Resource Development Council

From the President - Ralph Samuels

Who is Alaska’s competition?

Who do we compete with?

Businesses large and small have a defi nite idea of their competition. Private sector companies compete for bids on projects and selling goods and services on a daily basis. Price, history of similar work, long-standing relationships and ability to deliver are but some of the various factors that determine how good of a competitor an individual company might be.

When it comes to competition on a global scale for investment dollars, as Alaskans we must learn who our competition is. We must know the pros and cons of each competitor as well as our own.

For instance, natural gas is produced by many private companies as well as government owned oil/gas companies. There are opportunities of various sizes and degrees of difficulty to produce. Alaskans as a people, and the State of Alaska as their voice, must learn who the competition is for the massive investment dollars, and determine a path to win the investment.

In the tourism industry, most of our visitors use cruise ships as their transportation of choice. About 60% of tourists arrive by ship. Individual cruise lines compete with one another for market share. Like any industry, the companies have distinctive marketing campaigns, and offer different services aimed at various demographics.

However, from the perspective of Alaska, the competition for ships is the world. Over the past ten years, the number of cruise ships operating globally has boomed, while the number of ships coming to Alaska has remained fl at. Alaska used to comprise more than 7.5% of the global cruise market. We are now at only 4.5%. The industry has grown dramatically worldwide, but not in Alaska. What will happen if this trend continues?

If in ten years, Alaska is less than three percent of the global market, do our global competitors keep making it harder to deploy ships to Alaska? While tourism does not supply a large percentage of revenue to the state general fund, it does provide sales taxes, property taxes, alcohol taxes, bed taxes as well as countless other fees and taxes at a local level. For instance, bed taxes from visitors to Denali pay for about 65% of the revenues to the Denali Borough. In Juneau, summer visitors pay 20% of the sales taxes alone, not including the bed and property taxes. If Alaska continues to have a decreasing market share of the global market and becomes less of a global player, how will the various communities be impacted?

In the mining industry, investment dollars are needed for the exploration, permitting and development of that industry. Competition for those dollars is intense, with projects needing capital infusions around the world.

Investment dollars in Alaska for oil/gas development, investments in the form of ships deployed to Alaska, or investments in the highly competitive mining industry all must compete against global competitors that actively pursue the much needed capital. Alaskans must know who their competitors are, and what are their (and our) advantages and disadvantages. Similar to individual companies bidding against each other for a job, Alaska must learn what it needs to do in order to wrestle the job from the competition.

As a government, Alaska has certain things it can do in order to “get the bid.” First and foremost, policies that keep the cost of business down in Alaska must be implemented. Before implementing more taxes and regulations on the private sector, Alaska must look around the world and see what type and level of taxation and regulation are being implemented by government entities competing with Alaska, and continually adjust and adapt in order to remain competitive. Think globally, act locally.

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