Matanuska-Susitna silver salmon/ADF&G  photo

The Cook Inlet sport fishing business – its overall value marked by the opening of Cabela’s and Bass Pro Shops in Alaska’s largest city – remains a more than $800 million monster that trumps the economic output of commercial fisheries throughout Southcentral Alaska, according to a new economic analysis.

But the industry appears to have flatlined in recent years as the fabled Kenai River king salmon fishery has faded and some roadside salmon fisheries have declined, especially in the sprawling Matanuska-Susitna Borough to the north of Alaska’s largest city.

A new report on the economic status of the industry shows jobs down significantly since a statewide study in 2007 even though angler spending remains about the same. The job loss appears to reflect reductions in guide, charter and similar businesses.

Despite the decline, the report indicates anglers generate slightly more economic output in the Inlet area alone than commercial fisheries do in all of Southcentral.  Southcentral is a broad swath of Alaska that sweeps west from the Canadian border to Lake Iliamna and includes the major commercial fisheries of the northeast Gulf coast, the Copper River Basin and Prince William Sound in addition to Cook Inlet.

The latest report prepared by the respected, Florida-based consulting firm Southwick Associates for the Matanuska-Susitna Borough is sure to be controversial. The report comes only two months after the Alaska Board of Fisheries (BOF) rejected a proposal to eliminate the “priority” for the commercial salmon harvest in the Inlet for most of the summer, and only weeks after the state Legislature, heavily pressured by the state’s most powerful commercial fishing lobby, rejected the appointment to the Board of a sport-fishing supporter.

Both of those actions were themselves controversial, but the latter especially so. Retired judge Karl Johnstone – a former Board chairman who led the body when it shifted some Inlet salmon harvest from commercial to sport and personal-use fisheries – was voted down after Rep. Ivy Spohnholz, R-Anchorage, floated undefined charges of “sexual harassment” on the floor of a joint meeting of the House and Senate to confirm incoming Republican Gov. Mike Dunleavy’s cabinet and board appointees.

As of this time, it remains unknown what Johnstone is accused of doing. Spohnholz won’t say. Several of the women who worked closely with him on the Board say they saw no signs of sexual harassment, and a Spohnhloz aide threatened a reporter trying to find out if there is any substance to the charge his boss levied against the retired judge.

To say that issues surrounding Inlet fisheries, particularly Inlet salmon fishing, are controversial is almost an understatement, and the latest economic report by a company specializing in assessing the economic value of hunting, shooting, sportfishing, and outdoor recreation markets is sure to stir the pot once again.

The report puts the economic output of the Inlet sport fishing industry at $832 million in 2017. The multiplier effect calculated in the study – the dollars in economic output added as sport-fish dollars filter through the economy – is relatively small for a study of this nature.

“In 2017, anglers fished a total of 907,000 days in Alaska’s Cook Inlet region and spent
$716.5 million on trip-related goods and services, pre-purchased packages, equipment
and real estate used for fishing,” the report says. “As anglers’ dollars move from business to business in the Cook Inlet economy, the total effects of the spending generated $832.4 million in economic output and supported more than 6,300 jobs that provided $271.4 million in household income.”

Commercial value

The McDowell Group, an Anchorage-based consultancy focused heavily on assessing the economic value of industries tied to Alaska natural resource production, in 2017 pegged the direct total value of the Southcentral commercial fishing industry at $414 million with an economic impact of $814 million in a report prepared for the Alaska Seafood Marketing Institute (ASMI).

ASMI is a Juneau-based commercial salmon marketing agency backed by the state and funded by a 0.5 percent state tax on commercial salmon catches funneled directly to the organization plus grants from the federal government. 

The McDowell study estimated 40 percent of the value – or $326 million of the economic output – of the Southcentral commercial catch came from pink salmon, black cod, and other bottomfish – species seldom targeted by Inlet anglers.

Sockeye and all other salmon, plus halibut, accounted for 59 percent of the value or $480 million in “total impacts.” The direct value of commercial salmon drift-gillnet harvests – which take place of the mouth of the Copper River, in the Sound and in the Inlet – and set-gillnet harvests – which take place in the Sound and the Inlet but with most of the value coming from the latter – was calculated at $61 million.

The regional commercial fishing industry did score big for jobs, in part because 36 percent of resident Alaska commercial fishermen – about 5,600 limited-entry permit holders – live in the Anchorage metropolitan area, and almost 5,000 people are involved in shoreside processing, most of it seasonal.

Commercial fishing remains Alaska’s largest statewide employer, according to the Alaska Department of Labor, but most of its employees are seasonal workers from elsewhere.

“Alaska’s seafood processing industry employed 18,248 nonresidents in 2017, representing 74.6 percent of the processing workforce,” the agency reported last year. “The seafood processing industry has had the highest numbers and percentages of nonresidents every year since we began producing these statistics.”

Many of the workers are foreigners recruited from Mexico or Eastern Europe, often on student visas, and in recent years the processing industry has had trouble finding enough to fill the jobs.

“Brian Gannon has been recruiting workers to Alaska’s seafood processing plants for over 20 years,” Sarah Gibson reported in The New Food Economy after the 2017 Alaska season. “He used to get a lot of college students from the U.S. and abroad, but now he says a job fair in a big city can yield just a handful of workers. He blames increased government labor restrictions and reduced appetite for manual labor among young people.”

Former Democrat Presidential candidate Hilary Clinton was once one of those young people. In 1969, she worked briefly in a fish processing plant in Valdez before being fired for apparently complaining about the quality of the salmon being canned. 

Fish processing jobs are tough. Alaska’s so-called “slime line” is notorious for the long hours people spend on their feet in the wet and cold, heading and gutting fish. Gannon predicted many of the jobs will be gone soon.

“When asked how the fishery would survive without an influx of H2-B (student visa) workers,” Gibson wrote, “Gannon said he guessed processors would stop looking for 4,000 workers and ‘spend $50 million at the plant to use robotics.'”

Robotics have already invaded processing in Alaska, and they are in widespread use elsewhere. Norway’s Cermaq AS is set to go all in on a fully automated “Smart Factory” for salmon processing this year. 

An 86,000-square-foot plant at Storskjæret on the island of Vandve just above the Arctic Circle will take the processing of Cermaq’s farmed salmon out of the hands of people and put it under the control of machines.

Alaska economist Gunnar Knapp, a global authority on the salmon industry, has warned that the 49th state cannot ignore what is happening with commercial salmon processing in the rest the world. The industry needs to adapt to changing market conditions or suffer the consequences in lost value, he told a fisheries conference in Seattle last year.

Changing times

The Southwick report indicating that growth in the sport fishing business in the Inlet has stalled while the commercial fishing industry is struggling comes at an important point in state history.

The BOF is scheduled to again take up Inlet salmon management issues in March. The last time they did that back in 2017, a Board chaired by commercial fisherman John Jensen from Petersburg ignored pleas from Mat-Su businesses wanting expanded restrictions on commercial gillnetters in the Inlet to allow more salmon to escape to creeks and rivers in the Susitna River drainage.

Valley residents complained commercial salmon catches in the Inlet are choking off the Mat-Su tourism economy. The latest report would appear to add some substance to those claims. The Board ignored them in 2017.

Instead of strengthening commercial restrictions put in place while Johnstone was Board chairman, the Board relaxed them with Jensen observing that he wanted to “allocate some more fish to the commercial fishermen who, in my opinion, gave them up.”

About 1,100 active permit holders annually fish the Inlet, and harvest 75 to 90 percent of the salmon. The percentage shifts annually almost wholly dependent on returns of sockeye salmon to the Kenai and Kasilof rivers of the Kenai Peninsula.

The commercial fisheries are vital to the management of those stocks. There is considerable scientific debate as to how many sockeye are “too many” for the Kenai drainage to support, but there is a general agreement that allowing more than 2 million per year into the river would be a mistake.

Total sockeye returns to the Kenai have in the past sometimes topped 10 million. The most popular sockeye system in the state, the Kenai is also among the most productive for its size.

Without the Inlet’s commercial fishery, the Kenai would end up annually overrun with sockeye.

The 20-year average return to the river is 3.6 million, according to the Alaska Department of Fish and Game, with 3.8 million expected this year after a disastrous 2018. 

Approximately 4.6 million sockeye, about 2.5 million of those Kenai fish, were forecast to return to the Inlet last year, but they failed to show.  The Kenai return fell about 1.1 million short, forcing stiff restrictions on the commercial fishery and closures of sport and personal-use dipnet fisheries.

Fisheries biologists aren’t really sure what happened other than that about 90 percent of the four-year-old sockeye and 50 percent of the five-year-old sockeye that were expected to return didn’t.

Commercial fishermen took the big hit, but all fishermen suffered. The harvest in the dipnet fishery – a food-security fishery open only to Alaska residents – fell to 165,000 sockeye, less than half the long-term average. The catch was the lowest in more than a decade.

Not since 2006 when the state closed the dipnet fishery on July 22 with in-river returns lagging far behind schedule had harvests fallen so low. The sport fishery was also closed on July 25 of that year just before the sockeye started to swarm the Kenai.

The new Southwick report would indicate that Inlet-area sport fisheries, given their big economic bang, are about the last fisheries the state should consider shutting down.

The company calculated that in 2017 non-resident anglers brought $358 million north to spend in the Inlet area. Residents spent about the same, according to the study, but ended up contributing even more to the Alaska economy by buying huge volumes of gear.

“Although residents of Alaska spent roughly the same as non-residents ($358.5 million
compared to $358.0 million),” the report says, “it was the resident spending that made a larger economic contribution (more jobs and income). This was the result of differences in the kinds of expenditures made by residents and non-residents. Resident anglers spent more of their money on equipment while non-residents spent most of their money on trip-related purchases and pre-arranged packages that include services such as guides, lodging and meals produced by the region’s businesses.”

The study makes it clear why Cabela’s, Bass Pro and Sportsman’s Warehouse opened stores in the Anchorage metro area, why most of the big-box department stores in the region have sizable outdoor gear sections, and why even the Anchorage Costco warehouses seasonally sells fishing gear.

“More than one third ($255.8 million) of all sportfishing related spending in the Cook Inlet region is associated with equipment,” the study says. “While the trip-related spending reflects anglers who reported fishing in the region, equipment spending includes anglers who fished outside of the region as well. Given that this area contains a large portion of Alaska’s businesses, many anglers likely make trips to the region to purchase equipment. As a result, the equipment spending reflects purchases made within the region which may or may not have been used to fish within the region.”

The study also found anglers investing $242 million in real estate with non-residents preferring to purchase existing, Alaska fishing retreats to the tune of $116 million while Alaskans took to building them with a $69 million investment in construction on top of $34 million in land and building purchases.

Anglers generated $95 million in tax revenue but most of it – $63 million – went to the federal government which imposes an excise tax on fishing gear. State and local taxes in the form of property, sales, gas and other taxes amounted to only $32 million.

The state does get part of the federal tax back through revenue sharing associated with the Dingell-Johnson (D-J) Act. The Sport Fish Division of Fish and Game is fully funded by D-J revenue matched by state license fees. The state was awarded about $18 million in D-J funds last year, according to the Department of the Interior. 

The study is the first detailed examination of the sport fishing business in Alaska since Fish and Game commissioned the 2007 study that concluded anglers spent $1.4 billion statewide with $990 million spent in Southcentral.

The state study, however, expanded the Southcentral region to span an area stretching from the Canadian border to the tip of the Aleutian Islands that included much of Bristol Bay and the Alaska Peninsula – two areas with some high-end fishing lodges – plus Kodiak Island.

That study did include Cook Inlet as a subregion and broke out total economic values somewhat differently, but reported “spending by anglers within the Cook Inlet subregion contributed $279 million of income and 8,056 jobs to the larger Southcentral region
economy.”

That would compare to the $271.4 million in income and 6,300 jobs in the latest report. That numbers reflect a loss of $8.6 million and 1,756 jobs.

The state has not conducted a statewide economic survey in more than a decade because of fears of pushback from commercial fishing interests which have opposed economics-driven BOF decisions on salmon allocation.