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and 1995 single-family housing starts increased by 17% over 1994 " Sitka's unemployment rate 

 is the second-lowest in the region, below the state averaged' Sales taxes remain strong, and 

 Sitka's Finance Director recently acknowledged that predictions of disaster did not materialize.-'^ 

 While KPC's Ketchikan mills provide around one-third more jobs than the Sitka pulp mill, 

 Ketchikan's total economy is around twice the size of Sitka's with its pulp mill ''° 



5 Delegation/L-P Claim: No other timber industry is possible, because 30% of the trees are 

 "dead or dying," and suitable only for pulp Therefore a pulp mill is absolutely necessary 

 Moreover, transportation costs will make it impossible for a secondary-manufacturing industry to 

 develop in Southeast Alaska 



The Facts: The logical conclusion of this argument is that if KPC closes, no one will 

 ever cut another Tongass tree on a commercial basis. This conclusion is not believable, and 

 is belied by recent developments. Transition to a high value added, secondary 

 manufacturing timer industry based on the free market is both possible and desirable. 



(Please see SEACC's original written comments. May 28 and 29, 1996 at 10-12, and our 

 Supplementary Testimony at 7, where we discuss a value-added timber industry for Southeast 

 Alaska ) 



Please see Attachment 4. Far from being impossible, an established Southeast Alaska sawmill 

 owner and operator has just proposed a new remanufacturing plant and wood drying operation 

 for Prince of Wales Island. This kind of an operation is an important facet of a secondary- 

 manufacturing industry This is the kind of operation we'd like to see in our region's future. 



The Alaska Legislature passed, and Governor Knowles just signed, a bill to promote high value- 

 added manufacturing in Alaska The provisions of this bill were weakened by the legislature, 

 leaving the Department of Natural Resources with increased responsibility to recognize regional 

 differences in Alaska's forests and make sure that the bill accomplishes its stated purposes while 

 conserving important Alaskan resources Nonetheless, the Governor and the legislature have 

 embraced the importance of secondary manufacturing in the future Alaska timber industry 



Studies have shown that components of a secondary manufacturing industry can work 

 from Southeast Alaska. 



• Feasibility Analysis of Alternative Wood-Based Industries for the City and Borough of Sitka. 

 Alaska, prepared by International Resources Unlimited, Inc for the Forest Service and the 

 City and Borough of Sitka (draft 12-13-95) showed that a sawmill, a dry-kiln operation, and a 

 planer mill could be built from scratch and operated profitably in Southeast Alaska, both 

 separately and as an integrated operation Such a mill, while not necessarily producing 

 secondary products in and of itself, produces the raw material-kiln-dried, surfaced lumber— 



'^Alaska Department of Labor. Alaska Economic Trends . May 1996 

 ■•'Alaska Department of Labor statistics 



^'May 10, 1996 radio news stor>. KCAW. Sitka {transcript available) 

 ■""Measured bv gross business sales (other measures reveal a similar relationship). 



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