Fairbanks: Economy
Major Industries and Commercial Activity
As Alaska's second largest city, Fairbanks is an important trading, transportation, military, regional service and supply center. City, borough, state and federal government services are located here. The government services sector, including the military, employs more than one-third of the region's workers. The city's international airport serves villages in the region, is a supply point for North Slope oil fields, and is a center for the transport of cargo by international carriers.
Military activity is a significant contributor to the local economy. The combined payrolls at Fort Wainwright and Eielson Air Force Base are in excess of $354 million. According to the Fairbanks Economic Development Corporation, the total economic impact of the two military bases to the Greater Fairbanks community is $390.9 million annually. A total of almost 17,000 military active duty personnel lived in Fairbanks North Star Borough in 2004, comprising more than 20 percent of the total borough population. This figure is an increase of 1.6 percent from the previous year. In 2003, the United States Army Alaska began the transformation of the 172nd Brigade from a Light Infantry Brigade to a Stryker Brigade. One-third of the more than 1000 soldiers, plus dependents and support personnel, is already posted at Fort Wainwright, with the balance to be transferred to the Fort possibly as early as 2006 when housing and related infrastructure are in place. The Fairbanks North Star Borough's economy will benefit from the housing construction, rental and utility income, wages, and additional visitors these soldiers bring to the area.
Tourism and mining also comprise a large percentage of the commercial activity in the region. Each summer, approximately 325,000 visitors travel to Fairbanks. However, visitor numbers have declined from a high in the summer of 2001. The Fort Knox gold mine is the largest producing gold mine in the state. It produces 1,200 ounces of gold daily and employs 360 permanent year-round workers. Despite gold prices tumbling below $300 per ounce, the mine is still acquiring prospects in the region in order to expand its operation. To date, more than $200 million in gold has been extracted from the mining district. The mine is expected to remain in operation through 2010.
Incentive Programs—New and Existing Companies
State programs
The Governor's Office of International Trade provides assistance and information to firms interested in foreign trade and investment, organizes trade missions and promotions, and sponsors trade shows and seminars.
Local programs
The Small Business Development Center (SBDC) offers seminars, counseling, and workshops for new and established businesses to support their existence and help them grow. The Procurement Technical Assistance Center (PTAC) assists businesses who contract with local, state, or federal government.
Job training programs
A variety of training programs exist to help meet the business needs of Fairbanks employers; many are organized through the local educational institutions. Tanana Chiefs' Conference offers a wide array of programs for tribal populations through its Employment and Training Department. The Chamber of Commerce offers the School Business Partnership, which allows businesses and schools to work together.
Development Projects
Fairbanks and other Alaska officials are working toward the development of an 800-mile natural gas pipeline, which would run from the North Slope to a liquefied natural gas (LNG) plant to be developed at Valdez for export to the rest of North America. The All-Alaska Gas Pipeline will run parallel to the existing Trans-Alaska Oil Pipeline. In 2005, the Alaska Gasline Port Authority (AGPA) had reached a development agreement with Sempra LNG to assist in the development of the All-Alaska Pipeline Project and market the related LNG. Work was underway to acquire permits and the rights of way from Yukon Pacific for building the pipeline. The first LNG tanker is projected to leave the terminal at Valdez sometime around 2011. A 40 percent portion of project revenues will be shared among the Alaskan municipalities. The cost of the pipeline could approach $9 billion.
A major plan to redevelop the land surrounding the river bend in the Chena River for recreational, commercial and residential use is on the drawing board. Plans include the creation of a public riverwalk to provide direct access to the river and its recreational opportunities, along with the improvement of Pioneer Park and Carlson Center. Along the river, the construction of a fish hatchery and indoor/outdoor tennis courts, as well as the demolition of a sewer treatment
Construction of a new $25 million fish hatchery is also planned for Fairbanks. A feasibility study was completed in 2004, with design, site selection, environmental assessment, and site preparation scheduled for 2005-2006. The actual construction of the hatchery is planned for 2007-2008, with operation to begin the following year. Not only is the hatch-ery expected to increase the number of stocked catchable fish to provide a better fishing experience for tourists, it will also be an important tourist destination itself. It could also be the source of research dollars for the University of Alaska Fairbanks' fish biology program.
Fairbanks' extreme climate has become a real asset for the area as the city was chosen as the site for the construction of a Research Test Facility (RTF) for the Cold Climate Housing Research Center (CCHRC). It will be built on land adjacent to the University of Alaska Fairbanks campus. Plans call for it to be the first of several test facilities in a future research test park. RTF construction alone is expected to have a $4.5 million impact on the area's economy, with an additional annual direct economic impact of between $800,000 in 2005 to $1.4 million in 2009.
Commercial Shipping
As the only large city and main business center in interior Alaska, Fairbanks is a major transportation hub. Goods are shipped via truck, air and the Alaska Railroad. Fairbanks International Airport functions as the air freight distribution and supply center for the region. In 2003, the airport handled almost 200 million tons of air transit freight. Fourteen motor freight carriers transport goods through facilities in the city.
Labor Force and Employment Outlook
Continued slow population growth is projected in Fairbanks, especially among the working-age population. However, the Fairbanks North Star Borough has seen its population steadily increase over the past four decades. The senior population is projected to nearly triple by 2020, while the school-age population will grow about 10 percent by 2005 then hold steady for the next 15 years. Fairbanks-area businesses that cater to the needs of seniors will prosper, but there will be more competition by employers to find workers. The construction of the All-Alaska Pipeline is expected to bring new jobs to the area with a total of 7,600 total new jobs to the State of Alaska. The transfer of military personnel to Fort Wainwright will also augment the area's labor force. The projection for growth in the construction industry through 2012 is 15.5 percent statewide.
The following is an annual summary of data regarding the Fairbanks labor force, 2004 annual averages.
Size of non-agricultural labor force: 36,900
Number of workers employed in . . .
natural resources and mining: 900
construction: 2,700
manufacturing: 500
trade, transportation and utilities: 7,300
information: 600
financial activities: 1,400
professional and business services: 2,100
education and health services: 4,100
leisure and hospitality: 4,100
other services: 1,300
government: 11,500
Average hourly earnings of production workers employed in manufacturing: $12.16
Unemployment rate: 7.6% (January 2005)
| Largest private employers | Number of employees |
| Banner Health System | 1,204 |
| Alyeska Pipeline Service Co. | 1,007 |
| Tanana Chiefs Conference | 669 |
| Fairbanks Gold Mining Co. | 376 |
| Petro Star | 308 |
Cost of Living
Despite Alaska's reputation for its high cost of living, prices in Fairbanks compare favorably with those in many other North American cities. In 2002, Fairbanks's cost of living index was lower than New York or Boston, for example. In addition, the personal tax burden for Fairbanks residents is extremely low. Residents benefit from distributions from the Permanent Fund, a savings account established in 1976 by voters allowing residents to receive 25 percent of the state's royalty oil revenue. Senior citizens enjoy a $150,000 property tax exemption or a renter's rebate. The availability of vast natural resources insures utility costs somewhat lower than the national average.
The following is a summary of data regarding key cost of living factors for the Fairbanks area.
2004 (3rd Quarter) ACCRA Average House Price: $349,615
2004 (3rd Quarter) ACCRA Cost of Living Index: 128.4 (U.S. average = 100.0)
State income tax rate: None
State sales tax rate: None
Local income tax rate: None
Local sales tax rate: None
Property tax rate: 20.777 mills for city of Fairbanks; (7.171 City and 13.606 Borough areawide)
Special taxes: 5% alcohol tax (city only); 16% tobacco tax (8% city/8% borough); 8% accommodations tax (city only)
Economic Information: Alaska Department of Labor, Research and Analysis, PO Box 25501, Juneau, AK 99802-5501.