Alaska Business March 2022 by Alaska Business

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CONTENTS MARCH 2022 | VOLUME 38 | NUMBER 3 | AKBIZMAG.COM

FE AT UR E S 10 INSURANCE

Compensating for COVID Pandemic trends in workers’ comp By Tracy Barbour

16 TELECOM & TECH The Need for Speed

Internet service providers plan to close the digital divide in five to ten years By Rachael Kvapil

22 ALASKA NATIVE Caring for Tribes

Distributing COVID-19 relief funds By Richard Perry

30 FISHERIES

Hooked on Data How numbers guide Alaska’s commercial fisheries By Isaac Stone Simonelli

92 PROFESSIONAL SERVICES Outside Counsel Investigations Why it’s important, what to expect By Bryan Schroder

96 OIL & GAS Shell’s Game

Making the best of a bad hand By Scott Rhode

102 MINING Zeal for Zinc

Red Dog Mine feeds the hunger for a critical metal

Jeff Schultz | SchultzPhoto.com

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By Isaac Stone Simonelli

108 RETAIL

36 TOURISM

Where Did the Cars Go?

Reinventing the Last Great Race

Vehicle shortages hit buyers, sellers, renters, and tourism agencies

Celebrating 50 runs in 2022, the Iditarod continues to break new trail

By Nancy Erickson

By Brad Joyal

QUICK READS 8 FROM THE EDITOR

114 I NSIDE ALASKA BUSINESS

118 ALASKA TRENDS

114 ECONOMIC INDICATORS

116 RIGHT MOVES

120 OFF THE CUFF

4 | March 2022

Alaska Business www.akbizmag.com

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CONTENTS MARCH 2022 | VOLUME 38 | NUMBER 3 | AKBIZMAG.COM

SPECIAL SECTION: CONSTRUCTION 50 ENERGY, SANITATION, ROADS & MORE

80 CORDOVA SOUTH HARBOR

Long-awaited project finally underway

Preparing to leverage Infrastructure Investment and Jobs Act funds

By Vanessa Orr

By Rindi White

58 ALTERNATE DELIVERY CONTRACTING Beyond design/bid/build By Ryan Watterson

74 SUPPLY CHAIN SQUEEZE Builders scrounge for materials By Isaac Stone Simonelli

88 BACK ON SITE IN 2022

AGC of Alaska celebrates excellence in construction By Scott Rhode

66 TANK FARM FACILITIES

Crowley and Colville improve and expand fuel storage

Judy Patrick

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By Sarah Ward

ABOUT THE COVER This year will be the 50th running of the iconic Iditarod, and while it’s steeped in history and culture, it also has a bright and exciting future. Iditarod CEO Rob Urbach knows where the race has been—and has an innovative vision for where it can go far, far beyond Alaska’s snowy trails. For 2022, the Iditarod’s furry athletes, dedicated mushers, and invested sponsors are all participating in a race that’s about to see a major turning point, which we cover in “Reinventing the Last Great Race.” Photo by Jeremy Cubas Alaska Business (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc. 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577; Telephone: (907) 276-4373. © 2022 Alaska Business Publishing Co. All rights reserved. No part of this publication June be reproduced without written permission from the publisher. Alaska Business accepts no responsibility for unsolicited materials; they will not be returned unless accompanied by a stamped, self addressed envelope. One-year subscription is $39.95 and includes twelve issues (print + digital) and the annual Power List. Single issues of the Power List are $15 each. Single issues of Alaska Business are $4.99 each; $5.99 for the July & October issues. Send subscription orders and address changes to circulation@akbizmag.com. To order back issues ($9.99 each including postage) visit simplecirc.com/back_issues/alaska-business.

6 | March 2022

Alaska Business www.akbizmag.com

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FROM THE EDITOR

very year the Alaska Railroad creates a commemorative print, and for 2023 it’s asking artists to create works that “reflect the Alaska Railroad’s centennial.” (For any artists interested, submissions are due March 31.) Next year the Alaska Railroad will be celebrating 100 years since its completion: it was in 1923 that crews completed construction of the 700-foot Mears Memorial Bridge across the Tanana River at Nenana, the final link in the railroad (and at the time, the second longest single-span steel railroad bridge in the country). Warren G. Harding drove the golden spike that completed the railroad on July 15, 1923 on the north side of that bridge. Today the Alaska Railroad is a full-service passenger and freight railroad that services ports and communities from the Gulf of Alaska to Fairbanks, annually carrying hundreds of thousands of passengers and millions of tons of freight over 656 miles of track using 737 freight cars, 45 passenger cars, and 51 locomotives. It paid out $70.5 million in benefits and wages in 2020 and in 2022 has more than 700 employees. The last weld for the Trans Alaska Pipeline System was completed in May of 1977, so that iconic construction project will be celebrating its 50th anniversary in just a few years. The pipeline project required approximately 70,000 workers to complete construction between 1969 and 1977 and was funded not by federal dollars but by private companies: ARCO, BP, and Humble Oil. Today Alyeska Pipeline Service Company employs approximately 700 people working primarily out of Anchorage, Fairbanks, and Valdez to operate and maintain the pipeline, which over the course of its operations has moved more than 18 billion barrels of oil. The Port of Alaska, then Port of Anchorage, began operations in 1961 (celebrating sixty years in 2021), moving more than 38,000 tons of cargo in its first year. Construction started on the port in 1958 with an original projected cost of just more than $8 million (secured by Anchorage through the sale of general obligation and revenue bonds to New York financing firm Ira Haupt and Co.) and promised “great savings” of money and time for Alaskans for consumer goods and other imports. After the Good Friday earthquake in 1964, the Port of Alaska was the only port in Southcentral able to immediately continue operations, setting it up as Alaska’s main shipping hub. Today the port has 3,500 feet of dock frontage, three general cargo terminals, two petroleum terminals, two floating small-vessel docks, and 59,200 tons of bulk cement and 3.1 million barrels of liquid fuel storage, as well as connections to the Alaska Railroad. The bulk of all cargo entering Alaska comes through the port. They’re big projects, but they’re just three projects: these and thousands of others have built Alaska’s economy since before it was a state, in some cases literally paving the way for the state’s major (and minor, and mid-sized) industries. In this months’ Construction Special Section, we’re excited to highlight an industry that is setting up Alaska for the decades to come. Enjoy.

VOLUME 38, #3 EDITORIAL STAFF Managing Editor Tasha Anderson 907-257-2907 tanderson@akbizmag.com

Editor/Staff Writer Scott Rhode 907-257-2902 srhode@akbizmag.com

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Tasha Anderson Managing Editor, Alaska Business

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8 | March 2022

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INSUR ANCE

Compensating for COVID Pandemic trends in workers’ comp By Tracy Barbour

orkers' compensation insurance is designed to provide wage replacement and medical benefits to employees who become injured or ill “arising out of and in the course of employment.” In exchange, employees relinquish their right to sue their employer for the act— whether intentional or accidental—that caused them harm. This trade-off, known as the compensation bargain, helps cover the employees’ medical expenses and lost wages while providing the employer legal protection against litigation for additional damages. The workers’ comp system, which also includes disability payments to injured workers and death benefit payments to families, is seeing the initial impact of COVID-19 as the pandemic enters its third year. The lingering physical and mental effects have caused some employees to delay returning to work, modify their duties, or work remotely. Many employers are adjusting outside the workers’ comp system to accommodate employees’ health issues, which can include fatigue, pain, brain fog, anxiety, and depression. While the pandemic is starting to have a perceptible effect on the workers’ comp industry, its broad impact may not be evident for years to come.

10 | March 2022

Alaska Business www.akbizmag.com

Compensability Issues A major question around COVID-19 and workers’ comp involves whether contracting the virus is compensable or eligible for repayment under state workers’ comp acts. The answer is maybe. Workers’ comp laws provide compensation for occupational diseases that arise out of and in the course of employment, but many state statutes exclude “ordinary diseases of life” such as the common cold or flu, according to the National Council on Compensation Insurance (NCCI), a nonprofit data collection bureau that specializes in workers’ comp. But some occupational groups like healthcare workers arguably have a higher probability for exposure and, thus, a better chance at making a successful workers’ comp claim. The compensability of COVID-19 is being tested in litigation nationwide. For example, NCCI’s November 2021 Court Case update indicates that the Superior Court of Delaware ruled in the case of Ingino-Cacchioli v. Infinity Consulting Sols that a surviving spouse of an employee who contracted COVID-19 while at work needs to file a workers’ comp claim before filing a Johanna Kalal tort suit against Associate Claims Executive Parker, Smith & Feek the employer. And in the case of See’s Candies, Inc. et al. v. Superior Court of Los Angeles County, California’s Second Appellate District court is exploring whether the workers’ comp exclusive remedy would prevent a lawsuit from a See’s Candies employee who alleges that the candy maker’s failure to implement sufficient safety protocols caused her to contract the virus, leading to her husband’s eventual death from COVID-19. From a practical standpoint, if someone alleges that they caught COVID-19 at work, they have a right to make a claim, says Johanna Kalal, associate claims executive at the Anchorage office of Parker, Smith & Feek, an insurance and risk management brokerage firm. “And if they have a high potential for exposure to COVID at work, their claim may be compensable,” she says. www.akbizmag.com

“I strongly encourage my clients to stay in contact with their insurance agents and keep up with the OSHA guidelines… Even though we are two-plus years into this, this is all new landscape to everybody.” Colby Swenor, Strategy Consultant, RISQ Consulting

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“I think most employers will probably default to the side of not implementing [an employee vaccine mandate] because they might have concerns if people get sick from it. The vaccine producers have immunity from lawsuits, so the only person you can sue is your employer.” Christopher Pobieglo, President Business Insurance Associates

Issues involving post-acute COVID-19 syndrome, also known as long-haul COVID, can add more complexity to workers’ comp cases. This condition can cause weeks or months of residual brain fog, respiratory symptoms, and other problems. “In those rare cases where people are having the longhaul symptoms, I think we are still discovering what those issues can be,” says Kalal. “Specifically in Alaska, if it’s directly attributed to the compensable diagnosis, it will be covered, but all of that will be subject to a medical expert’s opinion.” Many employers are also considering COVID-related mental health issues like stress, anxiety, and depression, but whether the issue involves workers’ comp or not, Kalal says mental health is a major topic for companies these days. “I think employers are considering delaying the return to work or providing additional time off. And a lot of employers have an employee assistance program that helps with mental health issues, whether it’s related to workers’ comp or not,” she says. Kalal adds, “I think that with the pandemic, employers have realized they

can make a lot of accommodations, such as allowing employees to work from home, which gives them time to focus on their mental wellbeing.” Having a workers’ comp claim due to contracting COVID-19 is one situation, but employees could also claim emotional trauma or stress from dealing with the disease as part of their employment, says Christopher Pobieglo, president of Business Insurance Associates. Historically, workers’ comp has paid medical expenses and lost time but not addressed emotional and mental stress. However, a prison guard previously won a workers’ comp case related to emotional stress, making this scenario within the realm of possibility for employees. “If they feel like they have emotional trauma, they can take it to court; whether they prevail is another story,” Pobieglo says.

Alternatives for Small Business Pobieglo has seen few COVID-19related workers’ comp claims at his Anchorage commercial insurance agency. This is probably because most small business owners with employees who have caught COVID-19

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are keeping their people on the payroll during their illness. That’s what Business Insurance Associates is doing. If employees are out sick with COVID-19, the company allows them to work remotely or compensates them for the time they are absent. “It’s not worth going through a workers’ comp Christopher Pobieglo claim to try to President Business Insurance Associates address that,” Pobieglo says. “I think small business owners are absorbing the cost if their workers get COVID.” In addition, there remains a significant amount of uncertainty around dealing with the pandemic, which may be holding down claims. Pobieglo explains: “There’s still a lot of people feeling their way around. They may not know if they can turn in a workers’ comp claim.” While many businesses are implementing mitigation practices to try to restrain COVID-19 infections, this could change if attorneys start lining up for litigations. “We’re still relatively early

in this kind of thing from an insurance perspective; insurance is kind of reactionary,” Pobieglo says. Many states, including Alaska, came out very early with legislation that established that first responders and front-line workers would be eligible for workers’ comp if they contracted COVID-19, Pobieglo says. “They kind of took that right off the table,” he says. “With small, private-sector businesses, there’s no law of equivalence for them.” At RISQ Consulting in Anchorage, Strategy Consultant Colby Swenor has one client with an active COVID-19related claim. Like his colleagues, he feels the small amount of activity in this area reflects the complexities and ambiguities of the evolving situation. “We’re just getting to the beginning of this,” says Swenor. “I think the industry and workers’ comp boards are trying to wrap their brains around how COVID19-related claims are fitting into the workers’ comp arena.” In terms of the impact on sectors, more workers’ comp claims are showing up in industries with elevated levels of exposure to the virus. Some

of the most at-risk employees have been medical providers and first responders. But factory, retail, and transportation workers—and anyone else who deals with the general public for a significant amount of time—face a higher risk of catching COVID-19. “I’ve seen an uptick in some sanitation workers and housekeepers, with the increased workload from sanitizing surfaces,” Kalal says. “The increased work can result in higher possibility of injury, whether that be a back injury or an over-use injury like carpal tunnel [syndrome].” In addition, remote work is adding another facet to workers’ comp issues. The general consensus is that if employees are performing their job at home or anywhere else and suffer an injury, more than likely it will be covered. “However, everything has to be investigated to determine if it’s in the course and scope of their employment,” Kalal says. Pobieglo points out that employers who have a remote work model may be able to reduce their workers’ comp insurance cost by using the appropriate job class code for telecommuting

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Alaska Business

| 13 March 2022 1/26/2022 11:16:55 AM

personnel. This occupational classification code can result in a cheaper rate than what they would have otherwise used. “If people have remote workers, they should be talking to their broker to make sure that is accounted for,” he says.

Employer Vaccination Obligations What responsibility do employers have if they require employees to take the COVID-19 vaccine and those individuals suffer adverse reactions that affect their ability to work? Of course, employers have the obligation to support their employees, says Swenor, whose firm provides specialized risk management, customized insurance programs, and comprehensive employer services for various industries, businesses, and individuals. But the pandemic is an ever-changing situation. And with the Occupational Safety and Health Administration (OSHA) having a shifting position on how vaccines are to be handled, it leads to a lot of questions. “I strongly encourage my clients to stay in contact with their insurance agents and keep up with the OSHA guidelines,” he says. “Even though we are two-plus years into this, this is all new landscape to everybody.” On January 13, the US Supreme Court blocked the Biden administration from enforcing OSHA’s vaccine-ortesting requirement for employers with 100 or more employees. Justices did allow a more limited mandate for healthcare workers at facilities receiving federal money through programs like Medicare and Medicaid. Otherwise, it’s up to states and individual companies to decide if they will require workers to get vaccinated. Pobieglo suggests that employers take a cautious approach to demanding COVID-19 vaccinations, as he expects litigation to ensue from the issue. “It’s a legitimate concern when you implement a policy on anything, but with something that’s a lightning rod like this is, there’s even more concern,” Pobieglo says. “I think most employers will probably default to the side of not implementing it because they might have concerns if people get sick from it. The vaccine producers have immunity from 14 | March 2022

lawsuits, so the only person you can sue is your employer.” Some states, including Alaska, have enacted shield laws to try to mitigate potential legal action against business owners. So far, many of the lawsuits that were predicted have not materialized, Pobieglo says. “I think there are less than 200 civil suits filed nationwide and just fifty by non-employees,” he says. “The only thing you can do is to have a clear and concise policy that is distributed consistently. Employers should talk to their HR person and legal profession and get some feedback from them on this issue.”

Future Implications How the pandemic affects workers’ comp in the future remains to be seen. For instance, will any adjustments be made to compensate for the atypical and unavoidable nature of the pandemic? Will there be allowances concerning the experience modification rating (EMR) or losses incurred by industries with a high exposure to COVID-19? That hasn’t happened so far, but it’s something that would be determined by NCCI, Swenor says. “My crystal ball and hope is that any adjustments that are made really do reflect how dealing with a pandemic is unprecedented,” Colby Swenor Strategy Consultant he says. “I would RISQ Consulting hope they steer on the side of caution for the small business owner.” He continues: “Policy changes have typically had the small business owner at the tip of the sword, meaning to protect small business in America first. I think that if there are EMR adjustments due to COVID related cases, I would hope they start from the tip of the sword.” Policy changes appear to be in the works by NCCI, which manages the classification codes assigned to various kinds of employment and recommends workers' comp rates. NCCI also uses its members’ loss and payroll data to compute the experience modification factors used in most states to adjust employers'

workers comp insurance premiums. NCCI, according to its website, is focusing on three main COVID-related changes: • Excluding pandemic-related claims from experience rating: Catastrophes like earthquakes, terrorism, and pandemics have a non-ratable provision, so claims arising from those events are excluded from experience rating. • Ignoring COVID-19 data in state loss cost and rate filings: For the 2021/2022 filing season, COVID-19 data has been removed from the data underlying the state loss cost and rate filings because the observed frequency and severity of direct compensable COVID-19 claims are not expected to be predictive of loss experience in the filing effective periods. • Vaccination-related code changes for claims: NCCI is preparing a national filing to align with the Workers Compensation Insurance Organizations’ updates to the Nature of Injury and Cause of Injury codes. The expanded definition to Cause of Injury Code 82 will also be proposed to extend to vaccinations. In addition, NCCI offers various tools to help employers explore the pandemic’s impact on workers’ comp issues. For example, its COVID-19 Hypothetical Scenarios Tool sheds light on the potential cost impact on workers’ comp losses due to COVID-19, including the potential for permanent disability outcomes. In terms of navigating workers’ comp issues related to COVID-19, most employers are doing everything they can and are following local and Centers for Disease Control and Prevention guidelines for protecting employees, Kalal says. Aside from that, companies need to be very flexible and figure out how to do business in a safe way and continue to adjust to the world they’re currently in. “We should continue to take the pandemic seriously and be mindful of our own health and the health of others,” she says. “I’m sure we all want this to be over, but for now, unfortunately, there’s still a pandemic going on. We need to remind ourselves that it doesn’t help to become complacent or careless.”

Alaska Business www.akbizmag.com

Chris Arend | Alamy Stock Photo

TELECOM & TECH

The Need V for Speed Internet service providers plan to close the digital divide in five to ten years By Rachael Kvapil

16 | March 2022

ideo calling, telehealth, telework, and distance learning used to be science fiction. The onset of the COVID-19 pandemic made those fantasies an everyday reality, where people live-stream everything from business meetings and conferences to medical appointments, classroom sessions, and family gatherings. People were also uploading files they would typically present in-person to colleagues, teachers, or doctors. Highspeed internet eased the disruption of the pandemic by keeping some sense of continuity, yet people without fast, reliable connectivity quickly found themselves at a disadvantage. Though many have returned to physical offices and classrooms, telecommunication companies in Alaska continue to see a growing demand for improved services.

High-Speed Internet in Alaska To define high-speed internet, it’s necessary to understand how speed is measured. Megabits per second (Mbps) is a rate of transfer equivalent to 1 million bits per second. The higher the Mbps, the faster the internet. Also, rates differ between download, or pulling data toward the user, and uploads, sending data away. To be considered “high speed,” connections must have a download speed higher than the 25 Mbps standard set by the Federal Communications Commission (FCC) and at least a 3 Mbps upload speed. Usually, speeds range anywhere from 100 to 1,000 Mbps (1 gigabit per second, or 1 gig). Alaska Business www.akbizmag.com

For Alaskans, GCI and Alaska Communications are the two leading companies that have delivered internet for the past twenty-three years. Though both GCI and Alaska Communications provided communications services prior to the advent of the World Wide Web in the mid-‘90s, they expanded their portfolios in 1997 and 2000, respectively. Each company approaches internet delivery in a slightly different manner. For instance, GCI operates Alaska’s largest network in terms of actual network miles, and more than 97 percent of Alaskans live within GCI’s network footprint. Alaska Communications provides advanced broadband and managed IT services on a statewide data network via a diverse undersea fiber optic system connecting Alaska to the contiguous United States. Another player, Quintillion, began to provide broadband services in 2017 to wholesale customers through a combination of subsea and terrestrial fiber optic cable networks in the Arctic and a high-latitude data acquisition (HiLDA) site in Utqiaġvik, commonly known as a polar orbit station. All three companies agree that the pandemic accelerated the demand for faster networks. Business and residential customers required high-speed access to keep up with emerging internet applications and services, says Matt Peterson, Quintillion’s chief technology officer, and Mac McHale, Quintillion’s chief revenue officer. “The demand for fiber optic capability goes up as traditional technologies cannot efficiently transport large amounts of streaming video and other content,” Peterson and McHale say. Jim Gutcher, vice president of strategy and product management for Alaska Communications, says before the pandemic, the average consumer used the internet for email, web browsing, and streaming—activities that primarily relied on download speeds. However, consumer behavior shifted dramatically at the onset of the pandemic as schools and workplaces went remote. “The ability to share bandwidth with family members and fast upload speeds became more important than ever,” says Gutcher. “A fast upload speed www.akbizmag.com

“Our work will never be done… Our networks will never be complete. There will always be improvements to be made, fiber to be laid, towers to be built, and new technologies to implement.” Lori Davey, Vice President of Business Sales, GCI

Alaska Business

March 2022 | 17

“The ability to share bandwidth with family members and fast upload speeds became more important than ever…A fast upload speed is essential for activities like video conferencing and remote schooling.” Jim Gutcher Vice President of Strategy and Product Management ACS

18 | March 2022

is essential for activities like video conferencing and remote schooling.”

Alaska vs. the Lower 48 Even in urban settings, Alaskans understand remote living. In a state with an average of one person per square mile, residents learned long ago how to use the internet for collaborative work, distance education, and communication with health specialists. This is especially true in rural Alaska, where frequent travel to the nearest population center is time and cost prohibitive. “It’s a reliance that much of the Lower 48 just discovered during the COVID-19 pandemic,” says Lori Davey, vice president of GCI business sales. “In Alaska, we do so out of necessity, and we’ve done it for decades. Connectivity makes it possible.” How does Alaska’s connectivity compare to the Lower 48? The answer varies between providers. GCI says Alaskans have access to some of the highest internet speeds in the nation, with 80 percent having access to 2 gig (2,000 Mbps) internet speeds, twice as fast as the Lower 48. Quintillion places Alaska in the bottom 5 percent, citing a digital divide that has deepened in rural communities during the pandemic. Alaska Communications echoes a problem with a digital divide, where there is less coverage and slower speeds compared to the Lower 48. Providing broadband in Alaska requires overcoming harsh climates, expansive terrain, low population density, limited construction and operation capabilities, and high power, transportation, and fuel costs. Gutcher says connecting rural areas requires heavy investment in the middle mile and last mile. The middle mile, or backhaul, is the segment of the network linking its core backbone to a local area. The last mile refers to the network components that deliver connectivity within a local area to the customer. “Bridging the digital divide requires long-term investment, including investing in accessible and affordable middle-mile infrastructure,” says Gutcher. Even once the infrastructure is in place, Davey says different challenges

are associated with maintenance. She says it’s not unusual for a technician to travel a whole day to a remote location to conduct repairs. GCI techs often rely on snowmachines or helicopters, depending on the tower’s location, and have go-kits with supplies if they need to stay overnight. “Our techs must be incredibly prepared,” says Davey. “If they forget a tool or key equipment, it could be days before they can return to complete the job.” Davey adds that delivering connectivity in Alaska requires an extensive toolkit, a high degree of commitment, and innovation to overcome the challenges of building and maintaining telecommunications infrastructure in the state. It also takes a combination of technologies used by multiple providers, including fiber, microwave, and satellite.

The Next Five to Ten years Shoring up the digital divide is the primary focus for Alaska Communications, GCI, and Quintillion, as is providing better reliability and speeds statewide. Peterson and McHale say local access technologies will continue to increase bandwidth, including 5G wireless, multi-gig cable, satellite internet services, and fiber to the home. GCI will continue its push to provide 2 gig internet speeds outside urban areas. In 2021, the company increased speed in Nome and Kotzebue and expects to expand as it builds out fiber-optic infrastructure in the Aleutians and elsewhere in the coming years. Davey adds that GCI is on track to provide 10 gig internet speeds to customers within the next five years. Alaska Communications, too, has plans to increase speeds statewide by upgrading urban locations via AKXinternet. Likewise, it will provide service in new rural locations and underserved areas through the FCC’s CAF II program. Gutcher says the deployment of low Earth orbit (LEO) satellites, such as the OneWeb constellation, will transform business connectivity and services in rural Alaska. How people work, learn, and play in a post-pandemic world will most likely include increased online activity. Gutcher finds that

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20 | March 2022

consumers and businesses rely more and more on digital infrastructure, which drives improvements among service providers. Likewise, he says it also drives companies like Alaska Communications to invest in new tools and solutions, such as LEO satellites and wireless technologies. With technology evolving faster than ever, Davey says it’s crucial for Alaska to remain at the cutting edge of that technological wave. “Our work will never be done,” says Davey. “Our networks will never be complete. There will always be improvements to be made, fiber to be laid, towers to be built, and new technologies to implement.” Prioritizing the parts of the state and the methods used to increase connectivity depends on several factors. Gutcher says Alaska Communications will look to expand where there’s a need. In addition to identifying underserved areas, the cost of providing and operating service and potential funding sources will influence their expansion. Peterson and McHale say Quintillion will examine what is possible in terms of proximity to their existing network and develop partnerships with communities of interest while ensuring development makes business sense. Funding for expansion projects also comes from a variety of sources. Most GCI upgrades come from its capital. Over the past forty years, Davey says GCI has invested more than $3.5 billion in its network and facilities in Alaska. In addition to using capital funds, Alaska Communications has also taken advantage of grantfunded opportunities to connect underserved Alaskans. Most recently, Alaska Communications worked with several tribal corporations to apply for a National Telecommunications and Information Administration (NTIA) tribal broadband grant that would connect approximately 12,000 rural Alaskans in twenty-three communities along the Yukon and Kuskokwim Rivers to high-speed internet for the first time. The recent passage of the federal infrastructure bill also opens the door to new funding opportunities. How projects are funded will influence how much customers pay

for service, as will the number of subscribers across the state. Though GCI and Alaska Communications don’t publish the number of subscribers, Davey and Gutcher say the goal is to reach the most people at a competitive price point. Peterson and McHale further explain that pricing is a result of, and driven by, cost. Given the challenges of building in Alaska without government subsidies for capital and operating costs, Quintillion’s expansion into rural areas with urban-level pricing is unlikely. “With targeted and proper subsidies, expansion becomes possible, and prices will reach competitive levels,” says Peterson and McHale. Since the pandemic began, new internet service providers have started popping up around Alaska. In October 2021, Pacific Dataport announced a 2022 launch of its Aurora 4A satellite to provide better internet service to Alaska. Two months later, the Central Council of Tlingit and Haida Indian Tribes of Alaska received an exclusive license from the FCC to use a midband broadband spectrum in several Southeast Alaska communities. The tribe’s broadband network is called Tidal Service, and its mission is only to serve communities without access. There are also several smaller existing providers across the state attempting to fill holes where they exist. However, competition is a good thing among internet service providers. Gutcher says consumers and businesses in Alaska want choices, reliable solutions, and excellent customer service. Achieving this requires constant improvement, often spurred on by competition. Davey adds that competitors often end up being valuable partners. She says internet service providers are all doing their best to provide Alaskans with the highest level of connectivity. “While there’s certainly a level of competitiveness, it also requires a significant amount of collaboration to ensure Alaskans throughout the state have access,” says Davey. “We can’t do it alone.”

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Alaska Business

March 2022 | 21

A L A S K A N AT I V E

Caring for Tribes Distributing COVID-19 relief funds

CITC

By Richard Perry

laska Native Corporations (ANCs) were able to distribute more than $500 million in federal emergency funds, but they had to fight for it. The Coronavirus Aid, Relief, and Economic Security (CARES) Act earmarked $8 billion in relief funds for tribal organizations nationwide. A lawsuit filed by the Confederated Tribes of the Chehalis Reservation of Washington, the Tulalip Tribes of Washington, and the Houlton Band of Maliseet Indians of Maine claimed

22 | March 2022

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that ANCs, as for-profit entities, were not entitled to a share. Three Alaska tribes later joined the lawsuit: the Akiak Native Community, Asa’carsamiut Tribe of Mountain Village, and the Aleut Community of St. Paul Island. The six tribes argued that CARES Act funding should only go to tribal governments, further arguing that ANCs should not qualify. The lawsuit also sought a temporary restraining order to stop the funding from being allocated until eligibility questions could be resolved.

On June 25, 2021, the US Supreme Court held in Yellen v. Confederated Tribes of the Chehalis Reservation that Alaska Native regional and village corporations are eligible to receive federal CARES Act funding intended for all eligible tribes. Alaska’s Congressional delegation welcomed the ruling, saying that the court recognized what Congress had intended. The joint statement from Senators Lisa Murkowski and Dan Sullivan and Representative Don Young said, “Today, the US

Supreme Court affirmed what we knew all along—that when Congress used the definition of ‘Indian Tribe’ from the Indian Self Determination and Education Assistance Act in the CARES Act, it absolutely made Alaska Native Corporations eligible for these coronavirus relief funds.” The total amount of funds available for disbursement to ANCs was $443 million. This did not include the amount subject to the preliminary injunctions, and each ANC was provided at least $100,000.

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In June 2021 the US Supreme Court held that Alaska Native corporations were eligible to receive CARES Act funds, allowing $443 million to be disbursed to the corporations to support their regions, shareholders, and descendents. CITC

24 | March 2022

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A Multitude of Needs The response to the pandemic disrupted every aspect of life, so relief funds have been put to no end of uses. Cook Inlet Region, Inc. (CIRI) Senior Director of Corporate Affairs Ethan Tyler explains, “COVID-19 emergency funding has supported a multitude of needs in the Cook Inlet region, everything from food for families with children, domestic violence victim support, and disaster-proof technology implementation.” Tyler says each ANC determined for itself if proposed projects and organizations met the criteria and timeline of the legislation. “CIRI coordinated with a number of community partners and other ANCs to ensure the most efficient and effective use of these resources,” he says. Following a thorough grant submission and approval process that included local nonprofits and tribally designated organizations, CIRI allocated funds to one of its nonprofit affiliates, Cook Inlet Tribal Council (CITC). “There was extensive planning that went into CITC’s distribution of Treasury CARES Act Funding,” says LeeAnn Garrick, chief operating officer at CITC. “We were fortunate to receive funding from CIRI, and at each stage of the process our focus was on getting resources to where they were needed most.” CITC leadership identified the importance of maximizing the flexibility for the programs and how to best benefit participants. “The goal was to make sure the funding had a meaningful impact on our people, particularly those who have been negatively impacted by the [COVID-19] pandemic,” Garrick says. “As such, these funds have helped feed families, support victims of domestic violence, and provide assistance for things like vehicle repairs, winter clothing, and computers for school-age children. We’ve also been able to help our people with subsidized employment and support innovative projects, such as the implementation of disasterproof technology.” CITC also assisted CIRI with the needs-based distribution of CARES Act funds to the corporation’s shareholders. “The deployment of these resources included the direct assistance program, www.akbizmag.com

Alaska Business

March 2022 | 25

“It was with this in mind that CIRI distributed CARES Act funding in ways that could have long-lasting community impacts… While the deadline for spending the funds was on December 31, 2021, the community need that was a result of the pandemic will still exist well beyond that date.” Ethan Tyler Senior Director of Corporate Affairs CIRI

which distributed much-needed funds to nearly 11,000 CIRI shareholders, descendants, and their dependents impacted by the pandemic,” Garrick says. “Internally, CITC really pulled together, collaborated with our counterparts at CIRI, and found innovative ways to make sure COVID relief resources were deployed thoughtfully and in ways that had a real impact on people’s lives.” Every dollar distributed had to be accounted for, to avoid waste. “The processes for this work relied on close project management, innovative problem-solving, and a focus on the needs of our community and program participants,” Garrick says. “CITC has also diligently tracked and managed how these resources have been deployed to remain true to CARES Act intent and funding parameters. Throughout this effort, CITC has formed deeper relationships with its community partners, CIRI leaders, and integrated internal teams during the various phases of these projects.” CITC serves more than 12,000 people each year through an array of integrated programs in several service

areas that are designed to support and help individuals and families. Garrick says CARES Act funds have extended that work, supporting the Native community’s recovery efforts. According to Tyler, CIRI and CITC worked to expand suicide prevention and mental health services for clients suffering from stress, trauma, and anxiety. Although the deadline to expend the funds has passed, this work continues. CIRI also coordinated with other ANCs and Southcentral Foundation (SCF), which used CARES Act funds to expand clinics in its Behavioral Health Service programs and improve its other clinics. The COVID-19 pandemic has been identified as a leading cause for the dramatic increase in the demand for behavioral health services for adults and children. To expand the service available, SCF is opening two new behavioral health clinics in Anchorage, one for adults and another for children and families. Another CIRI affiliate, Cook Inlet Housing Authority (CIHA), used CARES Act funding to purchase a van to support the Chuda House on

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the Kenai Peninsula. Chuda House (which means Grandmother’s House) provides senior housing for those ages sixty-two and older or disabled persons. The van provides residents with transportation for shopping and medical needs. CIHA also purchased a van to help with the Protein Food Pantry program for senior housing residents. The van transports supplies to be repackaged for CIHA’s senior residents and delivered to those in need in Anchorage. Squeezing every last dollar out of the relief funds, CIRI coordinated with the Alaska Community Foundation and Kenai Peninsula Foundation to support the Kenai Peninsula Emergency Homeless Shelter. There was previously no homeless shelter or similar facility in the Kenai Peninsula to meet the homeless population’s needs, which have grown because of COVID-19.

CIRI allocated a portion of its CARES Act funds to CITC, a nonprofit affiliate that focuses on "getting resources to where they are needed most." CITC

Additional Relief Money from the CARES act came with at least one string attached: it had to be spent quickly, before the end of 2021; however, the pandemic isn’t over. “The needs of our people did not

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CON T E N T –

Alaska Business

March 2022 | 27

“These funds have helped feed families,

CARES Act funds allocated for direct assistance to nearly 11,000 CIRI shareholders, descendants, and dependents were distributed based on need. CITC

support victims of domestic violence, and provide assistance for things like vehicle repairs, winter clothing, and computers for school-age children. We’ve also been able to help our people with subsidized employment and support innovative projects, such as the implementation of disaster-proof technology.” LeeAnn Garrick, Chief Operating Officer Cook Inlet Tribal Council

stop on December 31,” Garrick says. “CITC continues to provide assistance to families impacted by COVID-19 and stands ready to thoughtfully assist our community members should additional resources become available.” At this time, CIRI does not anticipate further assistance being offered. However, CITC and CIRI leadership are making the most of the CARES Act funds they received. “It was with this in mind that CIRI distributed CARES Act funding in ways that could have longlasting community impacts,” Tyler says. “While the deadline for spending the funds was on December 31, 2021, the community need that was a result of the pandemic will still exist well beyond that date.” 28 | March 2022

The American Rescue Plan Act (ARPA) of 2021, also called the COVID-19 Stimulus Package, was a $1.9 trillion economic stimulus bill passed by Congress and signed by President Joe Biden on March 11, 2021—approximately a year after the CARES Act was enacted. One notable difference between the two is that ARPA contains a longer spending deadline, at the end of 2024. ARPA was intended to respond to the public health and economic challenges resulting from COVID-19 but did not carry the same requirements as the CARES Act funding. ARPA allocated $1.4 billion for Alaska tribes, which could be used to further address social welfare and public safety programs with fewer

restrictions. This includes support for tribal housing, tribal government services, child welfare assistance, and delivery of potable water. Every tribe was eligible for $2.64 million, even the eighteen with fewer than 100 enrolled members. (For perspective, by membership, Alaska’s largest tribe is the Central Council of the Tlingit and Haida Indian Tribes, with more than 32,000 members.) Beyond that minimum, ARPA funds were distributed based on the tribal population and the number of employees. For smaller tribes the ARPA funds are especially significant, providing more funds than their typical annual budget and more time to spend them for whatever needs arise.

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FISHERIES

A Hooked on

Data

How numbers guide Alaska’s commercial fisheries By Isaac Stone Simonelli

30 | March 2022

laska fisheries run on data—data and the hard work of those in the Last Frontier’s seafood industry. Data inform every aspect of the management of the state’s fisheries, from policy decisions and regulations to how much fish can be caught in a season. Data also play a vital role in understanding the markets for Alaska’s various seafood products, as well as the economic impact of the sector. The Alaska Constitution entrusts the Department of Fish and Game (ADF&G) to “manage, protect, maintain, improve, and extend the fish, game, and aquatic plant resources of the state in the interest of the economy and general wellbeing of the state.” Given the weight of the responsibility, the department has developed a robust, data-driven method for managing the state’s fisheries, from sea cucumbers to salmon and everything in between. “We collect assessment information for basically all of our fisheries so that we understand the status of the population, allowing us to operate under long-term sustainable management principles,” explains Bert Lewis, a regional supervisor for the Division of Commercial Fisheries at the ADF&G. Each assessment program is designed to provide a basic count or an estimated biomass for a target species. The programs are based on an understanding of a species’ lifecycle and include what information needs be collected in the field, such as size, age, sex, and location the catch came from, Lewis says.

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How to Count Fish Fish counts and assessments are often made in the wild as well as at the processing plant, where it’s easier to collect age, sex, and length data—often referred to as “ASL” data. For salmon, ADF&G conducts escapement counts using weirs, counting towers, sonar, and even aerial surveys depending on the species and location. These projects provide an assessment of the size of the spawning for discrete salmon stocks. How often surveys of salmon are done is dramatically different depending on the species and the region. Some of the more remote parts of the state might be visited once during peak spawning, while others see weekly surveys or hourly counts at sonar and counting tower projects. Escapement goals are established target ranges for the number of salmon that need to escape from the harvest area to spawn each year, ensuring a sustainable population, explains Andrew Munro, a fisheries scientist at the ADF&G Commercial Fisheries Division. “The biologist and the managers use the data, in some cases in nearreal time, to open and close fisheries… during the season,” Munro says. “It's also very good data for helping to… manage for maximum sustained yield, on average, over the long term.” These data are collected by boots on the ground. More than 1,000 seasonal fisheries technicians gather data for the various assessment programs. In regions that produce a lot of salmon, such as Bristol Bay, technician teams can be as large as twenty-five people. The team lives in a bunkhouse and is prepared to dash out to a processing plant when a tender starts delivering fish. They then track the origin of the harvest and get data points on a subsample of the delivered fish based on a statistical method to ensure that the sample will provide an accurate representation of the catch, Lewis explains. “Timely information allows you to maximize the harvests and associated economic benefit,” Lewis says. “A lot of times, there's a very short window with access to the fish, and real-time data allows the department to identify harvestable surplus available beyond escapement needs.” www.akbizmag.com

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“Alaska set the gold standard for applications of fisheries science to guide management… We're really held up as the model because of our sustainability mandate.” Bert Lewis Regional Supervisor ADF&G Division of Commercial Fisheries

The data can also help scientists and policymakers understand long-term trends. “In Bristol Bay, we have over fifty years of consistent data collection on salmon populations. There are over 14 million lines of data of ASL information for salmon in the state— we've measured 14 million individual fish,” Lewis says. “With that dataset, we have the capacity to really track long-term trends and salmon productivity and how it relates to changing climate, ocean conditions, marine environment, [and] harvest pressure, and it helps us understand, in a much broader context, the scientific status of these individual populations and salmon in the North Pacific as a whole.” For example, these data allow the agency to identify changes in productivity or if salmon are returning smaller or younger and to determine if policies should change to adapt for it, explains Lewis.

Adding It Up While the data collected are used in near-real time for making decisions about opening and closing fisheries,

32 | March 2022

the data from all Alaska’s fisheries are also collected into an annually updated database. Harvest, escapement, and ASL data are then used to conduct analyses to establish escapement goals, which are the basis for Alaska’s sustainable salmon fisheries management. The data are also used to forecast the next season's returns, which guides management and industry planning for the coming year. The Commercial Operator's Annual Report (COAR), created by ADF&G, is the bedrock for fisheries data in the Last Frontier. The department describes the report as “an operator's accurate and complete summary of purchasing and processing activity for raw fishery resources purchased or processed in Alaska.” “The COAR data is good for both ex-vessel and first wholesale,” says Dan Lesh, a seafood industry specialist at McKinley Research Group. “The processors say what they bought from fishermen—the volume and price—and then they also say what they produced and sold out of their network.” Lesh says that COAR offers the best statewide look at Alaska fisheries. “The

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COAR data that we use for salmon is perfect,” Lesh says. “For pollock, it’s missing a lot of harvests.” The gap in the data for pollock and some of the other fisheries is due to jurisdictional lines between state waters and federal waters. Federal fisheries data is collected by NOAA (the National Oceanic and Atmospheric Administration) Fisheries, which creates and distributes its own dataset and associated analyses. By combining NOAA Fisheries data, which contains similar data points to COAR data, Lesh says it’s possible to create a more complete picture of what’s happening with Alaska’s fisheries.

Harvesting Other Streams While COAR and NOAA Fisheries data is fundamental to understanding Alaska’s fisheries, they are only two of several important datasets created that give insight into Alaska’s fishing industry. The ADF&G also collects data through a separate stream via fish tickets, which must be completed for all commercially harvested fish. There are ten types of fish ticket forms for

various Alaska fisheries, though they all ask for the same basic information on top of fishery-specific information. This includes when fishing gear was deployed and when the harvest was delivered, the type of gear used, the region the fish came from, and the amount of fish, as well as identifying information for the harvester and first purchaser. “For our fish ticket system, commercial harvests are required to be reported within twenty-four hours,” Lewis says. “So, in the commercial fisheries, we have very tight control and understanding of the harvest levels.” The fish ticket data provides a particularly important window for viewing fisheries at the regional level. Through ADF&G’s Commercial Fisheries Statistics and Data website, it’s possible to retrieve recent and historic data for various fisheries. This includes salmon, herring, groundfish, shellfish, dive fisheries, and aquatic farming, such as oysters. The Alaska Department of Revenue also compiles an important dataset for understanding Alaska’s salmon fisheries, creating yet another stream

for salmon-specific wholesale value and volumes. Unlike COAR data, this database is updated three times a year. “It gives us more timely data,” says Andy Wink, the executive director of the Bristol Bay Regional Seafood Development Association. “It tells us what actually sells, so we're able to sort of see how well that product is moving.” One of the most important datasets for understanding the economic impacts of Alaska seafood after wholesale is export data. While it is collected by the US Census Bureau, it can be downloaded from NOAA Fisheries’ Office of Science and Technology website. Export data is updated monthly, resulting in a much shorter lag than many other relevant datasets, yet it also provides enough historical data to analyze long-term trends for value and volume. “The export data is great,” Wink says. “We can see where products are going, get a sense of its value, in the sense of what product forms are going to different markets.” Wink points out that there is a heavy emphasis on using data to identify

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“Timely information allows you to maximize the harvests and associated economic benefit… A lot of times, there's a very short window with access to the fish, and real-time data allows the department to identify harvestable surplus available beyond escapement needs.” Bert Lewis Regional Supervisor ADF&G Division of Commercial Fisheries

34 | March 2022

the most valuable markets, what channels within those markets are most valuable, and what products are most in demand. “But you're not always going to have data to answer those questions,” Wink says.

Eye on the Market Datasets have their weaknesses, as well as their strengths. For an accurate analysis, people working with the data need to understand their limitations and look for ways to corroborate findings. While this cross-checking can occasionally be done with other datasets, McKinley Research Group has built its brand on combining data analysis with expert interviews. “You’re just not that smart, just looking at the data,” says Lesh. “You don’t know what you don’t know.” Without talking to experts, analysts might miss important stories being told in the data because they didn’t know what to look for, Lesh explains. Alaska’s fisheries and the markets based on them are too complex with too much variety to accurately describe without having the pulse of what’s happening in the field, beyond the numbers. There is also some data that simply aren't available. One of these data black holes for the fisheries industry is domestic consumption, says Lesh. There is production and harvest data from Alaska and federal-level export data, but very little on the domestic market. “It's interesting because, of course, it's closer to home, but it's less transparent because there's not the extra data collected,” Lesh says. “We get a sense of it by looking at production data, and then subtracting exports and saying kind of roughly this is what's staying domestically.” Production minus exports doesn’t tell the whole story of domestic consumption, though, because a significant portion of exported seafood is processed abroad and shipped back to the United States. “A lot of people want to know more about our domestic markets for seafood,” Lesh says. “It’s the most important market, probably on the whole, for our seafood and is certainly growing.”

While understanding the domestic market through what data is available is important, it’s also essential to not lose sight of what’s happening abroad. Those in the industry need to not only keep track of Alaska-specific data but also keep an eye on what’s happening with primary competitors. As an example, Wink points toward Russian-caught salmon, pollock, and crab. “It’s important to understand how their supply and demand is looking. Are there opportunities in different markets? Is there going to be more competition in different markets?” Wink says. “Most of the emphasis by the fishery management agencies is going to be placed on that scientific and biological data,” he adds, “but the dollars and cents are really important too.”

Gold Standard for Data Both Lesh and Wink applaud ADF&G for the quality of the data it collects and provides to the public, saying that the information is essential to the work they do. “Fish and Game does a way better job than most agencies in realizing that their data needs to get out to people to help make decisions rather than just kind of using it for their own purposes internally,” Lesh says. The data collected about the fisheries themselves—as opposed to the markets—is foundational to what happens in the markets as well as the policy and regulatory decisions made by state and federal governments. “Alaska set the gold standard for applications of fisheries science to guide management,” Lewis says. “We're really held up as the model because of our sustainability mandate.” Lewis says that such an example is especially powerful when comparing Alaska’s fisheries to the many overfished fisheries across the world. “We've been able to maintain our fisheries because of its anchor to science, and the anchor to science is this individual fish data that we collect and spend a lot of money and time on,” Lewis says. “If you think about those 14 million lines of data that we have on salmon, the amount of time and money spent to collect that… There’s no other example like that in the world.”

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TOURISM

Reinventing the Last Great Race Celebrating 50 runs in 2022, the Iditarod continues to break new trail By Brad Joyal

Jeff Schultz | SchultzPhoto.com

o event shines a spotlight on Alaska in front of a global audience quite like the Iditarod Trail Sled Dog Race. On March 5, the Iditarod begins its 50th running with a ceremonial start in downtown Anchorage. This year’s conclusion of the first fifty races is a milestone being celebrated with multiple layers of significance for race officials and organizers, as well as sponsors, mushers, and the canine athletes that run across some of the most hellish terrain the Last Frontier has to offer. The 50th running is a more traditional setup compared to the 49th last year, when the COVID-19 pandemic forced the race to introduce the “Iditarod Golden Trail Loop” route, which saw mushers and their teams travel to the ghost town of Flat before retracing their steps and finishing in Willow. This year’s edition of the race will travel the Northern route all the way to the “burled arch” that marks the finish line in Nome. “This race, the 50th race, is the most important race since the first race,” says Iditarod Trail

Committee CEO Rob Urbach. “It’s not only a big milestone and important to return to Nome, but we recognize we are at an important inflection point, we are in a race for relevance and revenue to support the race.” Although the Iditarod is steeped in history and tradition, Urbach also sees a bright, new heading for the Last Great Race that extends far beyond Alaska. “We have launched three key initiatives,” Urbach announces. “A streaming channel for all dog owners; an acquisition of the leading dog events company; and a crypto token, the IditaCoin.”

Gone to the DOGZ Even while preparing for the 50th running of the Iditarod, Urbach is focusing on ways to bring it to a new, growing audience. The

Rob Urbach CEO Iditarod Trail Committee

The crowd claps and cheers on Mike Williams Jr. as he leaves the start during the Ceremonial Start of the 2016 Iditarod in Willow, Alaska. Jeff Schultz | SchultzPhoto.com

Iditarod is in the process of migrating its Insider Network (a 24-hour live broadcast during the two weeks of the race) to DOGZ, a direct-to-consumer streaming video channel for dog owners. In addition to coverage of the Iditarod, DOGZ will feature tons of dogcentric content: training, genetics/breed choosing, nutrition, dog competitions, and, as Urbach states, “awesome dogs doing awesome things.” Several shows are currently under development, such as The Dog Whisperer, Ask the Vet, and Dog Heroes, as is a DOGZ Film Festival. 38 | March 2022

“We both use a lot of kennels and we’re knowledgeable on wellness and nutrition for dogs,” says Urbach. “It’s really important that we’re able to have so much content and be a thought leader in dog welfare so that if extremists say we’re torturing dogs, we can say, ‘Look at what we’re doing, we’re actually a thought leader in dog wellness and research.’ We actually think we’re the Mayo Clinic for dogs.” In order to launch the network, the Iditarod, which is a 501(c)(3) nonprofit organization, first had to create a for-

profit affiliate legal entity. That entity then raised $1.2 million in the form of a convertible note to complete an acquisition and provide working capital. With that capital, the Iditarod acquired DockDogs, a canine sports league based in Medina, Ohio. Since 2000, DockDogs has produced fun events for dogs and their handlers, including Big Air, a long jump for dogs; Speed Retrieve, an Olympic-like sprint, swim, and retrieve for dogs; and Extreme Vertical, a high jump for dogs. “DockDogs, that will provide high-value

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content, a dog owner database to drive channel subscriptions, and valuable operating leverage to DOGZ,” Urbach says. The Iditarod CEO is also intrigued by the latest cryptocurrency and nonfungible token trends sweeping the nation and says he has plans on creating an Iditarod crypto coin that will, in addition to other recent advancements and investments, help set the Iditarod up for another fifty years of success. “While the burning imperative is on executing this race,” says Urbach, “I am super excited about the future—there is a reason the windshield is much larger than the rearview mirror. We need to evolve or we will evaporate. That’s why when I wake up in the morning it’s, ‘How can we create a long-term endowment so we future proof and ensure the Iditarod will be running in fifty years?’”

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Racing Past the Pandemic Finances and activists may challenge the race’s future, but infectious disease can’t stop the Iditarod. Indeed, any student of Alaska history knows that an epidemic was the inspiration for the event. More than forty years after the 1925 sled dog relay that delivered diphtheria serum from Nenana to Nome, self-described “history buff” Dorothy G. Page suggested a similar race to mark the 1967 centennial of Alaska’s purchase from Russia. One of her early supporters, musher Joe Redington Sr., carried the idea forward, proposing a race in 1973 to follow the Iditarod National Historic Trail. That route—symbolically 1,049 miles but actually 998 along the southern branch and 975 along the northern branch used in alternating years—hasn’t been used since 2020. The 48th Iditarod was in full swing when COVID-19 arrived in Alaska, so it wasn’t until the following year that organizers implemented robust protective measures. In addition to altering the route, Urbach and Iditarod officials went to great lengths to ensure COVID-19 protocols were followed throughout the 2021 race, which saw forty-seven mushers leave Deshka Landing in Willow to begin the Golden Trail Loop’s 852-mile trail. “Last year we did 3,000 COVID tests in twelve locations,” says Urbach. “We www.akbizmag.com

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Pete Kaiser puts out straw for his dogs at the Kaltag checkpoint during the 2019 Iditarod Trail Sled Dog Race. Jeff Schultz | SchultzPhoto.com

reinvented the whole race last year before the vaccine was widely available and people started taking it. There was still a hypersensitivity. We re-engineered how we fly, eat, sleep, et cetera on the trail.” Even though the race was able to secure the tests and distribute them at its various remote checkpoints, administering the tests in frigid cold proved to be another challenge altogether. “Testing in the cold isn’t easy,” says Urbach. “We used one device that had to be kept at 59˚F, so we had coolers that were heated.” Urbach expects procedures for the 50th running of the race will likely be similar to last year. “We have a 34-page protocol document that we’re getting finalized,” says the CEO. “We’re probably going to be testing pretty similar to last year, which was essentially testing everybody every time they travel. Our stated goal is zero community transmission, and that means a boatload of testing. We have 40 | March 2022

isolation spots at every single checkpoint available to us as needed. We did it last year—we had eight positives, but most were volunteers. We had one musher test positive who was pulled from the race.” He continues, “In addition to zero community transmission, our goal is that on the trail is the safest place you could be from COVID-19, outside of total isolation.”

Pressuring Sponsors Even though the race has a better understanding of COVID-19, that doesn’t mean this year’s budget is operating smoothly. Urbach says the race has experienced a cost crunch relating to both inflation and supply chain issues that he believes are a ripple effect of the ongoing pandemic. “It cost around $5 million to put on the Iditarod. We fly more than 700 sorties. With inflation and the supply chain, it’s a lot,” says Urbach. “COVID has killed us in some ways. Straw—we can’t get straw to Alaska, so we’ve got to bring it up. There’s like a $27,000

year-over-year differential just for straw. Everything has gone up with inflation.” Traditionally, the Iditarod has been financed through sponsors, but even that is a more difficult proposition than it used to be. For decades, local and national sponsors of the Iditarod have faced criticism from detractors, most notably the Humane Society of the United States and People for the Ethical Treatment of Animals (PETA). In the early ‘90s, the Humane Society tried to encourage the Iditarod to change aspects of the race that they felt hurt the health and well-being of the participating dogs. When the Iditarod denied the request, the Humane Society contacted the race’s sponsors—including the prime sponsor, Timberland—and insisted that the New Hampshire boot maker withdraw its sponsorship. In 1994, Timberland did just that and dissolved the eight-year relationship it had with the race. The Humane Society and PETA have long tried to derail sled dog racing, pointing to the deaths and injuries

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of dogs as evidence that the animals are exploited for entertainment. The organizations have gone as far as to hold in-person protests at the Iditarod start line, even though Urbach says he has invited them to advise the Iditarod directly. “PETA has harassed our sponsors for years and years,” says Urbach. “They’ve run a campaign of total misinformation that is grossly inaccurate and highly inflammatory. They haven’t really changed their approach. I’ve asked them if they want to come to the Iditarod and do research with us and tell us how we can have better kennel standards, but they refuse.” Anchorage Chrysler Dodge Jeep Ram held the title of being the Iditarod’s primary sponsor for thirty years, donating more than $100,000 annually and a pickup truck that was awarded to the winning musher. The dealership also donated additional trucks to be raffled at race fundraisers. Then, in 2020, Fiat Chrysler Automobiles presented the dealership with an ultimatum after PETA made waves by holding protests in Detroit in the weeks leading up to the 2020 race. “They took sleds with stuffed dogs and put fake blood on them and ran them through the streets of Detroit to get on the news locally there,” says Chuck Talsky, a spokesman for the Anchorage Chrysler Dodge Jeep and Ram and the president of Husky Advertising, which spearheaded the dealership’s involvement with the Iditarod from 1990 to 2020. “They also put up billboards saying the Iditarod was killing hundreds of dogs. Unfortunately, the factory people, who at the time were actually owned by people in Europe, said, ‘Look, we don’t need this kind of grief on our city streets where our corporate offices are.’ “So, they basically said to us, ‘If you want to keep your franchise, you can’t do this race.’ If they’re not going to let us display their franchise logos nor sell us any vehicles, then all of a sudden we’re a used car lot overnight, and we didn’t want to be that.” Under pressure from its franchise leaders, the dealership was able to carry out its sponsorship opportunities for the 2020 race. “We fortunately stood our ground for that final year,” says Talsky. “You can www.akbizmag.com

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Brent Sass removes harnesses and puts jackets on his dogs at the Takotna checkpoint just before dawn during the 2013 Iditarod. Jeff Schultz | SchultzPhoto.com

imagine if you were sponsoring the Super Bowl or something and then, four days before the trophy presentation, they told you you’re done. It hit us that way.” During its thirty-year relationship as a top sponsor of The Last Great Race, Talsky had the honor of handing the giant cardboard key to the winning musher when the truck was awarded at the finish line. “What we were saying with our marketing was, ‘Drive home a winner,’” he says. RAM trucks were the dealership’s biggest seller, says Talsky, so it was a big deal when the Iditarod champions would receive their truck and then put his or her dog box on top of it. “It was a wonderful display ad, if you will, year-round,” says Talsky. “It was the spirit and adventure we were trying to convey—in other words, ‘This is extraordinary and so are our trucks and Jeeps.’” The marketing worked. Anchorage residents flocked to the dealership, particularly in March, when it ran its Iditarod Trail Sale. 42 | March 2022

“Our revenue increased considerably— I’d say by 30 or 35 percent—because of that sale,” says Talsky. “But the residual benefit was public relations and otherwise. Many, many people would go to the dealership and say, ‘We appreciate the fact that you sponsor the race’ because the race has had a lot of changes, too. We identified with it tremendously, and people would even come in in July and say, ‘Hey, I’m here to buy a truck here rather than elsewhere because you guys sponsor that race and I see Chuck in Nome with the winner every year.’” In all, Talsky estimates Anchorage Chrysler Dodge Jeep Ram’s thirty-year sponsorship cost about $7.5 million between cash and truck donations. He believes it was a great relationship, especially considering the dealership was grossing “an average of $80 million all of those years and closer to $100 million for some of those years,” he says, before identifying some of the other perks associated with working with champion mushers. “The champions were kind enough,

with no compensation (of course, they did win a nice truck), to do commercials with me every year,” says Talsky. “We’d do it for radio and television, so our investment paid off with our connection to the champion every year pitching our products. Luckily, they wouldn’t alter the script I’d give them. We would interact or they would do it in of themselves. It was a very, very important business angle.” As disappointing as it was to see the thirty-year relationship end, Talsky says the dealership had little choice but to follow its parent franchise’s lead. “It was just unfortunate that it played out that way,” says Talsky, who felt the local media prevented the dealership from fully explaining its situation. “People misconstrued things. They think, ‘Oh, well, that’s a cowardly dealership, they’re just knuckling under’ and this and that. Well, we wouldn’t have had a business if we had insisted on doing it in 2021, so what are you going to do? What I find most distressing is no local media would say, ‘This is what happened but here is why.’

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Dalton Refrigeration

n Alaska’s transport refrigeration equipment market, Dalton Refrigeration offers a distinctive and all-inclusive solution. The Anchorage company sells, rents, services, and repairs various transport refrigeration systems for over-the-road refrigerated trailers and box trucks. Dalton Refrigeration has 10- to 53-foot refrigerated containers that customers can utilize at its facility or have delivered to their own location statewide. These special containers can keep contents -20˚F to 80˚F, depending on whether customers require a chilled or heated environment. Dalton Refrigeration is proud to be the Alaska authorized distributor for Thermo King, the global leader in temperature control systems for transport vehicles. Besides selling their high-quality equipment, the company has temperature-controlled trailers and containers with electric standby available for daily, weekly, and monthly rentals. Dalton Refrigeration’s service is the backbone of Alaska’s food industry as it’s often used by restaurants to preserve meat, produce, and other perishables. However, the company’s temperaturecontrolled units are also employed by various other organizations, from oil and gas companies to seafood processors, flower farms, and morgues. Currently, Dalton Refrigeration is expanding its

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personal-class containers to address the needs of small businesses and entrepreneurs. For example, it offers mobile freezers that are ideal for caterers that require cold storage for short-term usage. “We’ve always focused on the big equipment, but now we can help mom and pops,” says owner Dallas Dalton. “We want to make people’s lives easier.” Leasing and Repair With its leasing option, Dalton Refrigeration essentially serves as a onestop logistics company; it orchestrates the equipment planning, delivery, and everything in between. This often necessitates customizing solutions to fit customers’ needs and budget. “You can go to one company and get everything done,” Dalton explains. “Come to us with an idea, and we’ll make it a reality.” Customers can depend on Dalton Refrigeration to maintain and repair all of the equipment it sells and leases. And if a piece of rented equipment cannot be repaired, the company will replace it. Dalton Refrigeration’s mobile service gives customers the added peace of mind of knowing a technician will be available 24/7/365 if there’s ever a problem. When clients call, email, or text, Dalton Refrigeration responds promptly—even if it means driving more than 300 miles from Anchorage to Tok

to handle an early-morning repair. “Your produce can’t wait a day,” Dalton says. Prioritizing Quality and Relationships To maintain its professional edge, Dalton Refrigeration concentrates its efforts primarily in one area: transport refrigeration. That means the company doesn’t spread itself too thin or accept work it doesn’t have the expertise to perform effectively. “We’re focused on being the best in our industry,” Dalton says. Dalton Refrigeration also applies an authentic approach to doing business and building enduring client relationships. “We don’t come and go; we’re going to be there forever,” Dalton explains. “Our future plan is to continue with the quality of work we are currently doing—to not lose track of what we do and how we got here. We want people to know we are here to help.”

For more information, contact: Dalton Refrigeration Inc. Dallas Dalton, Owner 6320 Quinhagak Street Anchorage, Alaska 99507 (907) 250-1328 Dalton Refrigeration Leasing and Sales Grant Goulet (907)-244-8917 www.daltonrefrigerationalaska.com

Mike Williams Jr. handles his sled on the last leg of the Happy River steps between Finger Lake and Rainy Pass during the 2016 Iditarod. Jeff Schultz | SchultzPhoto.com

If you are in a situation where you can’t get the word out, how do you defend yourself?”

Gold Never Tarnishes Anchorage Chrysler Dodge Jeep Ram is hardly the only major sponsor to leave the Iditarod in recent years. ExxonMobil also severed its ties with the race in January 2021 after serving as a sponsor since 1978. Still, other sponsors are standing by, including Donlin Gold, GCI, Northrim Bank, Bristol Bay Native Corporation, Northern Air Cargo, Alaska Air Transit, Ryan Air, Capstone, City of Nome, Municipality of Anchorage, The Odom Corporation, Pathfinder Aviation, Providence Alaska, Alaskan Brewing Company, Alaska Mining and Diving Supply, Broadway Signs, Thompson & 44 | March 2022

Co., and Alaska Waste, as well as new partners for 2022: Hilcorp, Harvest Midstream, Lynden, Alaska Native Renewable Industries, CUE Health, and Greenbrook. Donlin Gold External Affairs Manager Kristina Woolston says the company’s motivation to be involved with the race has always been rooted in connecting and embracing the traditions and values of dog mushing, more so than any financial incentives. “The rest of the world tunes in for a brief period of time around the Iditarod and the celebration, but we understand the utility, history, and the cultural importance of the dogs and the mushers,” says Woolston. “This represents the way gold miners back in the day transported goods, resources,

and people. It’s a celebration of a long history and culture in Alaska.” Beyond sponsoring the race itself, Donlin Gold also sponsors multiple mushers, including Pete Kaiser, a Bethel native who in 2019 became the first Yup’ik musher and fifth Alaska Native to win the Iditarod. “Pete has other sponsors too and we share the limelight with all of them because he is such a phenomenal member of the community. We also support Isaac Underwood from Aniak and Mike Williams Sr. and Jr. of Akiak,” says Woolston. “We want to support healthy lifestyles and wellness in the communities. We’re focusing on healthy activities, and the tradition of mushing is one of those that we can really come alongside and partner with people like

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“We have over twenty villages that are represented in our workforce at the project site, and then of course the land owned by Calista and The Kuskokwim Corporation and the connection to gold,” says Woolston. Donlin Gold is also determined to help Alaska’s youth view the Iditarod as a healthy lifestyle that can preserve the region’s traditions and culture. “That’s one of the reasons we engage with rural mushers, because this is a longstanding tradition we want—as a part of the Alaska Native culture— to continue,” says Woolston. “We encourage folks who are interested in learning more about the impeccable healthcare for these athletes and the expectations of the mushers in caring for their athletes to visit Iditarod’s website and go on YouTube—there are great videos out there. But also, come to Alaska and experience the Iditarod firsthand.”

A Labor of Love For Iditarod veteran Brent Sass of Eureka and the approximately fifty other mushers registered for the 50th running, mushing is more a way of 46 | March 2022

Like most of the top mushers, Sass relies on sponsorships to cover his expenses. ManMat Supply supplies all of his dog jackets, harnesses, and gear he needs to take care of his team; Dogbooties.com supplies Sass with between 4,000 and 5,000 dog booties—the little shoes sled dogs wear to protect their paws—for each season. It helps, Sass says, that all of the companies he is aligned with share his dedication to the well-being of the dogs.

Unlike many mushers who prefer to avoid the spotlight and attention that come from fans, sponsors, and media, Sass embraces his supporters through his robust social media presence. He shares daily updates from his Wild and Free Mushing homestead located in Eureka, about 140 miles northwest of Fairbanks. His willingness to interact with supporters pays off; Sass receives donations from individuals that are interested to sponsor his individual dogs each racing season.

Jeff Schultz | SchultzPhoto.com

life than it is a sports career. Sass estimates it costs around $100,000 to compete in a full sled dog racing season—a ballpark figure that includes all the equipment, gear, dog food, and travel expenses needed to take part in multiple races. It costs about $20,000 to compete in the Iditarod on its own, Sass estimates. “By the time you figure out all of the logistics and all of the food drops and all of the little things—hotel rooms for before and after the race—it’s expensive. It’s a labor of love,” says Sass. “We do this because we love it. If you ask any dog musher if they do it for the money, I don’t think anyone does it for the money. You’re building a bad business plan if you’re doing it for the money. We do it because we love the sport and we love the dogs and it’s a lifestyle.” The lifestyle of a musher isn’t easy, according to Sass, who has won the thousand-mile Yukon Quest International Sled Dog Race on three occasions: in 2015, 2019, and 2020. “My life is not easy, but I love every single second of every single day,” he says. “I’m choosing what I’m doing every day. I’m really lucky to live a life with that sort of freedom. The trade-off is I work 24 hours a day, 7 days a week, 365 days a year. I don’t get days off; there’s no vacation. I have animals that need to be fed every day.”

Jeff Schultz | SchultzPhoto.com

Pete and the Mikes and Isaac. That’s a huge component of why we sponsor the race.” Donlin Gold also embraces mushing’s connection to Alaska’s gold communities. Last year’s shortened trail traveled through a number of historic mining and gold communities, including Ophir and Flat, while also navigating within 10 miles of the Donlin Gold project site. Beyond the connection to gold, Donlin Gold’s employees, particularly the 70 to 80 percent of whom are Alaska Natives from the region, feel especially connected with the race.

“I am definitely more of a fanbased musher than a lot because I do social media and keep people up-todate,” says Sass. “The reason I do that is because they are supporting me, and the best way I can give back to the people is by giving them a little piece of my life and show them the experience of the Iditarod and what it takes to live, breathe, eat and sleep dogs 365 days of the year. Those individual people and sponsors that have chosen a dog to sponsor for the season, those are huge, huge supporters of the kennel, and I really couldn’t do any of this without their support.” Like Urbach and the Iditarod's past and present sponsors, Sass challenges the race's critics to learn more about the sport. “Just come and watch,” says Sass, a five-time Iditarod finisher who finished 3rd in 2021 and 4th in 2020. “All you have to do is get on the internet and watch these sled dogs do what they’re doing. It’s so apparent that we’re just facilitating the thing they were born and raised to do. When people say those negative things, it’s ignorance. I hate to say that, but it is, because these dogs’ purpose in life is to run, and it’s our job to take care of them and make sure they’re staying in good health. I devote my life to these dogs.”

Alaska Business www.akbizmag.com

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Looking Forward to Construction Season A

laska has two seasons, the saying goes: winter and construction. This issue of Alaska Business comes out when winter has not yet relaxed its dismal grip, but we’re already thinking about construction. Following February’s special section about architecture and engineering, the topic is a natural fit. Construction trades span everything from kitchen remodelers and roofers to the hive-mind of crews in the industry’s two major tribes, vertical and horizontal construction. Carpenters and ironworkers build on top of the landscape, while graders and pavers mold the landscape itself. And let’s not forget the project managers who must choreograph the dance of materials, equipment, and labor on a wobbly stage of weather, money, and politics. The Alaska Department of Labor and Workforce Development counted 14,700 jobs in the construction sector, as of the end of 2021, hardly changed compared to the last months before COVID-19 arrived. The US Bureau of Labor Statistics (BLS) put the figure at 17,670 in May 2020, but the agencies use different categories and data collection methods. (For example, is a state snowplow driver a government employee or a 47-4051 Highway Maintenance Worker?) The most common construction occupation, according to BLS, is operating engineer, with 2,680 counted in Alaska. Laborers come in at 2,610; carpenters at 2,010; firstline supervisors at 1,710; electricians at 1,500; and there were 1,130 plumbers, pipefitters, and steamfitters. Supervisors unsurprisingly have the highest average wage, at $88,420 per year, but plumbers are right up there, so close that they’d have to argue over who picks up the lunch tab. Construction workers in Alaska are among the highest paid in the country, according to BLS. The mean annual wage of $67,240 is fifth, after top-ranked Hawaii, Illinois, Massachusetts, and New York. With its 2,080 construction workers, Fairbanks is among the top ten highest-paid metro areas, in the same class as San Francisco, Honolulu, Chicago, Seattle, New York, and San Jose. The “nonmetropolitan area,” too, is second only to Hawaii, in terms of average pay. Builders are bracing for a boom as federal dollars pour in. “Energy, Sanitation, Roads & More” details where those infrastructure funds are going. Those projects and more, however, must cope with the challenge of a “Supply Chain Squeeze.” This special section also includes a couple of construction case studies, “Cordova South Harbor” and “Tank Farm Facilities.” A guest article by Ryan Watterson explains “Alternate Delivery Contracting” so clearly that it might’ve been ripped from our sister publication, The Alaska Contractor quarterly, sponsored by the Associated General Contractors (AGC) of Alaska. And finally, AGC’s annual awards exemplify the traits that make Alaska’s construction industry so robust. 48 | March 2022

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Alaska Business

March 2022 | 49

LEADING PROVIDER OF REMOTE ALASKA INFRASTRUCTURE CONSTRUCTION & MAINTENANCE SERVICES SINCE 1995

Preparing to leverage

Infrastructure Investment and Jobs Act funds By Rindi White

Alaska Native Tribal Health Consortium

ince the Infrastructure Investment and Jobs Act (IIJA) was enacted in 2021, State of Alaska officials have been trying to understand how best to harness the windfall of federal resources. In January, department heads were completing written analyses of potential projects that could benefit from IIJA funds. So far, there are a lot of unknowns at the state level and for entities the bill affects, such as the Denali Commission and tribal governments. The IIJA mainly directs money to the state through existing channels, and it also sets up new and competitive funding sources and streamlines permitting for certain types of projects. “The majority of these funds will come through existing federal programs, but the legislation did establish a number of new discretionary grant programs for which Alaska should be competitive,” says Governor Mike Dunleavy’s Deputy Communications Director Jeff Turner. “It's important to remember that only a portion of the money Alaska is expected to receive will come directly to the State, as many discretionary grant programs are open to tribes, local governments, and other entities.” The existing federal programs include the US Department of Transportation’s Surface Transportation Board, the Federal Aviation Administration’s Airport Improvement Program, the largely federally funded Village Safe Water program, and other similar programs. The Alaska Legislature must authorize any funding coming directly to the State, but Turner says state officials were still awaiting guidance from federal officials about how to implement that authorization. As a result, some of the funding is unlikely to be allocated in this quarter.

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Energy, Sanitation, Roads & More

CO NS T RU C T I O N Alaska Native Tribal Health Consortium in 2019 completed a project to bring piped water and sewer to the community of Eek. Alaska Native Tribal Health Consortium

Federal infrastructure funds over the next five years could bring indoor plumbing to the thirty Alaska communities that currently lack household water and sewer. Alaska Native Tribal Health Consortium

52 | March 2022

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CO NS T RU C T I O N

“We will continue to develop projections as information becomes available, but [the Dunleavy administration] will seek appropriation authority from the legislature for any new infrastructure funds we expect to receive in FY23 during the upcoming session,” he says.

Finding Clarity Some portions of the IIJA are unclear, and part of the work state leaders are doing is simply finding out what’s expected. “We saw a section of the bill that says they will be making determinations at one date but taking public comment at a later date,” says Alaska Energy Authority (AEA) Executive Director Curtis W. Thayer. “Due to its complexity and interrelated programs, each time we read the law we find additional nuances.” One crucial area Thayer is seeking clarity on has to do with electric vehicle (EV) charging infrastructure programs. The act includes $7.5 billion to build a network of EV fast-charging stations across the nation to support the Biden administration's goal of having 500,000 EV charging stations to meet the projected 2030 EV market. Figuring out where to place stations along an EV charging corridor is already difficult, Thayer says. For instance, the stretch of highway between Girdwood and Cooper Landing needs somewhere to recharge, but power is not available in Turnagain Pass. A larger puzzle is trying to understand how rural Alaska, far from the highway system, benefits from the EV funding program. Formula funds earmarked for each state to use on certain types of projects are available for EV charging stations connected to the highway system. Whether it also covers charging stations in communities off the highway system, like Nome or Kotzebue, Thayer can’t be sure. AEA sent a letter seeking clarification.

Building Roads and Bridges The language in other areas of the IIJA seems straightforward. Alaska Department of Transportation and Public Facilities (DOT&PF) Commissioner Ryan Anderson says some funding was already rolling out in January, such as a $45 million bridge package. www.akbizmag.com

Alaska Business

March 2022 | 53

CO NS T RU C T I O N

An ANTHC work crew digs a trench for piped water and sewer in the community of Eek in 2019. Alaska Native Tribal Health Consortium

54 | March 2022

Anderson says the formula funds the state typically receives from the federal government—for building roads and bridges or making road corridors safer—will increase by between 20 and 30 percent, beginning this year. “We will spend those funds, starting this federal fiscal year. We have the shovel-ready projects those funds will get spent on,” he says. An uncomfortable reality that DOT&PF faces, however, is the likely effect that inflation will have on the additional funds. Although the IIJA provides a 30 to 40 percent increase in yearly transportation funding, the department anticipates higher steel and other material costs in the coming season may eat into the bonus. Discretionary funds are a different story, however. For those funds, Alaska competes like any other state. “There is a lot of money in the act for those discretionary grant funds,” Anderson says. A lot of the discretionary spending is in ports and harbors, so he hopes that critical projects, such as the roughly $1.6 billion project to modernize and repair the Port of Alaska in Anchorage, will obtain some of those discretionary funds. “I would think the importance of that port to the Alaska transportation system—it’s critical for everyone, Anchorage, Fairbanks, and beyond to get their food and freight and everything else—will help,” Anderson says. Another bright spot is aviation. Airport construction spending will see a dramatic increase—more than 40 percent for some projects and up to 80 percent more funding for others. Anderson says the department will consult the Aviation Advisory Board regarding aviation priorities. Anderson is hopeful the IIJA will expedite construction on some projects and help the state get preliminary work done on others. “We’re already looking at advancing projects from 2023 to 2022 as a result of this act; that’s a real positive,” he says. The state generally funds projects according to the State Transportation Improvement Plan, or STIP, which defines the scope of projects, details their funding needs, and ranks them according to priority. The current fouryear plan is about to expire and a new Alaska Business www.akbizmag.com

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STIP is being created, Anderson says. That document will help determine where the infrastructure spending goes. Anderson says public comments will help make those decisions—a process that has already begun. The state conducted a survey in November, asking residents what transportation modes they use most often, what modes they prioritize, and where they would like to see improvements in the coming year. More than 1,700 Alaskans took the survey. Anderson says the state will consider those responses and other public comments in determining where to focus infrastructure spending. DOT&PF is also creating an interactive map on its website which will allow residents to drop a pin on a project or area that needs to be addressed and then comment in more detail about their selection.

Energy Boost For energy infrastructure, Thayer says the IIJA “cuts both ways.” While there are exciting possibilities, some aspects are disappointing. For example, the AEA is interested in diverting more water into Bradley Lake north of Homer. The project would redirect water from Dixon Glacier to increase the annual energy output of Bradley Lake, already the largest source of hydroelectric power in the state. The diversion project has an estimated cost of about $250 million, but the IIJA includes only $200 million throughout the nation for hydroelectric projects. Similarly, needed power system upgrades in rural Alaska total about $300 million, and bulk fuel tank upgrade projects tally another $800 million. The IIJA funds neither of those project types. However, the IIJA could underwrite needed upgrades to the transmission line connecting Bradley Lake to Fairbanks. Those upgrades would allow the Bradley Lake diversion project to move forward, Thayer says—if the diversion project went forward prior to the transmission line upgrades, he explains, existing transmission lines wouldn’t be able to carry the extra power. Despite not having funds for rural bulk fuel and power systems from the IIJA, Thayer says AEA plans to go ahead www.akbizmag.com

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with several upgrades anyway, using state funding. “Each year we identify communities for power system and bulk fuel tank upgrades,” he says. “We’re looking to our partners, the Denali Commission, to see if they can help us with that funding.”

Tossing Honeybuckets Standing to gain a clear benefit from the bill are rural Alaskans in communities currently lacking piped water and sewer. The IIJA aims to ensure those communities finally obtain modern plumbing. “We’re extremely excited about it,” says David Beveridge, the senior director of environmental health and engineering for Alaska Native Tribal Health Consortium (ANTHC). The IIJA includes $3.5 billion nationwide to improve and provide sanitation infrastructure for tribes across the nation. Beveridge says that number represents the entire need outlined through the Indian Health Service national data system. ANTHC and project managers with Village Safe Water work with communities to identify needs, determine project costs, and relay that data to Indian Health Service each year. Beveridge says sanitation funds are spread over all five years. Alaska has about thirty communities currently without water and sewer service— most have a washeteria where people get water for home use, take showers, and wash clothing. That number is dynamic, he says; efforts to bring water and sewer service to some of those communities are already underway. ANTHC and other agencies have been working for decades to put honeybuckets in a museum, as the saying goes; these remaining communities represent the most difficult to provide service to, either due to geology—poor drainage, high water tables, or other issues—or geography, where homes are distant from each other. “Basically, to carry out these projects in the past, we’ve had to have a piecemeal approach. We get a couple million dollars a year, and it takes ten years to address it,” Beveridge says. Sanitation funding went first to projects where the per-home cost was relatively 56 | March 2022

An Eek resident washes an ulu in a sink under water from the community’s new water system. An ANTHC project brought piped water and sewer to the community in 2019. The federal infrastructure bill that passed in November 2021 will allow several more communities to receive water and sewer service, and dozens more have necessary repairs made to their existing sanitation services. Alaska Native Tribal Health Consortium

An ANTHC worker installs electrical wiring and indoor plumbing in a house in Eek in 2019. Many houses there only had one room, meaning bathrooms had to be added. Alaska Native Tribal Health Consortium

low. IIJA funding allows for a higher cost per home, allowing the projects to move forward, he says. The sanitation funding also helps communities where the water and sewer system need repairs. Beveridge says almost every rural community needs some sort of upgrade to its sanitation system, so it’s likely the funding will ultimately be spent in all 190 rural communities ANTHC has in its inventory. These projects are vital, Beveridge says, because they have a direct effect on health. A study by ANTHC and the

US Centers for Disease Control and Prevention tracked hospitalization rates for infants in villages where fewer than 10 percent of homes have water service. The study found infants in communities without water service were eleven times more likely to be hospitalized with pneumonia compared to infants in the rest of the United States. They were also five times more likely to be hospitalized with a lower respiratory tract infection and five times more likely to be hospitalized with Respiratory Syncytial Virus, or RSV.

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“It’s really important that these facilities are constructed in the communities and that they continue to be in use, producing good water,” Beveridge says.

Readying a Workforce With infrastructure cash already flowing, Associated General Contractors of Alaska (AGC) Executive Director Alicia Amberg says builders are making sure to have enough workers to bring these projects to fruition. “When the pandemic hit, Alaska was still pulling out of a recession. A lot of the workforce that many rely on in Alaska had moved to the Lower 48, particularly to the Pacific Northwest, which was seeing a boom,” Amberg says. Now Alaska is slightly behind the curve in terms of workforce readiness. Through a partnership with the Construction Industry Progress Fund, AGC of Alaska hopes to encourage more Alaskans to find work in the construction industry. “We launched this campaign in 2021 and have expanded the program and marketing budget significantly in 2022,” Amberg says. The campaign includes videos of craftworkers explaining why a career in construction has been helpful and how they have contributed to the nation’s economic recovery and remained an essential worker during the pandemic. “We hope these videos will reach our target audience of recent high school grads looking for a viable long-term career path that doesn’t include college debt; we’re also hoping it reaches those who may have been looking for a career change or lost their job because of the pandemic and want a stable position within the Alaska construction industry,” Amberg says. “We’re also hoping to target influencers of people within those demographics,” she adds, “which includes parents, grandparents, career counselors, and others who have an influence on the decisions that younger students are making when considering their future.” With so much infrastructure cash sloshing around for the next five years, the construction sector can make a strong case for workers to follow the money. www.akbizmag.com

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Alternate Delivery Contracting Beyond design/bid/build

Watterson Construction

By Ryan Watterson

58 | March 2022

Alaska Business www.akbizmag.com

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onstruction projects for buildings and structures are increasingly moving away from traditional procurement towards alternate delivery channels. Major buyers of construction services—such as the United States Army Corps of Engineers Alaska District, the Anchorage School District, Southcentral Foundation, Cook Inlet Housing Authority, and several private owners—are all utilizing alternate delivery to varying degrees. When executed correctly, alternative delivery contracts have the potential to produce high quality facilities while reducing project risk and maximizing project benefits.

Risky Business The traditional contracting method for construction is the design/bid/build model. Under this system the project owner first hires the design team, who complete the design. The fully designed project is put out for bid. The general contractor is chosen based on the lowest price. Finally, the project is constructed. This is a tried and tested model, but it has weaknesses. Clients, designers, and contractors all go into a project hoping for a great outcome. The client is excited to have a new or remodeled facility. The contractor and designers would like to make money and develop good relationships with the prospect of future projects together and with the client. Unfortunately, the traditional system often sets up an “us versus them” environment, with each player feeling under siege. The client paid for a design, agreed to a construction contract, and now they can’t understand why they are being asked for more time and money. The contractor agreed to a price based on the bid documents and feels the owner and designers are making new and expanded demands. The designers feel their designs are under attack, with the contractor wanting to make too many changes or offering lesser quality substitutions. The result is too often misunderstanding, hostility, and legal claims. On fixed price contracts, almost all issues resulting in extra cost or time fall into three categories: scope creep, change in conditions, and force majeure. www.akbizmag.com

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CO NS T RU C T I O N In 2019, Watterson Construction Co. completed construction of a building designed to be a pre-engineered metal building; changing to a traditional steel structure reduced the cost by $400,000. Watterson Construction

How well defined is the project scope? Who will be the end user? And how interested is the user group in being involved? Projects with poorly defined scopes benefit from more interactive contracting processes. 60 | March 2022

Of these three risk groups, force majeure is the hardest to control. A force majeure event is something that is outside the control of the owner, designers, or contractor. Examples of force majeure events are earthquakes, floods, fires, wars, and pandemics. Over the last two years the effect a pandemic can have on supply chains has been a frequent topic in the news. The Alaska construction industry has seen impacts ranging from the inability to procure appliances and shortages of basic construction materials to strained labor pools. Another example of how a force majeure event could affect a project is a labor strike. If the steel fabricator supplying the structure for the building is shut down by a strike, it could have a devastating effect on the project schedule and budget. Change in conditions occurs when something is uncovered during construction that was unexpected. Most

changes in condition are discovered during two phases of construction, sitework and demolition. Examples of unexpected conditions that might be discovered during site work include pockets of unsuitable soils that were missed during the geotechnical investigation, abandoned buried structures or utilities, or buried trash. Examples of unexpected conditions that might be discovered during demolition include previous structural modifications not shown on the record documents or hazardous materials such as asbestos or lead. Finally, scope creep: in the simplest terms scope creep, or expansion of scope, occurs when work is added to the contract. With some scope creep, all parties agree that it is extra work. For example, if the client secured more funding and moved up a future addition to the current project, that is clearly new work. Scope creep

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Three Alternatives Alternate delivery methods are an effort to control for risk and improve project outcomes. By working together, the project team identifies and plans for project risk. There are three main types of alternate delivery procurement: best value, construction manager/general contractor (CM/GC), and design/build. Best value procurement is an acknowledgement of the adage “you get what you pay for”—when least cost is the only factor considered, other aspects often suffer. Best value considers factors beyond the bottom line, such as experience, capabilities, past performance, safety record, proposed schedule, and proposed project team. By recognizing the importance of nonmonetary factors, best value contracts improve the likelihood of a positive project outcome. Like design/bid/build, under the CM/GC model the owner or client typically first hires the design team. Unlike design/bid/build, the general contractor is then hired prior to completion of the design documents. The contractor is often hired when the documents reach the 35 percent or 50 percent milestone. The contractor is initially hired only to provide preconstruction services. The guaranteed maximum price (GMP) for construction services is negotiated later. CM/GC contracts usually include a clause that allows the owner to hire a new contractor for construction if the owner and contractor are unable to come to a mutually agreeable GMP for the physical construction of the project. In a design/build contract, the contractor and designers are hired as a team. Design/build contracts can have the GMP set with the initial contract, or it can be set at a later design stage. Both CM/GC and design/build enjoy the same benefits as best value, but they go further. Both CM/GC and design/build bring the contractor onto the project team during the www.akbizmag.com

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gets contentious when there is a difference of opinion as to whether the work is included in the original price. These disagreements can get ugly, as each party is entitled to their own interpretation of the documents.

CO NS T RU C T I O N Following the construction manager/general contractor model, a contractor is hired on before a project’s design is finalized, allowing the general contractor to spot issues or advise the project owner on potential efficiencies or cost savings. Watterson Construction

The contractor and designers would like to make money and develop good relationships with the prospect of future projects together and with the client. Unfortunately, the traditional system often sets up an “us versus them” environment, with each player feeling under siege. 62 | March 2022

design phase. This has the benefit of providing expertise about current labor and material market conditions, constructability, logistics, scheduling, and budget. For example, on a CM/ GC project Watterson Construction Co. completed in 2019, the building was designed as a pre-engineered metal building. At the time there was an unusually high demand for preengineered buildings, so Watterson advised the client and design team about the market conditions. Acting on the market condition information, the team worked together to change the structure to a traditional custom structural steel structure. As a result, the building was completed months sooner and the cost was reduced by $400,000.

Keys to Success Alternate delivery projects are not immune from problems. Most problems can be avoided by following a few keys to success. Pick the Right Contract Type for the Project The first thing that must be done to set a project up for success is for

the client to select the right contract type. Not every project is a candidate for alternate delivery. There are projects that would be a good fit for best value but a disaster as a design/ build. What are the restrictions outside the control of the project staff? These can include limitations placed on the project by funding sources, the clients’ corporate policies, and politics. If the grant or bank funding the project requires traditional design/bid/build contracting, the decision is easy. If the president of the organization dislikes design/build, selecting that as a contract type would set the project on an uphill path. Next, the client must look at their own organization. How much interaction do they want with the designers and contractor? How well defined is the project scope? Who will be the end user? And how interested is the user group in being involved? Projects with poorly defined scopes benefit from more interactive contracting processes. Owners who don’t want to be intimately involved in the design process may benefit from selecting a design/build contract. Owners also

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need to decide if they want to be the connection between the designers and contractor or if they want to have a single point of contact. Clients who want to simplify their interactions with the project team may prefer design/build over CM/GC. In CM/GC the client is the arbiter between the contractor and designers; in design/ build the contractor and designers are a combined entity. Select the Right Team The Alaska design and construction community is full of excellent firms and professionals, but there are also owners who are known to be hard to work for, slow to pay, or litigious. There are contractors who are known for bidding low and then making their profit by generating large numbers of change orders (a change to the contract, usually for additional money), or they may be perpetually late finishing projects. And there are designers who have a reputation for not listening to their clients or the contractors. Projects benefit from knowing which firms have proven records for working collaboratively, fairly, safely, and finishing on time. Communicate Set clear expectations for the project. A well-crafted request for proposal, or RFP, is a key to a successful project. A poorly written or rushed RFP will cause problems from the minute it is released. The RFP needs to clearly set out the project requirements, expectations for all the project participants, and proposal requirements. Finally, provide comprehensive definitions for each pricing item. Defining pricing items makes comparing bids easier and prevents surprises when the client thinks a cost is included under a set fee item, but the contractor included it under a cost plus a fee item. All parties must be sure they understand the expectations. If there are questions, they need to be asked and addressed. It is not only important for the designers and contractor to understand what the owner is expecting; the end user must understand what has and has not been contracted for. It is a common occurrence for the user group or maintenance crew to be unhappy with a design if they are not included in the procurement and design process.

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The exterior (top) and interior (bottom) of a project for which Watterson Construction Co. was the general contractor under the construction manager/general contractor model. Acting on market condition information, Watterson was able to reduce the cost of the project. Watterson Construction

Communication is not only about sharing expertise but listening to the input of others. By valuing the experience of the whole team, better projects are built. Participate Have the right people involved in project development. On the client’s side, the end users and maintenance individuals should be involved. From the contractor it is important to have not only the estimation team but also people who have field experience and the people who will manage the project during construction. These people have valuable insights into constructability, the labor market, and logistics. Finally, the decision makers must be involved. Having a team working together is great, but if no one is empowered to make decisions, nothing can move forward. Stick to the Schedule Lastly, create a reasonable schedule and stick to it. The schedule should consider the client’s need by dates, the capabilities of the design and construction firms, and material lead times. Once a schedule is set, stick 64 | March 2022

to it. Make decisions on time, finalize designs on time, agree to a GMP on time, and then finish the project on time. Utilizing alternate delivery contracting can yield excellent results when expectations are clear, the team gels as a cohesive unit, each member’s expertise is respected, and everyone participates. The results can be highquality, in budget, on schedule,

and produce stronger professional relationships. Ryan Watterson is the Preconstruction and Development Manager for Watterson Construction. Watterson has twentythree years in the construction industry, including experience as a laborer, intern architect, contractor’s quality control manager, and estimator. He can be contacted at rwatterson@wccak.com.

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Tank Farm Facilities

Crowley and Colville improve and expand fuel storage By Sarah Ward

66 | March 2022

Alaska Business www.akbizmag.com

Judy Patrick

regulates facilities with as little as 1,320 gallons, but an exact total on the number is not available. Anywhere two large cylinders stand near each other, that’s a tank farm. Some of the state’s newest tank farm infrastructure expands capacity in two distinct ways. The projects serve radically different users in widely divergent locations, yet the builders had a similar mission when constructing them. Logistics firms Crowley and Colville both exercised caution and forethought to ensure these

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ost everywhere Alaskans live, at least one farm is nearby. No, not the approximately 762 farms that raise crops and livestock for sale (the smallest number in any state). Tank farms, or above-ground storage facilities, are essential infrastructure wherever fuel or other liquids must be stockpiled. The Alaska Department of Environmental Conservation regulates sixty-five tank farms with capacities greater than 5,000 barrels of crude oil or 10,000 of non-crude. Below that, the US Environmental Protection Agency

CO NS T RU C T I O N A Colville tanker truck and tank farm in Deadhorse. Judy Patrick

68 | March 2022

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exploration companies up there finding the oil, producing the oil, and getting it put in the pipeline for Alaska’s economy.” Roger Bock, Senior Director of Operations, Colville

new additions to Alaska’s petroleum landscape are safe and will be around for a long time.

Military Tanks The Defense Logistics Agency Energy (DLA Energy) awarded Crowley a contract to build and operate a 500,000-barrel (approximately 21 million gallons) bulk fuel storage facility in North Pole to support Eielson Air Force Base and Fort Wainwright. The project is like one Crowley completed in 2011 for DLA Energy at the Port of Anchorage, now the Port of Alaska. That facility was doubled in size in 2015, now

providing 1 million barrels of product storage for Joint Base ElmendorfRichardson, just up the bluff from the port. Crowley is in the second five-year term of its operating contract. For the North Pole project, Crowley was awarded the contract in July 2020. It was a “greenfield” facility, built from the ground up. Eighteen months later, the tanks and supporting infrastructure are operational. “The design is based on a really long lifespan,” says Scott Mulvihill, director of government operations and government services at Crowley. “There are tank farms, even within

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“This project makes it so we can keep all the

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By expanding the piping in the truck tanker loading area to be able to load two trailers at the same time, Colville doubled their rate of moving fuel at Prudhoe Bay. 70 | March 2022

Alaska, that some of the tanks were built in the 1900s—1914, 1920. Those tanks are still in service, so when you construct it, you’re not looking at a window that would be less than fifty years. You want to get a lot of life out of it.” This farm was built to stand up against corrosion, earthquakes, and wind and water damage. With durability in mind, Crowley used materials with a long life expectancy, and Mulvihill says maintenance plans include but are not limited to “painting, valve cycling, lubrication of facilities, pump replacement, [and] valve replacement.” While Crowley has experience with tank farms and similar infrastructure, this project “represents a new capability that doesn’t exist today,” according to Crowley Maritime Vice President Sean Thomas.

The main challenge was the available water on location for testing the facility and in case of fire. The groundwater on location is unsuitable for those purposes, so part of the design went to creating a facility that could hold the necessary water volume. While this is a normal part of the design of tank farms, it “becomes somewhat problematic at -40°F, since water becomes a giant ice cube,” says Thomas. To solve this problem, the design and contracting teams built a pumphouse building with a concrete holding tank inside to hold 100,000 gallons of water. The floors are hydronically heated to maintain the water temperature, and, as Mulvihill explains, the design of the pumphouse is “very new, maybe number one in the state” in terms of innovation for storing water.

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Colville tanker trucks lined up on the West Dock causeway during the 2019 fuel barge haul. Judy Patrick

Employees for this new tank farm are all from the local area, which is how Crowley likes to hire. Crowley also relied on Alaska-based design and construction partners: Enterprise Engineering and Latitude 63, both based in Anchorage, and approximately 95 percent of all subcontractors for the project are local Alaska businesses. For Crowley, the most important feature of the tank farm is that it “further solidifies our strength and capability in providing these types of services to the US military around the world,” Thomas says. He sees his company’s government services team expanding out, discovering “new opportunities like this elsewhere on the globe.”

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“There are tank farms, even within Alaska, that some of the tanks were built in the 1900s—1914, 1920. Those tanks are still in service, so when you construct it, you’re not looking at a window that would be less than fifty years. You want to get a lot of life out of it.” Scott Mulvihill, Director of Government Operations and Government Services, Crowley

72 | March 2022

reason Crowley Maritime entered Alaska, servicing early-warning radar stations in the late ‘50s. A decade later, when oil was discovered at Prudhoe Bay, Crowley was already experienced at barging cargo and bulk petroleum to the Arctic coast. Crowley has since sold its Prudhoe Bay sealift assets to Cook Inlet Tug & Barge, a subsidiary of Foss Maritime. Meanwhile, on shore, Prudhoe Bay logistics have become the bailiwick of Colville, Inc. “We supply fuel to several of the oil companies up there [on the Slope] that are producing oil,” says Roger Bock, senior director of operations at Colville. The company’s Prudhoe Bay tank farm can store approximately 220,000 barrels, or 4.6 million gallons, which is adequate for the short term, but Colville wanted to increase the efficiency of transferring fuel within their storage capabilities without building new tanks. According to Bock, 4.6 million gallons “may seem like a lot of storage, but it’s really just a drop in the bucket compared to the amount of gallons that get moved up there on a yearly basis, just to be able to put oil in the pipeline for Alaska.” When Colville first started to map out an expansion, an assessment of the needs of the community and their customer base determined that it didn’t need more storage tanks. Instead, the project Colville moved forward with was a combination of increased efficiency and safety on the “offload and load lanes at the rack.” Bock says the problem was that—even with a fleet capacity of thirty-six line haul trucks capable of hauling close to 500,000 gallons of fuel per week and fifteen tractors and dual tankers that can haul 16,000 gallons at once—the bottleneck at the offloading station was holding everything up. With only one unload and one delivery unit able to go out at a time, expanding the station was the logical next step. “Let’s double it,” Bock says of Colville’s strategy. “We’ll have the capability to unload two tankers at once and load two delivery units at the same time, aiming for over 20,000 gallons unloaded and be able to load over 40,000 gallons in an

hour or less.” By doubling the offload lanes, adding a new secondary containment structure that meets Alaska Department of Environmental Conservation standards, and expanding the piping in the truck tanker loading area to be able to load two trailers at the same time, Colville doubled their rate of moving fuel at Prudhoe Bay. Bock states that “this project makes it so we can keep all the exploration companies up there finding the oil, producing the oil, and getting it put in the pipeline for Alaska’s economy.” Bock adds that everything up on the Slope is “looked at with a fine microscope, so everything you do, you have to have 110 percent containment every time you transfer fuel.” The shop foreman on the expansion project, who has been promoted to project manager, put a lot of work into keeping the project safe, particularly in setting up a pumping system that is outfitted with several safeguards to prevent any environmental mishaps. Safety is part of everything Colville does. “We like to go above and beyond,” Bock says. “We have the basic list we check off regularly, but we also like to use our own steps to keep everyone vigilant. Every year we do a spill drill; we fully deploy, shut down the pad, put up a security zone, and have the whole team working as if it's a live fire drill.” For Colville, the benefits of this project are all about efficiency, safety, and an excellent reputation as a fuel-moving company going forward. Bock says this “opens the door for companies not to have to worry about their fuel needs. It gives them an efficient, more reliable service” and a “more sustainable way for exploration companies to get up there and do their work.” He’s proud that Colville has never run out of fuel on the North Slope, and on this project, most of the work was done in-house. While expanding the tank farm itself isn’t off the table for future projects, Colville’s new infrastructure has given the company the security it is looking for and these improvements will already be in place to move fuel for everyone in need on the Slope.

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Supply Chain Squeeze Builders scrounge for materials By Isaac Stone Simonelli

74 | March 2022

Alaska Business www.akbizmag.com

Fritz Jorgensen | iStock

laska’s contractors, architects, and hardware suppliers are scrambling and adapting to keep projects moving forward as a choked supply chain forces them to do what they do best: make it work in the Last Frontier. Alaska contractors are used to dealing with the delays that come with being at the end of a very long supply chain for construction materials. “Alaska always had a challenge of getting stuff here,” says Jonathan Hornak, a senior project manager for Cornerstone General Contractors. “Between the pandemic and the staffing shortages and everything else, it's just made it worse.” Choke points have resulted in price spikes for everything from groceries to household goods and construction materials—or, in some cases, have resulted in no availability at all. “The supply chain issues are real, they're happening, and they are highly unpredictable,” says Terry Shurtleff, the president of Alaska Industrial Hardware. “For example, everything can be going perfectly, but then you have an Omicron outbreak, say in a port in Taiwan. So that's going to change the landscape for all freight coming out of there,” Shurtleff says. “And then all of a sudden, what wasn't a problem fifteen minutes ago is now mission critical.”

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Lead-Time Leaders The first major shortage was lumber in 2020. Futures prices for lumber quintupled from March 2020 to May 2021. “We all knew lumber skyrocketed. It's back down. Pretty close to what it used to be,” Hornak says. “Following the wood, the structural steel skyrocketed.” By January 2022, structural steel prices were starting to trend downward, but Hornak doesn't anticipate them reaching normal levels until about June. Even with the increased prices, the lead time— the amount of time between when a product is ordered and when it arrives—for structural steel can be as much as six months in some cases, Hornak says. Doors and hardware are also requiring longer lead times, as are finishes and glass. Custom materials, such as doors over eight feet, which have always taken longer to arrive in Alaska, now can take up to sixteen weeks, when they’re available at all. “It's going to cycle through and trickle through the whole project, the material world,” Hornak says. Alaskan contractors are no strangers to needing to plan well ahead of time for ordering supplies, but the current situation is forcing them to push those timelines out even further. “We're definitely in a better spot than other states, because we are used to this with lead times and planning so far ahead,” Hornak says. “Other states don't have that issue normally, so they don't have to try to pre-plan stuff four to six months in advance in order to get materials there—so they are definitely impacted more.” The projects in Alaska that are most severely affected are those relying on custom materials and those with short project timeframes, Hornak says. This is especially the case for projects that are only three months long but need materials with a four month lead time. “We're recommending to our customers, if they can forecast a need, they should be buying it or finding ways to line it up and buy it now versus waiting until closer to their job’s start,” says Shurtleff.

Stocking Up for Lean Times Alaska

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Hardware

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The materials, parts, and supplies that are unavailable or on delayed shipping schedules have changed over the course of the pandemic and continue to do so. Local experts recommend ordering any necessary materials far in advance of a project's start date. mscornelius | iStock

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pushed its own buyers to go heavy on holding inventory in an attempt to meet the demands of the market and recognition of the challenges being faced due to supply chain issues. The company is now sitting on 20 percent more inventory than it’s ever had before, Shurtleff says. “We believe that that's what we need to do in order to make sure that we can support our customer base,” Shurtleff says. “We're fortunate here at Alaska Industrial Hardware that we have not only the holding power, but the financial resources.” Shurtleff explains that there is no increased risk to the company by stocking the extra inventory. “It's inventory we're going to sell. We're not taking a risk on products that we don't know about,” Shurtleff says. “We're just going heavy to make sure that we can meet demand.” Shurtleff explains that nearly every variable in the supply chain for construction materials is in flux in one way or another. The potential for disruption starts with production of raw materials, includes the manufacturing processes that turn

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Not for Sale at Any Price While prices for some materials are skyrocketing and others are starting to settle back down, other materials

are nearly impossible to get ahold of, explains Michael Repasky, the president of Summit Logistics. Even shipping containers themselves are in short supply, which has forced some modular construction companies reliant on them, such as Summit Logistics, to quickly pivot. “The shipping containers, for example, that we sell are just flat out not available,” Repasky says, before confiding that the company has squirreled away a few of them for some of their legacy clients. The lack of shipping containers, which are mostly constructed in China and shipped to the United States, are directly connected to global supply chain issues. Instead of being left in the United States, as has previously been the case, the containers are being put back on ships and returned to Asia, Repasky explains. “With the lack of shipping containers, we've actually been building more traditional stickframed buildings,” Repasky says. One project Summit Logistics had lined up in 2020 called for eight shipping containers, but the company

was unable to get the right kind of container needed in the necessary timeframe. “So, we just built eight traditional stick-frame units on skids,” Repasky says. The units were dragged across more than 100 miles of frozen tundra on skis. The following summer, a team took a private charter out to the remote village to secure the buildings. That, however, was early in the pandemic. “At this point, knowing what we know, we're able to get ahead of the problem with customers,” Repasky says. “Unless they really need a shipping container, we're trying to encourage them to evaluate other alternatives.” While alternatives can help a project meet its deadline, there are also cases where customers know exactly what they want, Repasky says. “ They may already have ten of those freezer doors in their compound, so they don't want to add a new type of freezer door because now they have to carry new spare parts and teach their maintenance guys how to work on this new door,” Repasky says.

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those materials into the goods needed for construction, and ends with lastmile delivery. “This is Economics 101, right? Demand is relatively high and supply chains are choked off,” Shurtleff says. “Anytime you have that inversion, prices go up, and that's what we're experiencing.” Alaska Industrial Hardware’s acquisitions team is doing their best to get ahead of some of the price increases, which are further compounded by inflation. However, price increases are going into immediate effect in some cases, Shurtleff explains. He says that sometimes he gets no lead time at all when it comes to price increases. He’ll get a call and be told that prices from that moment forward have jumped. “It's crazy, what we're seeing. Well, we've never seen that kind of thing happen before,” Shurtleff says.

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“We're definitely in a better spot than other states, because we are used to this with lead times and planning so far ahead… Other states don't have that issue normally, so they don't have to try to pre-plan stuff four to six months in advance in order to get materials there— so they are definitely impacted more.” Jonathan Hornak Senior Project Manager Cornerstone General Contractors

78 | March 2022

Repasky says that Summit Logistics is fortunate in that it keeps fairly robust stocks of the majority of the materials they need. “We're a small private business; I don't have to report to anybody else,” he explains.

Substitute Ingredients For the time being, clients must be amenable to alternative materials. “We will make sure that it can comply with all of the specs that are needed for the owners, and then we'll try to switch to a product with a shorter lead time,” Hornak says. “We've done that with our hardware. We've done that with some glazing products. We've done that with flooring products.” Mostly, though, Hornak ’s team is tr ying to get out ahead of the lead times. “ We'll get the long-lead materials submitted and approved by them [the client] prior to even really starting any work,” Hornak says. “ We’re doing all the prep work ahead of time and then basically putting the project on hold until stuff gets there.” The two primary issues with tackling the problem this way is the need to keep staff busy during the delays and working with clients who have unmovable deadlines. “That kind of impacts us as far as we need to go from 40-hour work weeks to 60-hour work weeks in order to still open the building when necessary,” Hornak says. Nonetheless, design teams and project owners have been very flexible, Hornak says. “They're all putting in extra efforts to make it work, too, because we all know that this is not normal times. They all understand and are helping out as well. It's definitely not just the contractors doing all the work,” Hornak says. “It's just a matter of shifting things to try to ease the pain all the way around.” He points out that construction is never simple or straightforward, and contractors are used to needing to think on their feet and adjust. “So it's not out of the norm, but it's definitely a lot more of it, which can add a lot of time and a lot of stress on our people to try to figure things out,” Hornak says. “And architects and designers, as well, because

they're the ones that are having to work with us and make sure stuff is compatible.”

Accept Reality Local suppliers in Alaska have also been stepping up to help contractors meet client targets, Hornak says. Companies have been staying in contact with contractors during the bidding process for projects to see what supplies they’ll need and start building up inventory accordingly. “They've been doing a really good job of keeping their shelves stocked with what we need,” Hornak says, noting that contractors do run into issues when it comes to specialty materials. Shurtleff says that once manufacturers are down to dividing up their products based on allocations, Alaska is in a tight spot. “We get allocated a much smaller slice than anybody else because we're a much smaller market,” Shurtleff says, adding that most major manufacturers characterize Alaska as a foreign destination. Shurtleff reiterated the need for contractors to put in orders for supplies as soon as they know they might need them. “If you have a forecasted need, buy it,” Shurtleff says. “Go find it right now. Do not wait.” He points out that it's a lot more expensive having tradespeople standing around with their hands in their pockets waiting for supplies to arrive than it is to carry the costs of the inventory. “What we're told by our vendors and manufacturers across the country, across the world, is that we're probably another year or so away from normality,” Shurtleff says. In line with Shurtleff’s advice, Summit Logistics stocks what materials it can and just sits on them. Repasky jokingly compares not being able to get the materials he needs in a timely fashion to going through the stages of grief. First, there’s anger, then denial and resignation. Finally, there’s acceptance. “You get to acceptance, and then life can proceed. You accept your suppliers are dealing with what they've got and you're doing the best with what you've got,” Repasky says. “We're all kind of struggling.”

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Cordova South Harbor

Long-awaited project finally underway By Vanessa Orr

80 | March 2022

ast November, the US Department of Transportation (DOT) awarded $20 million to the City of Cordova for the ongoing rebuild of its South Harbor. And while the process to replace the aging harbor will be a long one, for the city and one of the state's largest commercial fishing fleets, the project couldn’t get started soon enough. “We’ve been needing it for a long time; the harbor that is being replaced was being built in 1981 when I first came here and was expected to have about a thirty-year lifespan,” says fisherman Jeff Bailey of the FV Odyssey and FV Miss Margeaux. “Now, it’s on year forty."

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find an additional $10 million… which would

City of Cordova

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“We are hoping to

Bailey adds, “Every year, more floats become waterlogged and roll over, and the cleats on the dock have broken loose with a number of larger vessels... It’s not uncommon for floats to break loose with boats attached, and we have to go corral them.”

bring us up to $42 million… You would think with that kind of money, you could build the Taj Mahal of harbors, but not these

Restoring the Harbor

days.” Helen Howarth, City Manager, City of Cordova

our equipment every year, building new boats and new fishing nets and making modifications and improvements, but the harbor didn’t evolve in this same way,” says Bailey. “There were many competing priorities, and once it started deteriorating, there was no funding left. It’s difficult for a city of our size to fix something like this all on its own.” “If the entire fleet had been in town when the grant was announced, you could have heard the ‘hurrahs’ all the way to Anchorage,” laughs Cordova City Manager Helen Howarth. “It’s a really big deal. The fleet has been suffering with this aging infrastructure for a long time, and getting these issues resolved will make for much more comfortable, safer harbor.”

Though the state originally built Cordova’s South Harbor, it later turned it over to the community, which became responsible for maintenance and repairs. “As fishermen, we invest in

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While the harbor restoration is still in the planning stages, the $20 million grant is expected to go toward restoring South Harbor docks and floats, as well as paying for sheet piling, dredging, and construction of a new drive-down floatplane

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City of Cordova

CO NS T RU C T I O N

and vessel services dock. The project is also expected to improve environmental sustainability by reducing water pollution by creating a pump-out sewer station to eliminate the temptation of vessels to discharge wastewater into the harbor. Other improvements include improving access not only for the commercial

fleet but making the harbor more attractive for small-scale cruise ships, independent cruisers, and sportfishing operators. The city recently hired Mark Keller to advise on the initial stages of project planning and to help it develop an RFP (request for proposal). “Mark, who was Huna Totem Corporation's cruise ship

dock project manager, came highly recommended,” says Howarth. “He has worked extensively in Alaska and taken part in a number of water-based projects, and since this is a new type of project for us, we wanted to work with someone with a high level of expertise. “As soon as we got news of the award, we launched ourselves out

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City of Cordova

CO NS T RU C T I O N The $20 million grant will help fund restoring South Harbor floats and docks and a new drive-down float plane and vessel services dock. cweimer4 | iStock

84 | March 2022

of the gate for a 50-mile marathon run, because as you can imagine, the process will be a long one,” she adds. “All sorts of environmental studies will need to be done since the project is in federal and state waters, and we’re also still seeking more funding. The environmental process could take as long as a year to complete, so we’re hoping to have boots on the ground in 2023.” While the project was originally estimated at $30 million, construction and material prices have steadily increased, and Howarth says

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According to the US Department of Transportation, the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) Discretionary Grant program provides a unique opportunity to invest in road, rail, transit, and port projects toward national objectives. Congress dedicated nearly $10.1 billion for thirteen rounds of national infrastructure investments to fund projects that have significant local or regional impact. The Infrastructure Investment and Jobs Act adds $1.5 billion per year to this program. Other RAISE 2021 projects in Alaska include $20 million to fund the Haines Borough Lutak Dock replacement project, which will complete the relocation of the existing boat launch ramp, create a new uplands area, and demolish the entire Lutak dock and replace it with a bulkhead, fenders, and mooring dolphins. Roughly $12.1 million was awarded to the Nunakauyarmiut tribe for the NATIVE-III Trail to Mertarvik. The money will be used to install a 30mile geocell trail to connect Mertarvik, the new home for the village of Newtok, to existing transportation infrastructure in Nelson Island.

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WHAT IS A RAISE GRANT?

CO NS T RU C T I O N

“If the entire fleet had been in town when the grant was announced, you could have heard the ‘hurrahs’ all the way to Anchorage… It’s a really big deal. The fleet has been suffering with this aging infrastructure for a long time, and getting these issues resolved will make for much more comfortable, safer harbor.” Helen Howarth City Manager City of Cordova

86 | March 2022

that Cordova is hoping to raise approximately $42 million to complete the renovations. In addition to the $20 million provided by the DOT RAISE (Rebuilding America Infrastructure with Sustainability and Equity) grant, the city has been awarded a $5 million Tier 1 Municipal Harbor Grant funded by the Alaska Department of Transportation and Public Facilities that it will match with funds provided by a voter-approved bond. In March, a second voterapproved bond goes before voters that would help pay back a potential $2 million Federal Clean Water Act loan that would be used to replace the creosote pilings in the South Harbor with steel pilings. “We are hoping to find an additional $10 million, possibly from the EDA [US Economic Development Administration] or other programs, which would bring us up to $42 million,” says Howarth. “You would think with that kind of money, you could build the Taj Mahal of harbors, but not these days.” While the renovation will likely be a design/build project, that has yet to be determined, and the city is working with harbor users to gather input and prioritize different projects. “City management and council have been working really hard on this issue, and they’ve done a really good job on prioritizing what we need to continue on as a community, especially during COVID, which has diverted a lot of attention and made it easy to get distracted and not focus on the future,” says Bailey. “People in the community are happy that they are being included in the planning, and we’ve got a lot of ideas. “In a place like Cordova, most people work for themselves, which means everyone is in charge,” he laughs. “We’re going to have fun with that one.” As the host of the one of largest commercial fishing fleets in Alaska, Cordova Mayor Clay Koplin notes that the restoration of South Harbor is important not only to the city but to the nation as well. Cordova has ranked as high as the fifth largest seafood delivery port in the nation, averaging the 11th largest over the past decade—part of an $18 billion industry in the United States alone.

“A number of major processors work out of this community, and the commercial fleet is the number one source of revenue for Cordova and a number of other cities in [Prince William] Sound,” says Bailey. “There are literally tens of millions of dollars of seafood product harvested through this community.”

Growing Pains All that fishing—plus commercial and private maritime activity, the US Coast Guard, and a growing number of cruise ship visits—doesn’t stop while South Harbor is being rebuilt, so figuring out how to move the fleet during construction takes some logistical coordination. “ There’s no doubt that this project will be disruptive to the harbor; we’re going to have to mobilize quite an extensive ‘move your boat please’ process,” says Howarth. “Our goal is to make sure that there is as little disruption to the fleet as possible. “There are still a lot of questions about how we’ll move all these boats in the harbor without moving all of the boats in the harbor,” she adds. “But smart minds can make this happen, and we’ll make it as quick as we can and get it done.” “I think people realize there is no alternative, so we’ll come up with some type of plan,” agrees Bailey. “Some boats that are seasonal and are stored in the harbor during the winter can come out, and there are plenty of options to move other things around. I’m sure the city will do what it needs to accommodate that.” Working together, the city hopes to get the project off the ground as quickly as it can. “We want to get in the queue as soon as possible, so as not to experience too many delays,” says Howarth. “As soon as the infrastructure money hits the ground, there will be many competing projects, and we want to be at the front of the list.” She continues, “We’re so excited and we couldn’t be happier that finally, finally, finally, we have a project in a small rural Alaskan community that will have a huge impact not only on us but on an industry that supports this entire region.”

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Back On Site in 2022

AGC of Alaska celebrates excellence in construction By Scott Rhode

xcitement was building. Members of the Associated General Contractors (AGC) of Alaska missed their annual conference in 2020, when it was cancelled because of COVID-19. The event in November 2021 was split into two, with the in-person activities postponed as well. When the conference finally took place in January at the Hotel Captain Cook in Anchorage, AGC members were in a mood to party. The room was a little emptier than usual for the statewide conference, but the construction industry professionals who attended were eager to catch up with their colleagues and to honor this year’s awardees. 88 | March 2022

Due to skipping a year, AGC had two of its annual Hard Hat awards to hand out. As it happens, both honorees are past presidents of the trade group. For one of them, the year-plus delay makes his award posthumous.

Hard Hat John C. John Eng was still alive when he was selected for AGC’s Hard Hat award in September 2020. However, he died unexpectedly of natural causes in July 2021 at age 74. Accepting the award on his behalf, his widow Lynn Ann Eng brought a pair of his size-14 cowboy boots up to the podium, so John could be there in spirit. Being there in his

place, she later said, gave her some big shoes to fill. “We’ve awarded the Hard Hat award since 1964, and I’ve been pretty active since the early ‘90s,” says Robby Capps of F&W Construction Company, “and I can’t think of a more worthy recipient than John.” Capps, who was AGC president in 2006, presented the Hard Hat to Lynn. “The policy with AGC has always been that you check your individual company’s business at the door and it’s all about the industry,” Capps says. “The Hard Hat goes a little bit beyond that. The Hard Hat recipient isn’t just a contractor but is involved in the community.”

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Hard Hat 2021 winner Meg Nordale, president of GHEMM Company in Fairbanks. Carter Damaska | Alaska Business

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John moved to Alaska in 1980 from Nebraska, where he grew up as the son of a contractor and earned a degree in construction management from the University of Nebraska. In 1993, he co-founded Cornerstone Construction, now Cornerstone General Contractors, builders of the Veterans Hospital at Joint Base Elmendorf-Richardson and the Alaska Airlines Center arena at UAA. After his term as AGC president in 2013, John sold his interest in Cornerstone. He and Lynn stayed busy, though, with further construction ventures in Alaska and in South Dakota, where his grandfather settled after emigrating from Norway. Semiretirement also saw John spend a month in Africa and, as president of Anchorage Rotary Club, he went to India to help eradicate polio. His legacy also includes endowing the C. John and Lynn Ann Eng Construction Management Scholarship for the University of Alaska. Capps says John was “unselfish with his time” when it came to mentoring. “Wouldn’t he have so much fun here tonight?” Lynn said while accepting the award. “He loved you people. You were everything to him.” She says she’ll put the commemorative hard hat, emblazoned with John’s name, in a place of honor.

Lynn Ann Eng brought a pair of her late husband’s size-14 boots to accept the 2020 Hard Hat award on behalf of C. John Eng. Carter Damaska | Alaska Business

Hard Hat Meg The qualities of a Hard Hat winner are skill, responsibility, integrity, and a distinguished record of giving time and talent for the betterment of the industry and community. They don’t have to be past AGC presidents, Capps explains; it just worked out that way. Meg Nordale was AGC president in 2015, shortly after she became president and majority owner of GHEMM Company (pronounced “gem”), a vertical construction company in Fairbanks. GHEMM itself was honored at this year’s conference for a 50-year affiliation with AGC (as was insurance firm Parker, Smith & Feek). The company is responsible for building Bassett Army Community Hospital at Fort Wainwright; new surgery and imaging centers at Fairbanks Memorial Hospital; and the Chief Andrew Isaac Health Center eight years ago. That facility is now undergoing a 108,000-squarefoot expansion, set to finish this summer after two and a half years of work. Nordale started working for GHEMM in 1994 as an office manager and accountant. The original owners, who founded the company in the ‘50s, were still there. “I’m particularly grateful for the opportunities they gave to me, the confidence they had in me,” she says. “They taught me what I know, and they let me make my own mistakes. They did not stop any of my ambitions.” She worked her way up to chief Alaska Business

financial officer and, ultimately, began leading the whole company. “I’m particularly proud of the people that work for me,” Nordale says. “It’s not just me. It takes a whole team, every facet of the person that works there.” Nordale also takes pride in promoting careers for women in the construction industry. “The innate skills and talents that women bring to the table are very much valued in this industry,” she says. “There’s a whole vast world of opportunity, specifically for women.” From Fairbanks originally, Nordale studied marketing and finance at the University of Denver. She was working in insurance at Willis Corroon Corporation when she transitioned to the construction sector. Now, “Through her leadership and professionalism in community and in construction, Meg Nordale exemplifies all the best traits of the construction industry,” according to the plaque she was given. “I can think of no better career for someone to have, or specifically a single mom who started out all by myself,” says Nordale. “It’s been absolutely wonderful, and no I’m not retiring. I look forward to doing it for a really long time.”

Associate and Volunteer Insurance and risk management is a natural ally of the construction industry, judging by Nordale’s career path—and by the sponsor of the awards reception. March 2022 | 89

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Past Hard Hat honorees line up for the presentation of two new awards. Carter Damaska | Alaska Business

Marsh McLennan Agency (MMA) has been a major sponsor of all AGC events, and its employees participate in AGC committees and help organize events. That involvement earned MMA the Associate of the Year award. Presenting the honor, AGC Executive Director Alicia Amberg said MMA “really just go above and beyond, all the way around, with the best sponsorships, committee participation, and they’re always all-in. They’re always supporting us, always coming to our events. They have a great presence.” Accepting on behalf of the firm was Dax Lauwers, a client executive focusing on construction and transportation. “I get along well with contractors,” he says. He started volunteering with AGC about three years ago and chairs the Construction Leadership Council (CLC). What makes his company worthy of AGC’s recognition? “We do a good job of listening to the needs of our clients, not pretending to know what they are,” says Lauwers. “We ask good questions.” Another CLC co-chair is the winner of the Stan Smith Volunteer of the Year 90 | March 2022

award, chosen by AGC staff. Kiersten Russell slowly recognized herself as the winner was being described, and she declared herself “shocked” to be named.

AGC Executive Director Alicia Amberg (right) with Kirstie Gray (left), an AGC All Star recognized for her efforts to educate others about the benefits of AGC of Alaska membership. Carter Damaska | Alaska Business

Like her friend Lauwers, Russell has also been giving her spare time to AGC for three years, in addition to her day job as a commercial loan officer at Northrim Bank. “I looked for a niche that I wanted to get involved with,” she says, “and I loved the people that are associated with AGC.” Russell is familiar with construction through her work with financing building projects, extending lines of credit, and arranging loans for equipment. Her proudest achievement for AGC is securing Northrim’s signature-level sponsorship of the CLC reception. The bank also donated door prizes for the Construction Leadership Council Grill & Chill. “The construction industry is incredibly important to the state of Alaska,” says Russell, “and that encouraged my involvement to volunteer for different events with Associated General Contractors.” Russell also co-chairs the Dinner Dance Committee. The soirée would have followed the night after the reception, but unfortunately it was cancelled entirely for the weekend. More time to plan for the dance at the next AGC conference.

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Outside Counsel Investigations Why it’s important, what to expect By Bryan Schroder

very executive or business owner has shown up at their office on what seemed to be a perfectly normal morning and walked into a disaster. Most of the time when business leaders face a problem, they can evaluate the situation, take appropriate action, then move on. But what if the problem is too thorny—for any number of reasons? Maybe it’s beyond the management team’s area of expertise, such as a cyber-attack or a situation that has drawn the interest

92 | March 2022

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of government regulators or even law enforcement officials. Or perhaps it involves allegations of misconduct of someone on a senior leadership team. In such situations, business leaders should consider whether hiring outside counsel to conduct an investigation is their best option.

Why Investigate? Why do an investigation at all? Because the business matters. People don’t get to be a business owner or senior executive by ignoring problems. If something has gone wrong, they want to know why, and they want to know what can be done to make sure it does not happen again. If the problem is significant, especially one that might draw the attention of government regulators or law enforcement officials, they want to be ahead of the information curve, not behind. They want to know what the government knows, preferably before they know it. The bottom line is that taking proactive measures pays dividends. Why hire an outside counsel to conduct the investigation? After all, senior leadership and owners know the business, and hiring outside counsel is a considerable expense. However, hiring outside counsel communicates to everyone in the company that when the owner or management team identifies a problem, it is dealt with directly. Depending on the type of situation, it can also send a message to employees that they need to follow the company’s established values and code of conduct. If the matter has drawn, or may draw, the attention of government regulators or law enforcement officials, an outside investigation can pay even greater dividends. The Department of Justice and the Securities and Exchange Commission both have policies in place that reward companies for voluntary disclosure of information related to violations. An investigation can provide that information. However, to maximize the benefit, the investigation needs to be conducted by a thorough, independent entity. Hiring a law firm to conduct the investigation also adds an additional level of control: protection of information under the attorney-client privilege and attorney work product www.akbizmag.com

While defining the investigation as clearly as possible is important, be cautious of making the scope too narrow. Outside counsel should be able to follow the facts to get to the bottom of the matter.

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March 2022 | 93

Hiring outside counsel communicates to everyone in the company that when the owner or management team identifies a problem, it is dealt with directly.

doctrine, both recognized in federal and state law. In-house investigations do not offer the same protections. Even if the company later decides to release information to the government, it retains greater control of information that is protected under the attorneyclient relationship. And if there are potential conflicts of interest, hiring outside counsel helps ensure that the investigation is independent and is viewed as independent by others, including the government.

Investigative Steps What should decision makers expect if they decide to hire outside counsel to conduct an investigation? The first step is to set ground rules about the scope of the investigation. First, who will the outside counsel report to within the company? In many cases, outside counsel will report to the management team. However, if the company is publicly held, outside counsel may report to the board of directors. This is especially necessary if members of the management team are implicated in the matter. Second, the company must determine the

scope of the investigation. While defining the investigation as clearly as possible is important, be cautious of making the scope too narrow. Outside counsel should be able to follow the facts to get to the bottom of the matter. Moreover, if government regulators or law enforcement officials become involved, the credibility of the investigation will weigh heavily on their decisions. Credibility of the investigation will be judged by the independence and reputation of counsel, as well as the ability of the investigators to fully examine the matter. As to investigative steps, expect outside counsel to focus initially on documents. Preserving documents (and any other physical evidence) must be done quickly and thoroughly. In the modern age, this means electronic files as well as paper. The broad range of electronic files makes this especially challenging. The company must identify and take steps to retain a variety of files including (and especially) emails, social media, and files contained on devices assigned to employees. In addition, the company

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must suspend any processes that delete or overwrite existing files. The investigators will also interview employees or others with information. Those interviews will be sequenced according to the situation. Some interviews might be conducted early in the investigation, while others will happen after the investigators have had the opportunity to fully review documents and other evidence. It is important for the company to encourage all employees, even former employees, to fully cooperate with the investigation. Demonstrating public support for the investigation shows employees, regulators, and the public that the company is serious about getting to the bottom of any wrongdoing. In order to retain attorney-client confidentiality, employees will often be asked to limit any discussions about the matter to those within the company and possibly to only certain persons within the company.

Final Deliverables What is the output of the investigation? In most cases the outside counsel/

independent investigator will provide a report, either oral or written. The client, with advice of counsel, chooses the type of report, usually driven by the preferred outcome. An oral report makes it easier to maintain confidentiality. A written report is more valuable when negotiating with regulators or law enforcement officials. Moreover, if the investigation is based on a publicly known incident or situation, choosing an oral report may look like the company is trying to sweep information under the rug. A written report gives more of an impression of transparency. While no company wants to be in the situation of doing internal investigations, and especially hiring outside counsel, how the management team or board of directors handles a difficult situation is critical. Properly dealing with a challenging problem, especially in a thorough, evenhanded, and transparent (as the case allows) manner, will build confidence in the company’s leadership. That confidence, from the employees within to the stakeholders and the public on the outside, will make a successful

resolution of the underlying problem much more likely. Bryan Schroder practices law, including outside counsel investigations, with Cashion Gilmore & Lindemuth in Anchorage. He is the former US Attorney for the District of Alaska and is a retired US Coast Guard captain.

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OIL & GAS

Shell’s Game

Making the best of a bad hand By Scott Rhode

96 | March 2022

n September 28, 2015, Shell Oil abruptly ended its efforts to drill off Alaska’s Arctic coast. At the time, the company had roughly 400 workers at an office in Anchorage, plus an additional 3,000 contractors anticipating another possible drilling season. These days, Shell has little to no physical presence in Alaska. In 2021, the company had so much trouble finding an operator to explore its only remaining Beaufort Sea unit that the state Division of Oil & Gas had to approve an extension until the end of 2022. That extended search is part of a process that began in late 2020, when official filings seemed to hint at a grand reprise of Shell’s Alaska adventure. That inference, though, was colored by the wish for another major player to inject its industrial vitality into the state’s economy. Wishes aside, here’s reality: “Shell has no intention of operating this unit and plans to fully divest out of the venture,” Shell US media spokesperson Cindy Babski says in an email. Her earlier statements might have left some hope, as in 2020 when Babski told the website Arctic Today that the company’s latest moves in Alaska were taken “in order to preserve our leasehold options.” But those options are limited. There was never a chance that Shell’s red-and-gold scallop would scuttle around the North Slope again. Once bitten, twice shy, as the saying goes, and Alaska bit Shell in the past. The company’s inclination to seek a graceful exit is perfectly understandable.

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The Clock Is Ticking On paper, Shell has a plan for activity in Alaska. Its subsidiary, Shell Offshore Inc., submitted a multi-year exploration plan for West Harrison Bay, northwest of the mouth of the Colville River, in August 2020. That was the first peep from the company since it was dealt some bad cards five years earlier. The new timeline calls for a unit operator (yet to be named) to acquire seismic data by September 2022. Initial exploration drilling is scheduled for the winter of 2023/2024. A second well would be drilled the following season. Those first two winters would inform a new exploration or development plan to be submitted by October 1, 2025, ninety days before the plan of exploration expires. Without the plan of exploration, Shell’s access to West Harrison Bay would evaporate by the end of this year, ten years after the company first bought the eighteen leases covering 86,400 acres. The filing in 2020 was a request to consolidate the leases into a single unit. The state Division of Oil & Gas granted the unitization license in December 2020, which extended the leasehold. Approval was conditioned on Shell finding partners to spread cost and risk, with a deadline of December 31, 2021, to finalize commercial arrangements. With less than three months to go, on October 6, a company attorney asked for more time, blaming delays on a volatile oil market and the logistical challenges of meeting during the COVID-19 pandemic. On November 18, Division of Oil & Gas Director Tom Stokes approved the amendment to the exploration plan. Stokes said the division found that extending the deadline until the end of 2022 would be in the public interest. Going through the motions should hardly be an indication that Shell is returning to Alaska. “I think it’s more likely I’ll become a relief pitcher for the Chicago Cubs, and I’m seventy years old and I can’t throw a curveball,” says oil and gas writer and analyst Larry Persily. Shell’s only logical play, as he sees it, is to sell the West Harrison Bay leases before the state revokes them. www.akbizmag.com

A ticking clock was enough to convince ExxonMobil to begin producing natural gas condensate from Point Thomson in 2016 after those leases nearly expired for lack of activity, so it’s not unreasonable to imagine Shell following a similar path. But ExxonMobil has the largest working interest at Prudhoe Bay, as well as part ownership of the Trans Alaska Pipeline System.

“They were hit hard through COVID, everybody was… They’re all looking at reprioritizing limited capital dollars, so Alaska has to compete against a lot of other potential projects for a shrinking amount of capital.” Kara Moriarty, President & CEO Alaska Oil and Gas Association

Shell is not ExxonMobil, though, and the companies have quite different histories and relationships in Alaska.

Season of Discontent Before acquiring the West Harrison Bay unit, Shell bought its first Beaufort Sea leases in 2005. More followed in 2007, and then in 2008 the company spent $2.1 billion to acquire leases in the Chukchi Sea off Alaska’s northwest coast, in federal waters. Go there now, all that remains is open ocean 65 nautical miles offshore and, down below, a couple of unproductive holes in the seabed. The 2012 exploration campaign was so disappointing that the Obama administration conducted a high-level Alaska Business

March 2022 | 97

review to determine what went wrong. The Department of the Interior concluded that Shell “entered the 2012 drilling season without having finalized key components of its program, including its Arctic Challenger containment system, which put pressure on Shell’s operations and schedule….” The report also criticized Shell for inadequate oversight of contractors and “serious” marine transport issues with drill rigs Kulluk and Noble Discoverer. Exploration began late in the 2012 ice-free season, largely because regulatory standards at the time required subsea containment systems to be deployed prior to drilling into oilbearing zones. The operating window was further constrained by blackouts during subsistence hunts and the need to coordinate with emergency response from shore. For its part, Shell blamed the Obama administration for moving regulatory goalposts. For example, plans for two simultaneous wells, 9 miles apart in the Chukchi, had to be changed to 15 miles apart because of a 2013 marine mammal protection rule.

“We have sold or relinquished all our frontier licenses in Alaska and have no plans for frontier exploration offshore Alaska.” Cindy Babski Media Spokesperson Shell US

The federal review was not entirely negative, though. The report credits “Shell’s extensive efforts to communicate and minimize conflict with Alaska Native communities that rely on the ocean for subsistence use.” Also, the report recognizes that the company was operating in an “unforgiving” harsh environment. That harshness proved

to be a problem even after the drilling season concluded.

From Bad to Worse “I believe that this length of tow, at this time of year, in this location, with our current routing guarantees an ***kicking.” [Redaction in the original National Transportation Safety Board marine accident brief, quoting the master of the tow vessel Aiviq.] The time of year was late December 2012, when Shell was trying to outrun the calendar before its assets might be subject to state property tax. The mobile drilling unit Kulluk, a pan-shaped rig owned by Shell and operated by Noble Drilling, was being towed south to its homeport in Seattle for maintenance and repairs. The location was about 50 miles off Sitkalidak Island, or about 100 miles southwest of the city of Kodiak. The kicking began just before noon on December 27, when the tow connecting Kulluk to Aiviq came apart. The rig drifted for hours before Shell decided to evacuate the eighteen crew members aboard. Coast Guard helicopters attempted an airlift the next day, but the weather was so rough

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that they weren’t successful until December 29. By late that night, Aiviq and another tow vessel tried to bring Kulluk to safe harbor near Sitkalidak Island. That effort lasted until 8:40 p.m. on December 31, when waves pushed Kulluk aground. There it sat for weeks until salvaged. Four members of Aiviq’s crew suffered minor injuries. Kulluk was substantially damaged. Fortunately, none of the petroleum on board spilled, resulting in no significant environmental harm. “No single error or mechanical failure led to this accident,” the National Transportation Safety Board brief concluded. “Rather, shortcomings in the design of a plan with an insufficient margin of safety allowed this accident to take place.” After being bucked off the Alaska horse so badly, Shell’s reluctance to saddle up again is quite natural.

Headwinds According to the 2020 filing that signaled Shell’s continued interest in Alaska, the company’s departure five years earlier was “due to discouraging well results, high logistic and

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technical costs, and a challenging and unpredictable federal regulatory environment.” The grounding of Kulluk was not the proverbial final straw, nor was the disappointment of the 2012 season. Shell tried again in 2015 with a submersible rig 149 feet beneath the Chukchi Sea, drilling the Burger J well to a depth of 6,800 feet. Again, no payoff. Within weeks, Shell turned its back on Burger J and relinquished all other leases in Alaska. The $7 billion exploration program between 2012 and 2015 was a total loss. “They would love to recover some of their investment on those leases,” says Persily, “but I bet in the inner sanctums of Shell they’re pretty realistic that they may not recover any of that investment.” And that’s a reality that’s influenced by more than Shell’s last few exploration years. “They were hit hard through COVID, everybody was,” says Kara Moriarty, president and CEO of the Alaska Oil & Gas Association. Amid the pandemic, every oil company massively cut back on their workforce. “They’re all looking at reprioritizing limited capital dollars,” she says, “so Alaska has to compete against a lot of other potential projects for a shrinking amount of capital.” Financial options have been narrowing since 2020, when four of the nation’s six biggest banks—Chase, 100 | March 2022

CitiBank, Goldman Sachs, and Wells Fargo—set policies to forbid financing for new Arctic drilling. Dozens of smaller banks have followed. Shell itself is not entirely unsympathetic to those policies. Persily observes, “Shell is one of the leaders for turning away from fossil fuels toward a future of renewables and green energy,” explaining the company’s disinterest in betting on Arctic offshore oil. Indeed, “We have sold or relinquished all our frontier licenses in Alaska and have no plans for frontier exploration offshore Alaska,” says Babski. The only other active leases in the Beaufort Sea, according to the US Bureau of Ocean Energy Management, are at the Northstar field, operated by Hilcorp. Hilcorp is also awaiting regulatory approval for its Liberty project, located within the barrier islands about 4 miles offshore. There are zero active leases in the Chukchi Sea; after Shell’s difficulties, in 2016 the Obama administration withdrew the area from federal leasing. “We know there are permitting challenges,” Moriarty says, “and we have a federal administration that has a different view of what the future for oil and gas looks like.” In light of that “different view,” West Harrison Bay’s location near shore is an advantage, as Shell deals with a friendlier state regulatory regime.

Anybody Interested? If Shell intended to stay in Alaska, then West Harrison Bay wouldn’t be a bad proposition. According to its unitization request, “The technical risk associated with the West Harrison Bay prospects was decreased by a string of discoveries in the same play.” The leases are on top of the Nanushuk sands formation, the same geology underlying the on-shore Willow and Pikka units being developed by ConocoPhillips and Oil Search, respectively. No wells have ever been drilled in the West Harrison Bay leases, but companies exploring adjacent areas have seen some promising results. Located just north of the Willow prospect, in state waters within 3 miles from shore, West Harrison Bay is much closer to pipelines and other infrastructure than the Chukchi leases ever were. The location is also subject to less severe sea ice conditions, in much shallower water. Babski declined to discuss how much Shell has already invested in the asset. Its value may increase, depending on the results of the exploration plan. Anyone with a couple billion dollars to spend, along with the nerve to play in one of the toughest oil provinces in the world, could find West Harrison Bay very interesting. Plus, they’d be doing Shell a favor.

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MINING

Zeal for Zinc

Red Dog Mine feeds the hunger for a critical metal By Isaac Stone Simonelli

veryone knows Alaska’s economy is dominated by oil and gas, but not when it comes to foreign exports. The most valuable commodity Alaska sends to other countries is, in fact, zinc ore and concentrate. As of 2020 (the most recent data compiled by the US Census Bureau), Alaska exported $730 million worth of zinc. That’s down from over $1.2 billion in 2017 but still more than the $556 million worth of petroleum exported (because most Alaska petroleum is consumed domestically). When the rest of the world looks at Alaska’s resource output, they think zinc. Zinc consumption has gone from about half a pound per person globally in 1960 to about four pounds in 2020. The metal is nearly ubiquitous, showing up in everything from dietary supplements and sunscreen to fertilizer and ordinary alkaline batteries. The most prominent use of zinc, though, is as a galvanizer: protecting both iron and steel from corrosion. “We are galvanizing—making corrosion resistant steels— in greater quantities than we ever have before,” says David Hammond, a mineral economist at Hammond International Group who also works as a consultant for NANA Regional Corporation. “A lot of infrastructure uses zinc metal in it.” NANA leases the mineral rights of the Red Dog Mine northwest of Kotzebue. Through an operating agreement with Teck Alaska Incorporated, Red Dog produced 491,000 tonnes of zinc in 2020, making it the world’s largest producer of the metal, with the largest reserves.

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Red Dog Mine is responsible for 73 to 75 percent of all US zinc production, according to NANA Vice President of Natural Resources Lance Miller. Red Dog also produces significant quantities of lead (Alaska’s third most valuable export) and some silver, but zinc contributes about 80 percent of the product value of the surface mine. Due to its primary use to prevent rust, zinc demand is intrinsically connected to infrastructure development both within the United States and abroad. It’s used in rebar, cars, guardrails, brass fixtures, and so much more. “Almost everything you can think of where you don't want it to rust,” Miller says. Within the last decade, zinc prices rose such that a penny’s worth of the metal costs more than $0.02. That is, every penny is made of 97.5 percent zinc, and demand for the resource is so high that the cost of minting the coins exceeds their face value.

C O M M U N I T Y B U I L D I N G B LO C K S. Mines in Alaska are an economic development director’s dream, especially for local communities. A mine is labor intensive, so it provides year-round, high-paying jobs. It’s a substantial source of property tax. Then there’s the local buy, charitable donations and energy purchases from the hometown utility, which subsidize everyone’s electricity rates. Mines, like Hecla Greens Creek, are critical infrastructure for Alaska communities.

Situation Critical The US Geological Survey (USGS) proposed adding zinc, along with nickel, to the nation’s critical minerals list in a revised draft of the list announced in November 2021. “The USGS’s critical minerals list provides vital information for industry, policymakers, economists and scientists on the most important minerals when it comes to US supply chains,” says Assistant Secretary of the Interior for Water and Science Tanya Trujillo. A critical mineral is defined as a nonfuel mineral or mineral material that is essential to the economic or national security of the United States and is vulnerable to disruption. The USGS move comes as zinc inventories run low, dropping by more than 50 percent over the last five years. “This was drafted as zinc inventories decline and spot prices rise in a context where the United States and several other nations, including the European Union, announce major infrastructure investment plans that will require zinc for galvanization of steel components,” states a press release from Osisko Metals, a Canadian exploration and development company. The Osisko statement adds, “Further exacerbating the situation, North www.akbizmag.com

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“The Western world kind of let both the mining and the smelting and refining of zinc get away from it… Where the smelting and refining gets conducted is probably in my mind more important than finding the zinc deposits.” David Hammond, Mineral Economist Hammond International Group

American supply production is expected to decline by over 35 percent in the next three years due to mine closures and falling production in older mines, highlighting the placement of zinc as a critical metal.” Osisko’s reaction to the USGS listing concludes, “There are very few zinc development projects in the pipeline to meet production shortfalls this decade.” Zinc can be recycled. Indeed, recycling is relatively economical, and the metal retains its physical properties in the process, according to the International Zinc Association. But recycling is only able to meet a small portion of the demand for zinc, Hammond points out. There is only one primary zinc smelter facility in the United States: the Nyrstar smelter at Clarksville, Tennessee. That facility alone does not meet domestic demand, though, with the country importing 710,000 tonnes annually, according to the USGS. Thus, more than 80 percent of the domestic consumption of the metal comes from imports. “Zinc mine production runs, let’s say, 12.7 million tonnes of finished zinc

coming from primary production… coming right out of the mine,” Hammond says of global production. “There’s another million plus tons of finished zinc that comes from recycling.” Because of the price for zinc—even in its heightened state—the concentration in the ore needs to be significantly higher than many other materials. “If I'm mining copper, if I have dirt where less than 1 percent of a ton of it is actually copper, that's pretty good,” Hammond explains. “For zinc, I need grades that are up around, say 14 percent—certainly over 10 percent—in order to make an economic go of it.” Red Dog Mine meets that requirement.

Zinc’s Journey The two most visible features of Red Dog Mine are its huge open pit and, about 50 miles away on the Chukchi Sea shore, two long buildings with peaked roofs, painted bright red, white, and blue. These are for temporary storage of zinc concentrate. Hammond explains that ore is immediately processed into concentrate composed

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of about 50 percent zinc, which looks like dark black sand. Trucks haul the concentrate to the port, about fifty loads per day, every day. From October to June, the concentrate is heaped inside the two storage buildings. When safe passage is possible on the Chukchi Sea, Foss Maritime barges the concentrate to cargo vessels waiting offshore, which ship the zinc to smelters. Sea ice conditions permit, on average, about twenty-three shipments per year during the 100-day summer shipping season. One-third of zinc from Red Dog is exported to British Columbia, where Teck owns a smelter called Trail Operations. It’s one of the world's largest fully integrated zinc and lead smelting and refining complexes. The concentrates are first treated in either roasters or pressure leach plants. Then impurities are removed before the zinc is electroplated onto cathodes in an electrolytic refining plant. Finally, the cathodes are melted so the zinc can be cast to order. Miller explains that Red Dog’s zinc is roughly split between smelters in

Canada, Europe, and Asia. Europe gets roughly 43 percent, leaving 25 percent for smelters in Asia. “You want to send your product around to a lot of different places— just not too many—for diversification, making sure that you’re getting competitive rates,” Miller says, adding that a mine also doesn't want to be overly dependent on a single smelter. Most of the concentrate is tied up in long-term contracts at market prices, which are subject to annual negotiations. The remaining amount is sold on the spot market based on prevailing market quotes, according to Teck. Although Red Dog sends the lion’s share of its zinc concentrate to Europe and Canada, Hammond points out that most global zinc smelting is done in Asia. First it was in Japan and Korea, and, most recently, in China. “The Western world kind of let both the mining and the smelting and refining of zinc get away from it,” Hammond says. “Where the smelting and refining gets conducted is probably in my mind more important than finding the zinc deposits.”

Limited Supply While smelters play a key role in the supply chain for zinc, the relatively few zinc mines—when compared to copper or other types of mines—means that any disruption to operations can cause a short-term spike in prices. “These supply disruptions tend not to last for five or six years. They get addressed,” Hammond says. “If the zinc price goes up, some mines that stopped producing might start producing again. And that would bring down the price.” Currently, there are fewer strong zinc deposits being mined now than just a few years ago, Miller explains. “So then when the market anticipates that the supplies are getting tighter, that of course drives the price up—and prices are up right now,” Miller says. Hammond is quick to note that some of the recent closures of zinc mines in the United States were not related to the economics of the mine. “They closed because they just ran out of ore. There was nothing left to mine in them—they were depleted,” Hammond says.

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“If you say the price of zinc is high, we need to go look for a new zinc deposit and build a new zinc mine— that doesn't happen overnight… Once you find something and you say, ‘This looks like it would be profitable to invest in and bring online,’ you have five to ten years of environmental permitting that you have to do.” David Hammond Mineral Economist Hammond International Group

106 | March 2022

As of the end of 2020, the Red Dog Mine was estimated to still have 46 million tonnes of ore at a grade of 12.9 percent zinc remaining in the mine. Red Dog Mine is currently estimated to stay in production until 2031. Teck is proposing 2022 exploration programs on state lands comprising surface geoscience studies on and drill testing to advance the Aktigiruq project, explains Les Yesnik, the general manager for Teck’s Red Dog operations. “These programs are important to provide long term optionality for the mine,” Yesnik says. The mine is currently constrained by its existing ore body and tailings storage facility. “If additional resources such as the Anarraaq and Aktigiruq exploration targets prove feasible for development, and if a suitable location for additional tailings can be found, the mine life could be extended.”

Eat This Mineral While galvanizing makes up 60 to 70 percent of the use for commercial zinc, there is a significant amount that finds its way into other products. For instance, long before zinc was on the US critical mineral list, then-UN Secretary-General Ban Ki-Moon named the metal a “lifesaving commodity” in the 2012 UN Commission Report. An estimated 450,000 children die every year from zinc deficiency related issues, according to the International Zinc Association. Additionally, a zinc deficiency has been linked to the stunted and impeded intellectual development of more than 140 million children under the age of five, according to the Zinc Saves Kids Initiative. The initiative is a partnership between the International Zinc Association and UNICEF to provide zinc and multiple micronutrient powders that include zinc to young children in developing countries who are most affected by zinc deficiency. The program includes efforts to increase awareness and access to training for medical professionals, as well as assisting with logistics management. “The challenge isn’t producing more zinc; it is getting zinc to those who need

it most. That requires educating health workers, mothers, and caregivers and advocating with the local government about zinc’s importance for human health,” states the Zinc Saves Kids Initiative website.

Charging Forward Hammond estimates that consumption for zinc will continue to increase over the long term for the foreseeable future, as technological innovations find new uses for the material. Zinc-ion batteries are a proposed replacement for lithium-ion, currently the most common type of rechargeable battery. Key minerals—cobalt, lithium, nickel, and copper—needed to make lithium-ion batteries are in short supply or are becoming increasingly expensive as demand rapidly increases. Several companies around the world are developing zinc-ion batteries as an alternative, such as Zinc8 Energy Solutions in British Columbia. If zinc-ion batteries or any other new technology reliant on the metal becomes a dominant force in the market, it will only further increase the demand and consumption of the metal. To meet a future demand, Hammond believes the groundwork for domestic supply must be laid decades ahead of time. “If you say the price of zinc is high, we need to go look for a new zinc deposit and build a new zinc mine— that doesn't happen overnight,” Hammond says. “Once you find something and you say, ‘This looks like it would be profitable to invest in and bring online,’ you have five to ten years of environmental permitting that you have to do.” He notes that in some cases, where there are significant hurdles in the permitting process, it can take twenty years or significantly longer. “It seems like the public is becoming more aware of the need for metals in society, not that they necessarily like mining,” says Miller. “Yet at least for commodities like zinc and copper there is a growing understanding of how important minerals are. Zinc is really one of the fundamental building blocks of our quality of life, our lifestyle, today.”

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Where Did the Cars Go?

Vehicle shortages hit buyers, sellers, renters, and tourism agencies By Nancy Erickson

108 | March 2022

Alaska Business www.akbizmag.com

LoveTheWind | iStock

“I

grew up in the car industry. Everything I’ve ever done has been in the car industry,” says Steve Allwine, president of Mendenhall Auto in Juneau. “I have never seen this set of circumstances ever in my lifetime.” The problem is a lack of supply. “On the new car side, we don’t have a lot on the ground at any given time,” Allwine says of his Jeep, Subaru, Toyota, Honda, and Chevrolet stores. Anyone shopping for a car or truck lately may have noticed a certain barrenness at dealerships, not just in terms of inventory on the lot but an absence of coffee and snacks in the waiting area. Marten Martensen, owner/ dealer of Continental Auto Group’s five stores in Anchorage, says cutbacks have reached that deeply. He’s also had to eliminate costs such as courtesy shuttles and advertising and reduce his payroll by forty to fifty employees.

The supply problem began as a sudden drop in demand that was triggered, of course, by COVID-19. Then the pandemic’s sticky tentacles entangled the microchip industry, which extended into auto manufacturing, then auto sales and rentals, and now even tourism businesses are suffering a double blow for lack of automobiles. In a state as dependent on travel as Alaska is, the auto and tourism sectors have had to get creative to meet the supply chain issues head-on.

“Many of our small business partners had a recordbreaking summer [in 2021]… Our tours were sold out. ”

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Chain Reaction Two years ago, the auto industry was chugging along fine, with between 15 million and 17 million new cars sold annually nationwide, plus three to four times that in used cars. When COVID-19 arrived, the economic uncertainty halted car sales. “Meanwhile rental car companies are selling off their fleet,” says Charlie Vogelheim, an auto industry advisor. “Nobody’s traveling. Nobody’s renting cars. People are starting to cancel their orders and hunkering down.” Seeing a drop in demand, suppliers of microchips postponed plans to ramp up manufacturing. Power outages in Texas last winter also slowed down chip production in that state. Auto demand has returned, but without the microchips that modern cars and trucks depend on, manufacturers can’t keep up. “Within a couple months, the auto industry, in and of itself, starts to www.akbizmag.com

Alaska Business

March 2022 | 109

“I’ve personally been in the Alaska car rental business for over thirty-five years and have never experienced anything like the last two years.” Gary Zimmerman Vice President Floyd & Sons

recover, but now we’ve got a problem in terms of the supply chain,” Vogelheim explains. Eighty percent of global microchip supply now comes from Taiwan and South Korea. Vogelheim—executive editor at Kelley Blue Book, vice president at J.D. Power and Associates, and host of the weekly podcast “Motor Trend Audio”—says the United States is attempting to revive its chip production, but building a new chip factory is a twoyear process. Vogelheim believes shortages will continue at least through the first quarter of 2022 and likely through most of 2023. To further complicate matters, some vehicle manufacturers are beginning to stockpile chips. “If they get any at all, they want to get as many as they can,” Vogelheim says. “Kinda like you and I stockpiling toilet paper.”

Empty Lots New car dealerships are working to remain innovative until inventory gets back to normal. Martensen says his dealerships in Mazda, Volvo, Subaru, Honda, Acura,

110 | March 2022

and Nissan are experiencing shortages in everything from new cars to rubber gloves worn by technicians. “The new car shortage started in June of 2021,” says Martensen. “Our manufacturers basically told us they were canceling all of our incoming cars. We call it our pipeline.” His company is also seeing shortages of all types of parts—body parts for fender benders to mechanical repair parts. He says manufacturers are being quiet as to when these shortages will end. “I can’t really blame them because they want to meet demand as much as we do,” he adds. “They’re in the business to build cars as much as we’re in the business to sell them. They just don’t know when we’ll see more semiconductors.” Allwine’s Juneau dealerships face a more unique challenge compared to his Anchorage counterparts. Vehicle prices nationwide have escalated due to the high demand and low inventory, but because Allwine is the only game in a city accessible only by air or water, his pricing has to remain conservative.

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“Retailers can choose what they sell their vehicle for. That’s the way it works, but because we’re in such a closed environment, we can’t do that,” says Allwine. “That is to say, maybe we’re not discounting them as aggressively as we have in the past, but we’re not overcharging. That’s a delicate balance for us in Juneau.” Because of his association with domestic manufacturers—most of his inventory comes from the United States or Canada—Allwine says he has the ability to order a specific vehicle. But that doesn’t mean they will build it. “If they have the availability of the component, they look at that as a sold order for a retail customer and will build that vehicle first,” Allwine explains. “That’s how we’re handling it: by selling into the future, into vehicles that are coming.”

Desperately Seeking Used Cars “No doubt the pandemic has been the biggest challenge of the past twenty-five years for us,” says Steve Sautner, president of Dealers Auto Auction of Alaska. “Auctions are built

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on surplus goods. Surplus goods, in our case vehicles, are created when manufacturers put new vehicles into the supply chain. The pandemic has created new car shortages, which created used car shortages.” More than 9 million cars are sold at auction every year nationwide, Sautner says. Auctions bring buyer and seller together to obtain a mutually agreed upon price, handle administrative functions of the sale, and resolve disputes that may arise. Sellers include banks, corporate fleets, rental car companies, and auto dealerships. Marcus Waehler is owner of Red White and Blue Auto Sales, a used car dealership in Anchorage. He says it’s particularly challenging to find clean, well-priced inventory. “Auction volumes are low. Less people are trading in vehicles or selling their vehicles and more dealers are competing over less inventory,” Waehler says. This dynamic began in May 2020 and has vigorously continued to this day. “Now with new car dealers unable to obtain new vehicles, rental companies

Alaska Business

unable to purchase new vehicles for their fleets, and an unexpected surge in demand, everyone began to compete to purchase the same small number of available used cars in the marketplace,” says Waehler. “As a result, used car prices have soared 30 to 40 percent above pre-pandemic levels.” “This just doesn’t happen in the car industry,” says Martensen of Continental Auto Group. “Cars are a depreciating asset. That is no longer the case.” Waehler says he’s had to expand and adjust his buying habits to match market values and pay what is necessary regardless of published Kelley Blue Book values, whose valuation services have simply been unable to maintain pace with the market.

Rental Health Emergency “Everybody loves a challenge, right,” says Gary Zimmerman. “I’ve personally been in the Alaska car rental business for over thirty-five years and have never experienced anything like the last two years.” As vice president of Floyd & Sons, Zimmerman operates major rental car companies in Anchorage

March 2022 | 111

“I can’t really blame [auto manufacturers] because they want to meet demand as much as we do… They’re in the business to build cars as much as we’re in the business to sell them. They just don’t know when we’ll see more semiconductors.” Marten Martensen Owner/Dealer Continental Auto Group

112 | March 2022

and Seward. Rental car companies normally restock their fleet with new vehicles in the spring. With the onset of COVID-19 in 2020, Zimmerman canceled inventory that spring, and manufacturers actively started canceling pending orders shortly after. With too many vehicles remaining in his fleet, he started liquidating inventory. But when the rental car market started recovering and Zimmerman was ready to restock his fleet, he couldn’t. “Manufacturers would inform us that our orders placed months earlier were being canceled—often at the last minute,” he explains. “Due to new car shortages and every manufacturer struggling to supply inventory, we ran with a smaller fleet in 2021 than even our 2019 fleet level.”

Guides, Not Rides The pandemic has challenged Alaska’s travel and tourism industry any number of ways: travel restrictions, ever-changing mandates and industry protocols, decreased visitor revenue, workforce recruitment and retainment, and inventory supply shortages. That includes rental cars, according to Sarah Leonard, president and CEO of the Alaska Travel Industry Association. Alaska saw zero cruise ship activity in 2020 and only a little in 2021. Consequently, many travelers who had plans to cruise to and from Alaska opted to visit regardless and sought out self-drive itineraries, using rental cars for transportation rather than rail or bus services, according to Roberta Warner of Alaska Tour & Travel. “Travelers were hitting up anyone and everyone that might have a car rental,” Warner says. “Our team had the unfortunate position of frequently being the bearer of bad news, informing travelers that we too were sold out or unable to secure them a car rental reservation.” Salmon Berry Travel & Tours takes a different approach that lightens the demand for rental cars. Located across from the Visit Anchorage Log Cabin Visitor Center in downtown Anchorage, Salmon Berry prides itself on their high level of guest services. When travelers arrive without

transportation, agents set them up with daily guided tours. In 2021, “Many of our small business partners had a record-breaking summer,” says Salmon Berry coowner Mandy Garcia. “Our tours were sold out. Without rental cars, we had many more days of explaining to guests what they could do within walking distance.” If and when rental cars were available, prices were comparable to a day-long private guide tour, but Garcia says even the private guide options were sold out.

Person-to-Person Alternative With cars unavailable for travelers to rent, some travelers resorted to alternatives, such as U-Haul trucks or RVs. Visitors also have an option that’s new to Alaska: Turo. Just as Airbnb enables homeowners to monetize idle property, Turo allows private vehicle owners to list and rent their vehicle directly to a customer. Many individuals in Alaska cashed in on the lack of rental cars in 2021 by lending their own cars. Brian Huling rented out his 2014 Subaru Outback all last summer for $244 per day, even though it was his only vehicle. “It worked out pretty good; way easier than I thought it would be,” says Huling, who also works in the travel industry. “Seemed like every single person was using Turo for the first time, just like me.” “It was moderately inconvenient to not have a car, but it wasn’t a $1,000-a-week inconvenience,” he adds. Riding his bike or borrowing a car took up the slack. Huling is looking at buying a new car and would normally trade in his Subaru, but he is considering keeping it because of Turo. “Finding a car—that’s the other hard part,” he says. “I’m trying to get a dealership to order me one, but they haven’t confirmed that they can get one. I’m looking at some in the Lower 48, but that requires driving it up here or shipping, so I haven’t pulled the trigger on that quite yet.” “I made half of my vehicle’s value— what I paid for it—just this summer,” Huling says. “It made buying a new car a little easier—if you can find one.”

Alaska Business www.akbizmag.com

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INSIDE ALASKA BUSINESS UAA ISER A forecast for the Alaska economy in 2022 anticipates approximately the same level of growth as in 2021, up about 2.2 percent, or 7,000 new jobs. That would leave the state nearly 14,000 shy of where jobs were before the COVID-19 pandemic, yet federal infrastructure spending could entirely make up the difference. In his first forecast in two years, Mouhcine Guettabi, formerly of the UAA Institute of Social and Economic Research (ISER), concludes that a full recovery this year depends on the first billion dollars of IIJA funds being deployed quickly, provided the construction sector has the capacity to mobilize. iseralaska.org

North Pacific Fishery Management Council The North Pacific Fishery Management Council voted to switch halibut bycatch for Bering Sea and Aleutian Islands groundfish trawlers to an abundance-based limit. The trawl fleet is currently capped at no more than 1,745 metric tons of halibut incidentally snagged while fishing for sole or yellowfin sole. The cap has remained fixed for years while halibut abundance decreased steadily since 1990. The new method would lower the limit to 1,309 metric tons—slightly higher than the average annual bycatch— and float based on abundance surveys by the International Pacific Halibut Commission and the National Marine Fisheries Service. The new bycatch limit is scheduled

to be implemented either in mid2023 or the beginning of the 2024 fishing season. npfmc.org

Alaska Division of Agriculture The US Department of Agriculture (USDA) approved the Alaska Division of Agriculture’s plan for industrial hemp production. The Division of Agriculture drafted state regulations in 2019, and USDA approval aligns those regulations as a permanent program, in compliance with federal law. Hemp is the same species of plant as cannabis, used recreationally as marijuana, but the industrial variety has less of the psychoactive chemical THC. The production, manufacture, and sale of all industrial hemp products require registration with the Division of Agriculture or risk immediate enforcement action. plants.alaska.gov/industrialhemp.htm

a pilot project in Wrangell this spring. ccthita.org

Alaska Power & Telephone The Falls Creek Hydroelectric Project can share power with Glacier Bay National Park and Preserve, thanks to an intertie with the city of Gustavus. The 800-kilowatt run-ofriver turbine is located on former park land, swapped to the State of Alaska in 1998 so that Alaska Power & Telephone (AP&T), the utility spanning Southeast, could build the project. It began generating in 2009, but not until 2017 did Congress approve $6.5 million for construction of the intertie. In October 2021, crews extended the powerline by using horizontal boring underneath sensitive terrain. The intertie lets Glacier Bay cut its dependence on diesel fuel; Falls Creek already replaces about 300,000 gallons of diesel in Gustavus, according to AP&T. aptalaska.com

Tlingit & Haida The Central Council of the Tlingit & Haida Indian Tribes of Alaska received a license from the Federal Communications Commission’s for a 2.5 GHz Rural Tribal Priority Window, providing exclusive use of prime mid-band spectrum to increase broadband access in rural communities. That means bringing improved internet to about 10,000 people in Southeast Alaska who currently have no access or limited options in their area. Funding has already been secured by Tlingit & Haida’s newly named broadband enterprise, Tidal Network, to begin

Santos A new oil field unit aims to tap the Nanushuk formation on the North Slope. An Alaska subsidiary of Oil Search, which recently merged with Santos and now operates under that name, applied with the Alaska Division of Oil and Gas to form the Quokka unit. The area extends south from the Placer unit, acquired in 2021 from Arctic Slope Regional Corporation by Santos and Spanish oil company Repsol. The unit is just east of Santos’ Pikka unit. Four of the eleven wells drilled in the area have discovered oil. oilsearch.com/our-business/alaska

ECONOMIC INDIC ATOR S ANS Crude Oil Production 5505,349 barrels -1% change from previous month

ANS West Coast Crude Oil Prices $91.08 per barrel 14% change from previous month

Statewide Employment 352,100 Labor Force 6% Unemployment

1/30/22 Source: Alaska Department of Natural Resources

1/31/22 Source: Alaska Department of Natural Resources

12/1/21. Adjusted seasonally. Source: US Bureau of Labor Statistics

114 | March 2022

Alaska Business www.akbizmag.com

RIGHT MOVES Alaska Business This magazine upgraded its digital staff with a couple of recent hires. Carter Damaska is the new Social Media Manager. Originally from Michigan, he earned a degree in history and classical studies from Hope Damaska College. He made a living as an events photographer, branching out into videography and web design, skills that help him engage with the Alaska Business audience via social media platforms. He would rather have pursued a career as an auto mechanic, being able to identify makes and models at a glance, but underneath the hood, he says, he’s lost beyond checking the oil. Taylor Sanders, the new Web Manager, studied in Paris to become a pastry chef and event coordinator. After ten years on that career path, she Sanders pivoted from pastry to pixels. She was certified as a web developer after a year-long coding boot camp at the University of Washington and is now pursuing a degree in computer science at UAA. Her responsibilities include juggling all the content on the Alaska Business website and compiling the weekly Monitor e-newsletter. Born and raised in South Carolina, her native accent only emerges when she’s been around her family.

Alaska Department of Commerce Governor Mike Dunleavy named Julie Sande as his choice to lead the Alaska Department of Commerce, Community, and Economic Development. She

replaces Julie Anderson, who announced her retirement as Commissioner after the new year. Sande was most recently executive director of Sande the Ketchikan Pioneer Home. She earned a bachelor’s degree in social work from the University of Montana and a master’s degree in healthcare administration from the University of Southern California. She is also a lifelong Alaskan who was primarily raised in remote logging camps of Southeast Alaska.

Providence Alaska Upon retiring as the first Black chief of the Anchorage Police Department, Kenneth D. McCoy marks another first. Providence Alaska hired McCoy him as its first Chief Diversity, Equity & Inclusion Officer. In that role, McCoy is responsible for coordinating efforts to promote culturally competent, patient-centered care as well as diversity and inclusion within the Providence Alaska workforce. McCoy earned a bachelor’s degree in justice from UAA and a certificate in criminal justice from the University of Virginia in Charlottesville. After twentyseven years in law enforcement, McCoy was named chief of police in 2021, and then in December he announced his retirement. “After serving the public for nearly three decades,” McCoy says, “it was important for me to continue to make an impact in our community.”

Wilson Albers Wilson Albers, an affiliate of human resources management firm Alera Group,

has a new Managing Partner for the first time in twenty-six years. Jennifer Bundy-Cobb takes over for Lon Wilson, who co-founded the partnership Bundy-Cobb in 1995. Bundy-Cobb has also been with the firm since the beginning, most recently as the director of employee benefits. Wilson is transitioning his leadership responsibilities over the coming months and supporting Alera Group as needed in the region.

HDR The Anchorage office of architecture and engineering firm HDR brought in Matt Stone as Alaska Area Manager. He oversees a staff of more Stone than 100 engineers, scientists, and other technical professionals working to responsibly develop critical infrastructure for Alaska. Stone brings more than twenty years of experience in Alaska civil design and is a dedicated leader who fosters positive collaboration and teamwork among his staff. He is a registered professional engineer in both civil and environmental design.

Sourdough Express One of Alaska’s oldest transportation companies made some internal changes for 2022. Debbie Norum and Josh Norum are now Norum the sole Co-Owners of Sourdough Express and Sourdough Transfer, established in 1898 with locations in Fairbanks, Anchorage, and Kenai. Josh Norum is President of both organizations,

RIGHT MOVES IS BROUGHT TO YOU BY NORTHERN AIR CARGO

Keeping Alaska Open for Business 116 | March 2022

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the fifth generation of his family to serve in that role. The current president, Jeff Gregory, is shifting to a consulting position and Norum retains ownership of the real estate segment of the organization. Debbie Norum retains her position as Vice President of Finance and majority stakeholder.

MTA Matanuska Telephone Association (MTA) promoted Gary Enloe to VP of Product Development and Commercial Solutions. In his new role, Enloe Enloe oversees all product development efforts, encompassing consumer, enterprise, and wholesale. Enloe has been with MTA for more than twenty-four years, starting in 1997 as a CO installation and repairman. In 2001, he moved up to network maintenance engineer, and by 2017 Enloe moved into the product development manager position. He helped launch MTA’s Managed Wifi solution—total WiFi—in that position.

Northrim Bank Northrim Bank added to its talent pool. Doug Ladenburger is now Vice President, Director of Treasury Management Services. He joins Northrim with twenty-five years of Ladenburger experience in leadership, most recently as an executive vice president and head of payables consulting and account management at Wells Fargo. Ladenburger holds a bachelor’s degree in business administration from Minnesota State University Mankato. Chellaney Middlemas came to Northrim as Assistant Branch Manager, Float Pool,

after eight years of experience in the financial industry. She earned a bachelor’s degree in professional photography from the University of Central Middlemas Missouri. Ruth Regan, Assistant Branch Manager at the Seventh Avenue branch, joins Northrim with more than eight years of experience in the financial industry. She holds an associate degree in Regan computer technology from Lyceum of the Philippines University.

Tlingit & Haida  The Central Council of the Tlingit and Haida Indian Tribes of Alaska hired a new manager in the president’s office. Ralphenia Dybdahl is the Office of the President Manager, returning to the tribal government after working as executive assistant at Sealaska Heritage. Dybdahl began working for Tlingit & Haida in 2006 as administrative clerk in the finance department, then later as accounting technician and administrative assistant in public safety. Dybdahl In her new role, Dybdahl provides direct and indirect administrative support to the president. Dybdahl is Wooshkeetaan from Hoonah. She holds a bachelor of liberal arts degree from UAS.

Richmond & Quinn A partner of the Anchorage law firm of Richmond & Quinn, Kenneth Gutsch, accepted an invitation to join the International Association of Defense Counsel (IADC), a global legal organization for attorneys who represent corporate and insurance interests. Gutsch practices in the areas of personal injury/

premises liability, product liability, construction defect, professional malpractice, and insurance coverage litigation. Gutsch received Gutsch his JD from the University of Illinois College of Law and his bachelor’s degree in the Russian language from Knox College. He also is a past president of Special Olympics Alaska.

Corps of Engineers Krystle Burns assumed duties as the Chief of Workforce Management for the US Army Corps of Engineers–Alaska District Burns in November 2021. Burns is now responsible for advising the district leadership and executive staff on substantive procedural and policy matters for civilian workforce management functions. Burns is a native of Savannah, Georgia. She earned her bachelor’s degree in health science from South University and a master’s degree in healthcare administration from Kaplan University.

Great Alaskan Holidays Great Alaskan Holidays started preparing for the 2022 visitor season early by hiring a new RV Technician, Nate Solomon. Solomon Prior to his arrival at Great Alaskan Holidays, Solomon was an RV technician with Arctic RV in Fairbanks and a production foreman with Bulletproof Trailers, also in Fairbanks. Solomon was also a volunteer firefighter in both Fairbanks and Delta Junction and has additional experience in the construction and farming industries. Born and raised in a military family in Aurora, Colorado, Solomon now calls Alaska his home.

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www.nac.aero / Alaska Business

March 2022 | 117

ALASKA TRENDS “Here is the sea, great and wide, which teems with creatures innumerable, living things both small and great.” Verse 25 of Psalm 104 (English Standard Version) evokes the vastness of the ocean and the complexity of its eco-webs, and it articulates the challenge faced by scientists and resource managers whose job it is to number the innumerable. This month’s article, “Hooked on Data” by Isaac Stone Simonelli, reports on how fisheries managers compile, share, and utilize all the different ways to count seafood. This includes the Commercial Operators Annual Report by the Alaska Department of Fish and Game (ADF&G), which tracks the tonnage of seafood harvested from ex-vessel (when the catch leaves the boat) to first wholesale to processors. Meanwhile, the Tax Division of the Alaska Department of Revenue is responsible for adding up the value of the commercial salmon harvest and recording the price per pound. Sportfishers keep a close eye on the tally of salmon returning to rivers. The most popular of ADF&G’s daily counts, perhaps not surprisingly, are the late-run sockeye and late-run chinook to the Kenai River. The US government also has a role, with NOAA’s Fisheries agency contributing a variety of data from federally managed waters. And finally, when seafood products leave Alaska for sale in foreign markets, export data is the domain of (believe it or not) the US Census Bureau. This edition of Alaska Trends dips into the great and wide sea to harvest a sample of the fisheries data available. SOURCE: adfg.alaska.gov/index.cfm?adfg=fishlicense.coar_buying census.gov/foreign-trade/statistics/state/data/ak.html adfg.alaska.gov/static/education/wns/abalone.pdf

WALLEYE

POLLOCK

Largest single species harvest by volume was in '17 with 1,957,933,595 lbs of walleye pollock.

The top ten harvest volumes in recent years have all been pollock, typically almost two-thirds of all seafood.

3,600,000,000

1,600,000,000

STATE TOTAL$ Pounds & amount paid over time for all the seafood processed.

2,400,000,000

1/3 VALUE OF ALL SEAFOOD

800,000,000

The top ten most valuable single species harvests are all for sockeye, typically almost onethird of the value of all seafood.

The '19 season for sockeye salmon had the highest value of any single-species harvest in any year. 118 | March 2022

800,000,000

LBS

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$460,279,719 0

$ Alaska Business www.akbizmag.com

CRAB HARVE$T STATEWIDE Pounds & amount paid over time for all crab species processed. 240,000,000

500,000,000

220,000,000

450,000,000

200,000,000

400,000,000

180,000,000

350,000,000

160,000,000

300,000,000

140,000,000

250,000,000

120,000,000

200,000,000

100,000,000

150,000,000

80,000,000

100,000,000

60,000,000

50,000,000

40,000,000

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

550,000,000

20,000,000

LBS

LARGEST CRAB HARVE$T 1997 was the largest single-species crab harvest, with 188,175,252 lbs of opilio (snow crab) processed. The wholesale value of the harvest was $400,162,786 and 81% of the total value.

SEAFOOD TRIVIA OCTOPUS ADF&G has been tracking the sale of octopus since 1984. 2006 was the highest producing year with 1,087,960 lbs of octopus sold for $254,806.

SQUID 1,677,315 lbs of squid were bought in '20 for a total of $11,733.

SEA CUCUMBERS ADF&G has been tracking the sale of sea cucumbers since 1989. '19 was the highest grossing year with 2,170,716 lbs sold for $11,350,922.

FROZEN NOT FRESH Frozen fish meat was the fifth most valuable Alaska export, after zinc, petroleum, lead, and gold.

ABALONE "ABS" Abalones are marine snails. Alaska Natives used abalone as a supplemental food and as decoration on their carvings. Commercial processing closed in 1996.

7/12 ADF&G has tracked 12 crab species over the years: Blue King, Red King, Dungeness, Golden King, Hair, King, Scarlet King, Grooved, Bairdi, Tanneri, Snow, Triangle. Only 7 species have been harvested every year since 1984: Dungeness, Tanner, Bairdi, Snow, Golden, Hair, King crab. www.akbizmag.com

$14.82/LB In 1994, ABS recorded the highest statewide average price per pound of $14.82. Alaska Business

March 2022 | 119

AT A GLANCE What book is currently on your nightstand? Talking to Strangers: What We Should Know About the People We Don’t Know by Malcom Gladwell. What charity or cause are you passionate about? Safari Club International. What’s the first thing you do when you get home after a long day at work? Take our black lab for a walk. What’s your greatest extravagance? Nice dinners.

If you could domesticate a wild animal, what animal would it be? Deer.

120 | March 2022

Alaska Business www.akbizmag.com

OFF THE CUFF

Ed Gohr R

anked at #23 on the Alaska Business Top

AB: What’s the most daring thing you’ve ever done? Gohr: A couple years ago I did a winter snowmachine trip alone. Started out at -30°F. Denali Highway, by Cantwell… I got stuck. You gotta plan ahead.

49ers list for 2021, with the fourth-highest

gross revenue of any non-Native corporation (after Lynden, Three Bears Alaska, and Chugach Electric Association), Delta Constructors makes a big impact without leaving a big impression. CEO Ed Gohr started the company in 2007, and by 2013 it was working on high-dollar, behind-

AB: Dead or alive, who would you like to see perform live in concert? Gohr: AC/DC. I’ve seen them twice. They were unbelievable. We saw them in Houston about five years ago, and prior to that was in San Diego in 1989. AB: What’s your favorite local restaurant? Gohr: I’ve got many chef friends… Suite 100.

the-scenes projects in Alaska and North Dakota oil fields. That portfolio propelled Delta into the Hundred Million Dollar club, the youngest

AB: Is there anything you’re superstitious about? Gohr: Golfing. Make a birdie, save golf ball; make a bogey, throw the golf ball away.

Alaskan-owned company with that status. Not bad for a contractor almost unknown outside of the industry. “Kinda go under the radar,” Gohr acknowledges. Gohr grew up in Palmer and got into aboveground oil field construction as his first job out of college. He spun his equipment leasing company into a contracting firm with approximately 600 employees on the payroll, 200 of them in Alaska. “The most important thing is good people around you, working with good people,” he says. His other keys to success are perseverance and good decisions: “I believe in my spot I’m supposed to make about five big decisions a year.”

Alaska Business: What do you do in your free time? Ed Gohr: I like to hunt and fish and snowmachine. AB: Other than your current career, if you were a kid today, what would your dream job be? Gohr: Hunting guide.

AB: What’s your best attribute and worst attribute? Gohr: My best attribute is completing the task at hand. My worst is I care too much. AB: Is there a skill you’re currently developing or have always wanted to learn? Gohr: Always working on the communication process.

AB: What is your favorite way to exercise? Gohr: Outdoor activities. Snowmachine, skiing. www.akbizmag.com

Alaska Business

March 2022 | 121

ADVERTISERS INDEX Afognak Leasing, LLC............................... 17 afognakleasing.com

Cruz Companies....................................... 82 cruzconstruct.com

Pacific Dataport ....................................... 19 pacificdatapor t.com/oneweb

Airport Equipment Rentals..................... 123 airpor tequipmentrentals.com

Dalton Refrigeration Inc........................... 43 daltonrefrigerationalaska.com

Alaska Humanities Forum......................... 31 akhf.org

Pacific Pile & Marine............................... 115 pacificpile.com

Davis Block & Concrete............................ 57 davisblock.com

Alaska Miners Association...................... 103 alaskaminers.org

Davis Constructors & Engineers Inc........ 63 davisconstructors.com

Alaska Pacific University........................... 26 alaskapacific.edu

Davis Wright Tremaine Llp........................ 45 dwt.com

Alaska Railroad.......................................... 41 alaskarailroad.com

Delta Constructors................................... 23 deltaconstructors.net

Alaska Roof Restorations.......................... 75 alaskaroofrestorations.com

Design Alaska............................................ 53 designalaska.com

Alaska School Activities Association........ 93 asaa.org

Donlin Gold............................................ 105 donlingold.com

Alaska Traffic Company............................ 97 alaskatraffic.com

Equipment Source, Inc............................. 91 ESIalaska.com

Alcan Electrical & Engineering Inc........... 65 alcanelectric.com

First National Bank Alaska.......................... 5 fnbalaska.com

Altman, Rogers & Co.............................. 109 altrogco.com American Heart Association.................... 33 hear t.org Anchorage Chrysler Dodge................... 110 accak.com Anchorage Sand & Gravel...................... 104 anchsand.com Arctic Information Technology................ 21 arcticit.com ASRC Construction................................... 55 asrcbuilders.com Associated General Contractors of Alaska.................................................... 39 agcak.org

Parker, Smith & Feek................................. 15 psfinc.com Personnel Plus Employment Agency................................ 71 perplus.com Petro Marine Services............................... 79 petromarineservices.com Quintillion................................................. 29 quintillionglobal.com R & M Consultants Inc.............................. 31 rmconsult.com Roger Hickel Contracting Inc.................. 57 rogerhickelcontracting.com

Fountainhead Development.................... 59 fountainheadhotels.com

SmithCo Side Dump Trailers.................... 35 sidedump.com

GCI.............................................................. 3 gci.com

Sprung Structures..................................... 95 sprung.com

Great Northwest Inc................................. 83 gr tnw.com Hecla Greens Creek Mining Company. 103 hecla-mining.com Holmes Weddle & Barcott........................ 25 hwb-law.com JAG Alaska................................................ 32 jagalaska.com Kiewit Infrastructure West Co.................. 53 kiewit.com

Stellar Designs Inc.................................... 25 stellar-designs.com T. Rowe Price...............................................7 alaska529plan.com The Plans Room....................................... 63 theplansroom.com Think Office................................................ 9 thinkofficellc.com

Builders Choice........................................ 69 builderschoice.us.com

Lynden.................................................... 124 lynden.com

Tikigaq....................................................... 51 conamco.com

Business Insurance Associates Inc........... 55 businessinsuranceassociates.com

Material Flow & Conveyor Systems, Inc.............................................. 76 materialflow.com

Turnagain Marine Construction............... 71 turnagain.build

C & R Pipe and Steel, Inc.......................... 61 crpipeandsteel.com Carlile Transportation Systems.............. 101 carlile.biz Central Environmental Inc....................... 94 cei-alaska.com Conrad-Houston Insurance Agency....... 26 chialaska.com Construction Machinery Industrial............ 2 cmiak.com Cook Inlet Tug & Barge Inc...................... 81 cookinlet tug.com cowork by RSD......................................... 61 coworkbyrsd.com Craig Taylor Equipment............................ 73 craigtaylorequipment.com Credit Union 1..........................................111 cu1.org Crowley Fuels......................................... 113 crowley.com 122 | March 2022

Matson Inc................................................ 67 matson.com Nenana Heating Services, Inc.................. 39 nenanaheatingservicesinc.com New Horizons Telecom, Inc..................... 84 nhtiusa.com Nortech Environmental & Engineering.... 85 nor techengr.com Northern Air Cargo.......................... 116,117 nac.aero

Tutka, LLC................................................. 98 tutkallc.com UA Local 375 Plumbers & Pipefitters.................................................. 87 ualocal375.org Umialik Insurance Company.................... 13 umialik.com Watterson Construction........................... 12 wat tersonconstruction.com

Northrim Bank.......................................... 47 nor thrim.com

West-Mark Service Center........................ 41 west-mark.com

NorthStar Supply LLC............................... 77 nssalaska.com

Westmark Hotels - HAP Alaska.............. 109 westmarkhotels.com

Nu Flow Alaska......................................... 99 nuflowalaska.com Oxford Assaying & Refining Inc............................................. 107 oxfordmetals.com

Willscot..................................................... 81 willscot.com Yukon Equipment Inc............................... 49 yukoneq.com

Alaska Business www.akbizmag.com

Anchorage 907.522.6466 Delta Junction 907.895.9898

The Rental Zone 907.474.2000

Fairbanks 907.456.2000

Prudhoe Bay 907.659.2000

Kenai 907.335.5466

www.airportequipmentrentals.com www.akbizmag.com

Alaska Business

March 2022 | 123

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Alaska Business March 2022

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