline in 
 fish processing and transportation activities, accounted for this change. 
 
 - 32 - 
 
Employment in trades, services, and government activities remained about the 
 same, and the last category represented, in August 1964, more than a third of 
 all non- agricultural jobs in the area. 
 
 Other indices also show rapid growth. Scheduled airline passengers in 
 the fiscal year June 1963-64 numbered 35,000, or more than double those in 
 June 1961-62. Vessel traffic increased from 38,000 tons in 1960 to over 
 80,000 two years later. For the 4-year period 1960-63, total volume of busi- 
 ness (excluding small businesses with gross incomes of less than $25,000, and 
 sea food processing industries) rose from $6.3 to $9.7 million. In the same 
 4-year interval, production of King Crab rose from 14 to 41 million pounds and 
 electric power consumption from 7 to almost 9 million kilowatt hours. The 
 canned salmon pack also nearly doubled, from 443,000 cases in 1960 to 867,000 
 in 1963. During the same four years the halibut catch increased from 40 to 
 45 million pounds. The very substantial growth of the fishing and sea food 
 processing industry was not entirely reflected in similar increases in year- 
 round jobs, principally because many salmon canners import seasonal workers 
 who leave the area after the pack is completed. The large increase in King 
 Crab production has, however, added stability to local employment, and both 
 fishing and processing operations are at present carried on for some 10 to 11 
 months each year. 
 
 At the time of our visit in late September, Kodiak's economy was buzzing 
 with activity, chiefly because of extensive reconstruction work. All those 
 able to work were employed and help-wanted signs were seen at the windows of 
 the State Employment Office, a rare sight in South Central Alaska. But in 
 discussions with local business leaders and city officials, it was soon dis- 
 covered that much needs to be done in order for the fishing and sea food 
 processing industry to grow. By destroying boats, harbors, and sea food pro- 
 cessing facilities, the earthquake has seriously crippled the economic growth 
 of this area. Future economic growth may also be hampered by power and water 
 shortages and the city's management will have to carry a very large financial 
 burden for the expansion of these needed utilities. Lack of housing and pro- 
 blems of securing land are also critical factors that tend to impede growth. 
 
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Much needs to be done to realize the very substantial potential of this area 
 and to make available its full contribution to the economic development of 
 the entire South Central region for which the city needs outside financial 
 assistance. Among the many projects discussed with local officials, bankers, 
 and businessmen, the following appear to be of special significance: 
 
 1. The Passenger Ferry Dock 
 
 The recent inauguration of the ferry system which links the entire South 
 Central region from Kodiak to several Kenai Peninsula ports and thence to 
 Anchorage, will be of considerable economic significance for this region. 
 During the summer months the ferry has already become an important tourist 
 attraction and at all times it serves as a means for transporting goods. 
 The remoteness of Kodiak from other populated communities in South Central 
 Alaska has in the past inhibited the growth of its trade and commerce be- 
 cause air freight is generally either very expensive or not suitable for 
 handling certain types of cargo. Kodiak beef, for instance, if properly 
 processed, can have a substantial market in Anchorage and the new ferry 
 system is expected to encourage such inter-city trade. 
 
 The sole municipal dock now in existence is already overloaded with 
 four sea food processing plants and two warehouses. Most of these facili- 
 ties are operating around the clock and queuing of cargo or fishing vessels 
 in the harbor is occasionally necessary while awaiting dock space. Use of 
 the existing facility for ferry-boat docking would tend to disrupt seriously 
 the local economy since nearly all economic activities in the city are being 
 performed in this area. 
 
 The proposed ferry dock will be located in the center of the town, only 
 2 to 3 blocks from the new Central Business District, and will be very con- 
 venient for tourist trade. An engineering firm has already prepared the 
 pier design under contract from HHFA Community Facilities Administration, 
 with an estimated cost of the entire project of about $250,000. When com- 
 pleted, the dock is expected to provide 6 direct jobs and more than 50 in- 
 direct ones. The latter would be created by increased tourist potential 
 and added facilities for handling commercial freight. We were informed 
 
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that an application for financial assistance is now pending with Area Redevelop- 
 ment Administration, and in view of the considerable stimulant that this new 
 dock would provide for increasing tourism and trade, its support is recommen- 
 ded. 
 
 2. Slaughtering Facilities 
 
 Because of favorable climatic conditions and good pasture available on an 
 almost year-round basis, Kodiak Island could develop a sizeable beef-cattle 
 industry. Home grown beef would in turn tend to lower meat prices and living 
 costs in other parts of South Central Alaska and, by reducing imports, create 
 new local job opportunities. We were told that at present there are between 
 2000 and 3000 head of livestock on the island, of which at least 300-400 steers 
 can be ready for butchering each year. But because of lack of proper slaugh- 
 tering facilities, all the beef consumed by the approximately 3000-man Naval 
 Station (located only a few miles from the cattle ranches) is imported from 
 Seattle. For civilian markets in Anchorage, some meat comes from New Zealand. 
 Meat grading and inspection are required by all Federal procurement agencies 
 and the primitive slaughtering and processing facilities now available to 
 local ranchers cannot meet such standards. 
 
 Since there is a very large market for beef for both military forces and 
 civilians in all parts of Alaska, the development of this industry on Kodiak 
 offers promising investment opportunities. The recently- inaugurated ferry 
 service linking Kodiak with Anchorage could play a key role in the distribu- 
 tion of meat to the various communities in the area in which live nearly 
 half of the state's population. 
 
 In our discussions with members of the Kodiak Livestock Growers Asso- 
 ciation, Inc., it was tentatively agreed that this group would form a cor- 
 poration for the purpose of erecting and operating small but modern 
 slaughtering and possibly freezing facilities. Among the various locations 
 mentioned was a surplus warehouse belonging to the Naval Station. Before 
 the decision is made, however, on the kind and location of slaughtering 
 facilities to be established, a technical study is required to analyse the 
 scale and economics of operation as well as the needed standards to meet 
 
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Federal buying specifications. Once arrangements are completed to sell beef 
 to the Naval Station and to other Alaska outlets and the distribution is thus 
 assured, the next step is to raise the necessary capital, build the required 
 facilities, and hire competent management to operate them. With an assured 
 livestock supply which has a potential for substantial expansion, and a large 
 and accessible market, this operation appears to offer a promising investment 
 opportunity. 
 
 3. Expansion of the Municipal Dock for Cargo Handling and Sea Food Processing 
 Facilities 
 
 This is another public facility whose expansion would materially stimulate 
 Kodiak's economic development. Practically all sea food processing activities, 
 as well as cargo handling and warehousing, are now being performed on the 
 municipal pier, because it is the only area undamaged by the March earthquake* 
 As the center of the community's economy, the pier is already badly over- 
 crowded. Warehouse space appears to be inadequate to handle the present volume 
 of cargo so that costly delays are experienced. Moreover, several canneries 
 and sea food processing concerns, including some whose plants were destroyed 
 by the earthquake, have expressed a desire to locate in Kodiak and need water- 
 front space. 
 
 Two large sea food processing plants are planning to return to Kodiak 
 and as of the end of September 1964 arrangements had been made for waterfront 
 locations in the Near Island Channel which they occupied before the earth- 
 quake. The Alaska King Crab Co. plans to anchor a barge on the city side of 
 the channel and build its processing facilities there. Some few hundred 
 yards away the Alaska Packers Association will also bring a Victory ship 
 and, by sinking it along the shore line, install permanent processing faci- 
 lities. These two installations are expected to provide between 200 and 
 300 jobs and would represent a considerable expansion of the local economy. 
 Together with the ferry pier, these plants will nearly exhaust the water- 
 front space suitable for canning and freezing facilities. Moreover, even 
 if space were available, many smaller sea food processors cannot afford to 
 build their own waterfront sites and are anxious to locate on the municipal 
 dock. For such enterprises, proximity to port warehouses and loading 
 
 - 36 - 
 
facilities are essential both for handling the incoming raw fish and for ship- 
 ping the finished product. 
 
 In discussing these industrial site problems with the Kodiak city manager 
 and local businessmen, it was agreed that extension of the present municipal 
 dock is the most economical method of creating new waterfront space in addi- 
 tion to the existing warehousing and cargo handling installations. Existing 
 utilities, such as water, power, and fuel, can be expanded at this location 
 to accommodate the needs of the new facilities at much lower cost than would 
 be required anywhere else in the area, even if other waterfront sites were 
 available. 
 
 The proposed dock expansion would involve an addition to its face of 
 some 400-500 feet and a width of some 100 feet. With a fill area behind the 
 dock, this would make available some 3 to 4 acres of land as sites for sea food 
 processing facilities. The estimated cost for this expansion is about $1.2 
 million. Present requirements for plants of the 3 firms which have already 
 requested space amount to nearly one acre. The reserve space would be used 
 to expand the present municipal warehouses, and would be expected to attract 
 other new establishments. We believe this port expansion would be an impor- 
 tant stimulant to economic development of this area and a potential source 
 of several hundred new jobs. By leasing land to sea food processors, it 
 would, in addition, become a source of income to the city for much needed 
 municipal improvements. 
 
 4. Small-Boat Repair Facility 
 
 As a home port of several hundred fishing vessels, Kodiak could also 
 support a boat repair facility and a small dry dock. A very convenient 
 site has been partly developed for this purpose in the Gibson Cove some 
 2 to 3 miles southwest of the city. As indicated earlier, local repair 
 facilities are essential for an isolated area like Kodiak. They would 
 provide needed services to the hundreds of boats operating in the area 
 and create additional employment and income in the community. A techni- 
 cal study is recommended to assess the market, size, and investment require- 
 ments of such a facility. 
 
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5. Marine Sciences Research Institute 
 
 According to information obtained in the course of this survey, many new 
 and significant discoveries have recently been made in sea food resources in 
 the Kodiak area, among which are shrimp, clams, abalone, and deep sea crabs. 
 Local business men and city officials feel that other discoveries are imminent 
 and that this entire area is a fertile field for systematic research in marine 
 sciences dealing especially with the Arctic region. In addition to performing 
 basic research in biological sciences, especially in discoveries of new species 
 and their commercial possibilities, such an institute would also concentrate 
 attention on the development of new technologies to advance the sea food in- 
 dustry. Developing programs and policies with respect to harvesting indivi- 
 dual sea food resources, and thus reducing the seasonality of this industry, 
 might be another important aspect of the Institute's work. A year-round sea 
 food industry would contribute significantly to the growth of Alaska's economy, 
 encourage locally-operated processing facilities, attract new migrants, and 
 bring about stability in employment and income. Utilization of fish waste for 
 food, chemical, and drug products, and for use in poultry and cattle feed, and 
 possibly fertilizer, are other activities in which the Research Institute 
 might be interested. 
 
 The suggested location for the research center (which would be a branch 
 of the University of Alaska, similar to their present Arctic Research Insti- 
 tute) is the Near Island, right across the narrow channel from downtown 
 Kodiak. It is a superb site which could accommodate very large facilities, 
 not only to house the laboratories and classrooms, but also as a convention 
 center for scientific meetings dealing with the marine sciences and technology. 
 In addition to providing Alaska with a center for developing one of its major 
 natural resources, through special museums, exhibits, international meetings, 
 and seminars it would also upgrade the cultural level of the area, become an 
 important tourist attraction, and provide considerable local income and pro- 
 bably over 100 new jobs. A committee of the National Science Foundation, 
 National Research Council, and some of the foundations operating in the 
 various marine sciences field, might initially be set up under the sponsor- 
 ship of the appropriate departments of the University of Alaska to study this 
 
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problem. Defining the scope of the Institute's research program, its type of 
 management, and sources of financing would initially be the major task of such 
 a committee. We recommend that the University of Alaska initiate a study of 
 this project. 
 
 Kenai Peninsula Communities 
 
 Among the several communities visited along the western shores of the 
 Kenai Peninsula only Homer and Seldovia were seriously damaged by the March 
 earthquake. At Homer, a fishing community of about 1200 people located on 
 the Kachemak Bay, the major damage was to the small-boat harbor . In Seldovia, 
 which lies on the southern shore of this same bay, the earthquake caused the 
 shoreline to sink by about 3 feet, thus lowering the break water and exposing 
 the small-boat harbor to greater wave action. The other important town in 
 this area which was not damaged by the earthquake is Kenai, a community of 
 about 1500 people located on the eastern shore of the Cook Inlet and some 80 
 miles south of Anchorage. Although no unemployment data are available for 
 individual communities it has been appreciable in the past several years. 
 
 In all these towns expansion of sea food processing and boat repairing 
 facilities (including oil drilling barges) appears to offer promising invest- 
 ment opportunities. Beef and hog raising and slaughtering, as well as egg 
 production, also offer similar possibilities for economic growth. With the 
 large Anchorage .market for these products, the present very limited activities 
 could be greatly expanded. 
 
 In discussions with local business men in Kenai and Anchorage during our 
 September 1964 visit, two additional projects were suggested which merit 
 serious consideration. One is a greenhouse for tomato growing and the other 
 a sawmill. 
 
 With the expectation of using the exhaust heat from a local power plant, 
 a one-acre greenhouse is being considered by certain Anchorage business men. 
 Except for balancing the advantages of substantially lower fuel cost at Kenai 
 against the disadvantages of high transport costs to deliver tomatoes to 
 Anchorage, this project is similar to the one described earlier in this dis- 
 
 - 39 - 
 
cussion. But the Anchorage market could, in all probability, support two small 
 greenhouses. Subject to a feasibility study dealing with its profit-making 
 potential, establishment of such a competitive facility might be desirable. 
 
 Three local business men were interested in building a sawmill and dry 
 kiln in the Kenai-Soldatna area. Discussion with two of the principals in- 
 dicated that certain machinery has already been purchased for a sawmill of 
 50,000 board feet per-day capacity, and that its owners are competent tech- 
 nicians with ample experience in sawmill operations. They claimed that local 
 oil-drilling contractors have indicated interest in making sizeable lumber 
 purchases and, of course, the Anchorage market could absorb a great deal of 
 the mill's output. Raw logs would be towed from across the Cook Inlet and 
 arrangements are being made to purchase them from the Federal government at 
 very favorable stumpage prices. Approximately $200,000 of additional capital 
 is required and 15-20 jobs would be created. 
 
 But as is the case with other small lumber mills in South Central Alaska, 
 this group lacks marketing and selling experience. As was indicated earlier, 
 to operate a sawmill and market lumber successfully in this area, some sort of 
 cooperative arrangement might be necessary. Most of the people in the lumber 
 business seem to be good technicians but inexperienced marketers so that 
 skilled management is required to develop effective distribution channels. 
 Perhaps one way to provide such management is through a cooperative group 
 supported by all sawmills in the area, similar, for instance, to the Sunkist 
 Orange Association. Such a group would not only promote effective distribu- 
 tion but also establish quality standards. Lack of grading facilities by a 
 recognized group represents the greatest difficulty. Housing and Home Finance 
 Administration, for instance, according to local bankers, refuses to approve 
 loans for homes built of ungraded Alaska-grown lumber, so that most of the 
 wood used in housing must be imported from Seattle, despite the very large 
 local timber resources. 
 
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SECTION IV. GENERAL OBSERVATIONS 
 
 In the preceding sections, emphasis was placed on investment opportuni- 
 ties consisting principally of short-run projects that could be started in 
 specific communities in the next 2-3 years to take up the expected slack 
 in employment after the reconstruction job had been completed. If properly 
 developed, some of these projects could bring lasting benefits to the Alaskan 
 economy. The recommended research institute in marine sciences, for instance, 
 could be quite helpful in charting a long-term program with respect to future 
 development of sea food resources. 
 
 A more rational development of Alaska's sea food resources is, in our 
 opinion, one of the most important problems facing the industrial planners 
 and should command highest priority. Since in many respects these resources 
 are unique, their development deserves special attention. Lengthening of 
 the fishing and sea food processing season could in the foreseeable future 
 create more local jobs, do more to attract new migrants, and bring about 
 greater stability to local economies than would several hydro-electric or 
 mineral industries projects that have been talked about in recent years. 
 What is needed most (with respect to the fishing industry) is a careful and 
 systematic study of how the available resources could be fully developed 
 within the framework of Alaska's economic program. Development of floating 
 canneries and freezing or cold storage facilities is one type of project 
 that deserves serious attention. Marketing and packaging of salmon and 
 other sea foods is another area for investigation. Such activities cannot 
 be left to absentee owners whose main interests are not in Alaska but in 
 the Pacific Northwest. Alaska-based organizations should be developed to do 
 this, following the example set in the King Crab industry. This problem of 
 marketing and promotion of sea food products by local business interests is 
 crucial to the successful development and modernization of the fishing industry, 
 
 Development of local agriculture, including beef-cattle raising, on 
 Kodiak and Kenai should command the next order of priority and is in our 
 view another important program to be seriously considered in the future. 
 Lowering of food costs is an essential first step in the reduction of living 
 costs, which in turn can be of considerable assistance in making the products 
 
 - 41 - 
 
of local industries more competitive with imports. As suggested elsewhere in 
 this report, the eventual possibility of using natural gas for certain agricultu- 
 ral operations, like hay drying or fertilizer manufacturing, also presents 
 interesting possibilities. Use of various types of heat energy in agriculture 
 has been seriously considered by Scandinavian farmers and a study of their 
 experience might prove useful. 
 
 The growth of the South Central oil industry is likely to be governed 
 by the world supply and demand, and not much could be done in Alaska to 
 stimulate its expansion. But liquefying natural gas ur using it to produce 
 ammonia - both for export to Japan - are projects which could be greatly 
 stimulated with proper promotional effort. Since both iron ore and natural 
 gas have been found practically next to each other in the Cook Inlet area, 
 serious consideration should be given to employing recently-developed technolo- 
 gies for using gas to reduce iron ore. This would more than double its export 
 value, in addition to creating some additional local employment. 
 
 Further development of forest resources also offers promising investment 
 opportunities. However, from the information we have gathered, it is not 
 certain that the South Central region could successfully compete with South 
 Eastern Alaska. ": In any case, what is badly needed is a better marketing 
 organization for selling the lumber which is at present being produced by 
 numerous small saw mills. Setting of quality standards to satisfy FHA 
 specifications is another problem requiring immediate attention. 
 
 Finally, we believe that exorbitant land costs are a serious impediment 
 to Alaska's economic development. When, according to information supplied 
 by local citizens, a standard city lot in a small town like Kodiak or Soldatna 
 costs more than it would in Washington, D. C, in an area less than 10 miles 
 from the White House, there must be something wrong with Alaskan land prices. 
 Such land prices make house construction prohibitively expensive and to- 
 gether with the high cost of living tend to discourage new migrants. We 
 do not pretend to know the answer to this problem but feel that it deserves 
 serious attention. 
 
 - 42 
 
Expansion ol: tourism is another important stimulant to economic growth 
 but we found a wel 1 -developed state program and most people in Alaska aware 
 of its potential, and it need not be stressed in this report. Since this is 
 also a highly seasonal industry and its seasonality coincides with construction, 
 fishing, canning, and other economic activities in Alaska, it creates relatively 
 fewer year-round job opportunities per dollar of investment in comparison 
 with most manufacturing industries. It may be mentioned, however, that the 
 development of low-cost air group-rate fares, or the Alaska-Europe combina- 
 tions mentioned earlier, especially from midwestern and eastern areas, 
 might be a constructive step for increasing the tourist trade. 
 
 - 43 - 
 
PENN STATE UNIVERSITY LIBRARIES 
 
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