Alaska's Manufacturing Sector: An Emerging Economic Powerhouse

Alaska brings to mind wild salmon, expansive wilderness and unique native cultures. But did you know there’s a small and thriving manufacturing industry representing 4% of the state’s private sector Gross Domestic Product (GDP) and 4.8% of the employment base? In fact, from 2012 to 2016, according to the U.S. County Business Patterns, Alaska’s manufacturing employment grew 6.4% compared to overall employment growth of 3.2% during the same period.

Nolan Klouda, Executive Director at the University of Alaska Center for Economic Development and one of the authors of a 2014 state extension service planning study in Alaska sponsored by the National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership (MEP), recently commented:

“Smartly chosen opportunities continue to exist in manufacturing in Alaska. Maybe not building aircraft, automobiles or consumer electronics, but clearly there are specialty areas like ship building, specialty aircraft components and unique foods which can play a part in a broader economic strategy.”

Isaac Vanderburg, Managing Director for Launch Alaska also shared his thoughts about manufacturing’s relevance in today’s Alaska:

“We think that modern manufacturing offers some unique opportunities for Alaskans – additive manufacturing and 3D printing could present opportunities to reduce our dependence on outside supply chains and unlock new potential for industry here, the digitization of manufacturing could mean lower costs for our state – all of which could contribute to our transition from a resource extraction economy to a value-added economy.”

Study Highlights Alaska’s Manufacturing Contributions

The 2014 NIST MEP-funded study highlighted several exciting existing and potential contributions from manufacturing in Alaska.

• While fish processing is the largest manufacturing segment based on employment, entrepreneurs creating value-added products in the seafood industry are a potential growth segment. Barnacle Coast to Kitchen in Juneau uses locally grown, harvested and foraged ingredients like Kelp to make salsas and pickles. The MEP Center in Alaska, MAKE Partnership, worked with Spruce Root in Southeast Alaska to support a marketing strategy to increase sales for the firm. Because of the assistance, Barnacle boosted on-line sales and tapped into new markets.
• Beer, wine and beverage manufacturing represents a small but fast-growing sector with significant potential for expansion, and the small-scale food processing sector is rapidly expanding too. Moosetard of Fairbanks combines both sectors with their specialty beer mustards, and manufacturers their gourmet mustards using local trees, wildflowers and berries from the Alaskan interior. One of MAKE Partnership’s partners, the Sea Grant Marine Advisory Service, quickly provided the necessary testing for Moosestard to comply with all updated state and federal food standards. The company estimates this resulted in an increase or retention of $120,000 in sales in one year.
• There are a surprising number of companies that develop products for Alaska yet end up selling outside the state too. Shipbuilding, yurts, windows, aircraft components and fiberglass structures are all examples of products now serving markets around the world. Notably, 63% of the companies originally interviewed in the study said they earn regular sales outside of Alaska.

Clearly, there are common barriers facing Alaska manufacturers. Costs of shipping (25%) and costs of inputs (22%) were ranked in a survey as the two most important factors preventing Alaska companies from competing in the “lower 48.” These factors can be tough to overcome due to geographic reasons, however many manufacturers seem to prevail over these challenges.

NIST MEP continues to champion and invest in manufacturing as a vital and exciting part of every state’s economy, and like Alaska, perhaps not a widely known part at that. NIST MEP is holding a forum in Anchorage, AK June 7, 2018, to discuss continuing MEP services in Alaska as part of the MEP National Network^TM. If you’d like to join the discussion, please view the regional forum information page and register to attend. To learn more about your state’s manufacturing economy, please contact your local MEP Center. 

 

The MEP National Network is a unique public-private partnership that helps small and medium-sized manufacturers generate business results and thrive in today’s technology-driven economy. The MEP National Network comprises the National Institute of Standards and Technology’s Manufacturing Extension Partnership (NIST MEP), the 51 MEP Centers located in all 50 states and Puerto Rico.