The Alaska
Aerospace Development Corporation (AADC), a public
corporation of the State of Alaska, has successfully
launched a number of rockets from the commercial spaceport
on Kodiak Island. The Kodiak
Launch Complex (KLC) is located on 3,100 acres of
state-owned land at Narrow Cape, about 30 miles south
of Kodiak. The area is an ideal location for launching
small satellites into polar, high inclination and Molniya
orbits. The State of Alaska, U.S. government, communities
of Kodiak Island and private aerospace companies support
the development.
The fully
operational Kodiak Launch Complex (KLC) has successfully
supported five launches. The next launch is scheduled
for April 2002. In an attempt to provide ongoing information
about the value of the Alaska Aerospace Development
Corporation (AADC) and the KLC to Alaska, AADC periodically
evaluates the economic impact of a launch from the KLC.
The University
of Alaska Institute of Social and Economic Research
(ISER) was contracted to evaluate the economic impact
of the September 29th, 2001 Kodiak Star (payload
of 4 satellites) launch from the KLC at Narrow Cape.
The launch facility is a basic high-tech industry, bringing
money into Alaska that otherwise would be spent elsewhere.
This contrasts with support industries (such as retail
trade), which largely re-spend money already in the
state.
According
to the paper An Evaluation of the Economic Impacts
of the September 2001 Kodiak Star Launch, by Alexandra
Hill, ISER, the launch generated millions of dollars
into the state economy.
Since economic
impacts result from expenditures, certain assumptions
about expenditures were made in the impact analysis.
Expenditures were made by Lockheed Martin, NASA and
AADC, itself. The expenditures were distributed across
36 industries, to estimate the "final demand" the expenditures
would place on those industries. The final demand became
the input to the Alaska Input-Output model, which calculated
how the money would flow through the economy.
Not all of
the expenses that affected the Alaska economy were included,
for example, the airfare for out-of-state employees
flying to Alaska for the launch campaign. Those expenditures
did support some Alaska jobs and payroll, but most were
made out of state and the money stayed there. The cost
of barging equipment to Kodiak from the lower 48 was
excluded even though some portion of that money supports
barge terminal workers.
Launch expenditures
were broken down by eight categories. In Kodiak, $47,728
was spent on business services, insurance; $173,068
on construction, maintenance and repairs; $127,200 on
equipment and supplies; $50,850 on food and hospitality;
$413,869 on labor; $76,943 on professional services
and $562,460 on transportation, communication and utilities.
Lockheed
Martin and NASA spent an estimated total of $1,702,919
on food, lodging, local transportation and recreation
for visiting launch personnel. Some of these employees
were on Kodiak from June through mid-October. A typical
commercial customer with a 90-day launch campaign will
bring about 5,400 visitor person-days (one person day
is one person visiting Kodiak for one day). Because
this launch was delayed by 30 days, one third was added
to the original estimate, for a total of 7,200 visitor
days for Lockheed Martin and 2,400 visitor days for
NASA. In addition, business travelers typically spend
money beyond their per diem allowances on tourism activities.
Most business visitors combine their visit with some
amount of tourism. For some, it becomes an important
component of their visit. For the vast majority of the
Kodiak Star contractor personnel, this was their
first visit to Alaska. Kodiak is a unique place, very
different from the areas where the KLC customers live.
An assumption was made that these business visitors
actively engaged in tourist activities and their spending
patterns would be much like those of business visitors
to other parts of Alaska who combine their visit with
tourism.
Part of the
monies spent flows directly out of the state, leaving
in-state expenditures lower than the initial total of
about $5 million. Some types of expenditures have higher
out-flows than others. Money spent on clothing is much
more likely to leave the Alaska economy immediately,
since many of the clothes available for sale here were
manufactured out-of-state; money spent on services will
stay in Alaska longer as it goes largely to pay the
wages of the service provider.
Respending
in the Alaska economy expands the initial in-state expenditures
by over 50 percent. Kodiak's multiplier is much lower,
adding 22 percent to expenditures, because much of the
spending on Kodiak that stays in Alaska flows out to
Anchorage.
Summary
of Economic Impacts
The $4.4
million spent in-state became $6.8 million of total
economic effect on Alaska.
Of this $6.8
million, about half benefited the Kodiak economy.
Spending
associated with this launch supported $1.35 million
of payroll in Kodiak.
Business
services ($471,148) and Lodging, Food and Amusements
($440,114) together accounted for about two-thirds of
the payroll growth in Kodiak.
Although
many of the jobs generated both in Kodiak and elsewhere
in Alaska are low-wage jobs (such as retail clerks and
restaurant wait staff), others (such as some of the
Business Services, Transportation and Health Services
jobs) are relatively high wage jobs.
Economic
Impact of September 29th 2001
Launch - Summary
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