Alaska Business January 2018 by Alaska Business

JA Welcomes 2018 Laureates | Aerial Technology Reaches New Heights | Hilcorp Moves on Liberty Project January 2018 Digital Edition

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Left to right: Shawn Fuller CEO, Pierre Nicolet Strategic Partner, Buddy Bailey Strategic Partner, and Kirk Henke COO.

re the obligations of hiring, benefits, payroll, reporting, and compliance robbing attention you should be paying to your core business? Although human capital is one of the most valuable assets of a business or non-profit organization, growing enterprises struggle to keep up with the demands of managing the resource. Four successful Alaskan business leaders have partnered to create a company with the expertise to identify and deliver state-of-the-art practices, technology, and innovation tailored to individual companies. After getting to know and understand client needs, Focus Employer Solutions provides a wide array of customized HR services, including benefits administration, risk management assistance, payroll services, and comprehensive hiring, safety, training, and onboarding programs. Through its personal attention and relationships with customers, Focus Employer Solutions is a one-stop shop for broad management solutions, according to Buddy Bailey, Strategic Partner. The company adds value by helping to develop more effective and appropriate strategies for HR, business succession, acquisitions, and brokered services such as 401(k)s, insurance, and capital management.

Bailey brings twenty years of marketing for Bailey’s Furniture, as well as experience as a Registered Representative of New York Life, to the company. Additional partners are Shawn Fuller, Chief Executive Officer, a successful entrepreneur who has built and sold businesses and has experience applying technology to enhance efficiency; Kirk Henke, Chief Operating Officer, a fifteen year HR professional; and Pierre Nicolet, Strategic Partner, a specialist in investments and financial planning who has been a New York Life agent for sixteen years. “HR is truly paramount in what every company does on a daily basis,” says Fuller. “To become more successful, businesses need to be better at managing human capital.” He points out that payroll, at 75 percent to 80 percent of total expenses, is typically the largest cost for a business. Adds Henke, “Hiring and retaining great people are critical to the success of any business.” He explains that although businesses and other organizations are created to provide services or sales, soon they must begin hiring employees, administering benefit packages, and managing payroll. “It’s laborious to keep up with the requirements for taking care of people, and attention is diverted from the core business mission,” says Henke. “Our goal is to provide HR support so – PA I D A D V E R T I S E M E N T –

that business owners and managers can focus their attention on their company goals.” Focus Employer Solutions offers the expertise and the data, metrics, and tools to help business owners better strategize for designing compensation and benefits packages that are desired by employees and have proven to be cost-effective. “Helping businesses understand what employees want is a significant factor in identifying solutions,” says Henke. Focus Employer Solutions enables customers to get out from under the day-to-day activities to concentrate on the success of their primary purposes. “Our services allow businesses to grow, retain successful employees, and have successful companies,” says Fuller. To learn more about a trusted advisor who can provide cost-effective options for efficient management of human capital and other business roles, contact Focus Employer Solutions at 907-830-3872.

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January 2018 Digital Edition TA BLE OF CONTENTS

DEPARTMENTS

FROM THE EDITOR EAT, SHOP, PLAY, STAY EVENTS CALENDAR RIGHT MOVES BUSINESS EVENTS INSIDE ALASKA BUSINESS ALASKA TRENDS AD INDEX

ABOUT THE COVER: If any of our readers have the answers to “the economy,” we at Alaska Business would love to hear them. The oil industry has substantially stabilized in what’s looking like a long-term oil price environment, but tax regime uncertainty and the repayment of promised credits has suspended many potential projects, setting them on shaky footing. Numerous Alaskan experts extol the virtues of diversifying away from an economy primarily based on natural resource extraction, yet simultaneously the tempting billion-dollar AK LNG project is making steady progress. What’s certain is Alaska’s potential; but that potential can lead us down many different roads, leaving us today at a crossroads. Fortunately for us and our readers, a selection of Alaska’s leaders have chimed in with their insights for Alaska’s Economic Outlook in 2018 and perhaps offer some direction about where we should go next on this road to recovery.

7 71 72 74 76 77 80 82

Cover Design: Art Director David Geiger

Photo by Sherman Hogue/Explore Fairbanks

“Fairbanks’ latitude on the globe makes it one of the best places on earth to see the captivating light of the Aurora Borealis, view incredible outdoor ice sculptures, and experience the exhilarating sport of dog mushing, not to mention the multitude of other winter activities, celebrations, and sporting events happening during an energy-filled winter season.”–Amy Geiger, Director of Communications for Explore Fairbanks.

ARTICLES

ECONOMY

8 | Economic Outlook 2018

Running theme: Alaska will recover but not without stable fiscal plan

FINANCE

14 | Rural Development

Photo by Jessie Huff

Loans Benefit Businesses, Communities throughout Alaska

Industries, individuals rely on loans to improve rural life By Tracy Barbour

20 | The Grand Bargain Aspen Suites Hotel, a USDA Business and Industry Loan Guarantees project located in Haines, Alaska.

Protecting employees and employers with workers’ comp insurance By Tracy Barbour

ALASKA NATIVE

40 | Keeping Cultural Traditions Alive with Modern Skills

Alaska Native Regional Corporation shareholders, descendants learn job skills, further education through grant programs By Julie Stricker

TELECOM & TECH

Eyal Saiet from ACUASI prepares a Ptarmigan UAS for a sea ice mapping mission near Utqiaġvik. Image courtesy of ACUASI

60 | Welcome to the Drone Age Oil, gas, engineering, construction use UAVs to reach the unreachable By Heidi Bohi

Alaska Business | January 2018 www.akbizmag.com

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Januar y 2018 Digital Edition TA B L E

O F

C O N T E N T S

Junior Achievement Special Section 24 | JA Inducts Four Laureates at 2018 Annual Alaska Business Hall of Fame

General Mark Hamilton, JA students to emcee event’s 31st year By Flora Teo and Cory Quarles

25 | Junior Achievement of Alaska Statewide Board of Directors 2017-2018

26 | 2018 Donors 27 | Learning to Live an Entrepreneurial Life

JA teaches students money matters, the value of hard work, and the meaning of dedication By Ashley Jean Marie Smith

28 | Why Junior Achievement?

Program Results Speak For Themselves Alumni report greater career satisfaction, financial intelligence, entrepreneurship

32 | 2018 Laureate Admiral Thomas Barrett

34 | 2018 Laureate Chuck Robinson 36 | 2018 Laureate Robert Penney 38 | 2018 Laureate Robert Gillam

Oil & Gas: Meet Alaska Special Section 48 | Optimism for 2018 and Beyond in Alaska’s Resource Development Community Elections matter By Rebecca Logan

50 | 2018 Oil and Gas Forecast

Discoveries, production increases lead to industry optimism By Julie Stricker

56 | New Year Offers Promise, Progress for Liberty Project

TAPS could see much-needed throughput increase By Judy Mottl

ARTICLES TRANSPORTATION

66 | Online Delivery Options Have

VOLUME 34, NUMBER 1 Published by Alaska Business Publishing Co. Anchorage, Alaska EDITORIAL STAFF Managing Editor Kathryn Mackenzie 257-2907 editor@akbizmag.com

Associate Editor Tasha Anderson 257-2902 tanderson@akbizmag.com Digital and Social Media Strategist Arie Henry 257-2906 ahenry@akbizmag.com Art Director David Geiger 257-2916 design@akbizmag.com Art Production Linda Shogren 257-2912 production@akbizmag.com Photo Contributor Judy Patrick BUSINESS STAFF President Billie Martin VP & General Manager Jason Martin 257-2905 jason@akbizmag.com VP Sales & Marketing Charles Bell 257-2909 cbell@akbizmag.com Advertising Account Manager Janis J. Plume 257-2917 janis@akbizmag.com Advertising Account Manager Holly Parsons 257-2910 hparsons@akbizmag.com Advertising Account Manager Christine Merki 257-2911 cmerki@akbizmag.com Accounting Manager Ana Lavagnino 257-2901 accounts@akbizmag.com Customer Service Representative Emily Olsen 257-2914 emily@akbizmag.com 501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503-2577 (907) 276-4373 | Toll Free: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial email: editor@akbizmag.com ALASKA BUSINESS PUBLISHING CO., INC. 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; Fax: (907) 279-2900, ©2018, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues of the Power List are $15 each. Single issues of Alaska Business are $3.95 each; $4.95 for October, and back issues are $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business, 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577. Please supply both old and new addresses and allow six weeks for change, or update online at www.akbizmag.com. Manuscripts: Email query letter to editor@akbizmag.com. Alaska Business is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Publishing Co., Inc. is prohibited. Email specific requests to editor@akbizmag.com. Online: Alaska Business is available at www.akbizmag.com/ Digital-Archives, www.thefreelibrary.com/Alaska+Business+Monthly-p2643 and from Thomson Gale. Microfilm: Alaska Business is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

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Alaska’s Delivery Services Scrambling

Customer expectations lead to more, faster delivery options for even rural locales By Judy Mottl

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Alaska Business | January 2018 www.akbizmag.com

FROM THE EDITOR

appy New Year! We’re extremely excited for the upcoming year and so are many of you, according to the wide range of contributors to our 2018 Economic Outlook Special Section. Looking back at 2017, a variety of factors contributed to a less-than-stellar year for Alaska—tax credit cuts for the oil and gas industry, continued lower-for-longer oil prices, and the resulting trickle-down effect, to name a few—yet even those have not dampened the state’s hopeful expectations for the year ahead. We too are hopeful that 2018 will bring an end to the cycle of fewer jobs leading to less disposable income leading to less spending in retail and hospitality businesses leading to a stagnating population causing more layoffs—and the cycle continues. The loss of oil and gas industry jobs has been particularly devastating over the past few years. Why? Because for every direct oil-related job, there are nine additional jobs supported by oil and gas activities and thirteen more jobs that are supported by oil-related taxes and royalties, according to a report commissioned by the Alaska Oil & Gas Association and published by the McDowell Group in mid-2017. The general consensus among industry leaders and public officials who contributed to our 2018 Economic Outlook starting on page 8, is that, in order for Alaska to emerge from this cycle, the state’s government must create and implement a fiscal plan that supports the oil and gas industry by paying the tax credits many feel the industry is owed since the Alaska Legislature passed HB111. Only companies producing less than 50,000 barrels of oil daily are eligible for tax credits under HB111, which means Alaska’s largest producers (including BP and ConocoPhillips) cannot claim their expected payments. The move also caused BlueCrest and Caelus Energy Alaska to delay drilling because they have not received the oil-tax credit money they expected to continue operating. “If Governor Walker can develop and carry out a plan to pay what is owed in tax credits, a number of projects in Cook Inlet and the North Slope will get new life—that means jobs for Alaskans and tax revenue for the state,” Representative Jason Grenn told Alaska Business, a sentiment echoed by many of our readers and guest contributors. Along with the various and fascinating views about what to expect in the upcoming year, this issue features our annual Junior Achievement Special Section in which we recognize the many accomplishments this incredible program has made toward inspiring and preparing young people to believe in themselves and learn the basic principles of how to succeed in an entrepreneur-based, global economy. We also profile Junior Achievement’s Alaska Business Hall of Fame 2018 Laureates. And, while the state’s trials, tribulations, and victories continue to swirl around us, we’re in the midst of some big changes of our own here at Alaska Business. Jason Martin, our general manager, weighs in: “Beginning in early 2017 we began a soft roll out on the rebranding of our thirty-three-year-old name. We came to the conclusion that Alaska Business Monthly no longer covers all we do, and we needed a name that better represents the full spectrum of our coverage and who we are while still paying homage to our roots and our long-standing commitment to Alaska business.” www.akbizmag.com

Since 1984 we have evolved to become more than a monthly magazine. Along with our position as the premier source for business news and information in a monthly print format, we are also a digital app, a weekly e-newsletter—keep an eye out for the Alaska Business Monitor—and a vibrant, thought-provoking website that is undergoing a major revamp in the coming months complete with exclusive, original content, exciting guest authors, and many more surprises to come. To help us usher in this new age, we’ve brought aboard Arie Henry, the Alaska Business Digital and Social Media Strategist. If you’ve noticed increased activity on our Facebook and Twitter pages lately, Henry is to thank. We’re thrilled to have him on the Alaska Business team, helping us better communicate with you. “Our mission is to provide a positive voice for business and industry in Alaska while championing the economic growth of business in all of Alaska. We strive to achieve this through thought-provoking editorial and award-winning design,” says Martin. Welcome to 2018 with Alaska Business!

—Kathryn Mackenzie, Managing Editor, Alaska Business January 2018 | Alaska Business

ECONOMY

Economic Outlook 2018 Running theme: Alaska will recover but not without stable fiscal plan

s we do each year, Alaska Business asked industry leaders and public officials to provide us with insight into what they expect to see for the state’s economy in the coming year. A running theme throughout each response is that Alaska is on the road to recovery, but without a comprehensive fiscal plan that promotes stability and economic growth that recovery will remain elusive. As a state we must create a stable, competitive fiscal environment to attract investment dollars and create job opportunities. Although many experts expect Alaska’s job count to fall again in 2018, job losses are expected to decline thanks in part to continued growth in the healthcare and tourism industries. Minimal job losses are expected for other industries such as retail and professional services. In fact, there are many signs the worst of the recent recession may now be behind us, as oil prices ticked upwards in 2017 and oil production increased for the second consecutive year. There is more reason to be optimistic as the housing market has proven resilient and growth in military activity and the fishing industry act as stabilizing forces, helping to diversify the economy; something most industry leaders agree must happen for Alaska to emerge from its current low-price oil environment. And while low interest rates and a strong US economy positively impacted Alaska in 2017, continued lack of agreement on a fiscal plan has eroded private sector confidence and in8

vestment, hitting some industries, such as vertical construction, hard. But enough from us. Here Alaska’s public sector and private industry leaders offer expert opinions on what we can expect to see in the coming year.

EDC’s outlook for the Anchorage economy in 2018 is for a moderation of the current recession. Since the recession began in 2016, the Anchorage economy will have lost more than 5,000 jobs, just below 4 percent. In 2018 those job losses will likely be less than 1,000. Oil prices have seen modest recovery and industry investments are starting to increase, benefiting Anchorage jobs and spending as a result. Air cargo and the visitor industry will continue to see growth, as will the healthcare sector. Other service sector industries such as retail, professional services, and the like will see minimal job losses. With the chance that the legislature will resolve the fiscal crisis and oil prices remaining at or near current levels, there could a better outcome in 2018 than our current predictions suggest. —Bill Popp President and CEO Anchorage Economic Development Corporation

he Alaska economy is still challenged by low oil prices and related State budget deficits. However, there are many signs the worst of the recent recession may now be behind us.

Job losses are slowing. Oil prices ticked upward in 2017 and oil production increased for the second straight year. The housing market has been resilient. Prices and sales activity remain stable in lower and middle income homes. Growth in military activity, healthcare, and the fishing industry are stabilizing forces, helping to diversify the economy. Low interest rates and a strong US economy positively impacted Alaska. A change in federal policy has renewed optimism for natural resource development. There have been appointments of Alaskans in key government positions, expanded lease sales, and serious discussion of allowing oil development in ANWR in the recent tax bill. —Mark Edwards Senior Vice President, Senior Credit Officer, and Bank Economist, Northrim Bank

onstruction continues to shed jobs at an uncomfortable pace. The maintenance level capital budget of recent years will likely continue flat until there is a revenue source to pay. Continued lack of agreement on a fiscal plan erodes private sector confidence and investment, hitting vertical construction hard. Horizontal construction, financed mostly with federal funds, remains steady but very competitive. I expect the construction volume to slow its recent downward slide, buoyed by the increase in activity on the North Slope combined with defense

Alaska Business | January 2018 www.akbizmag.com

spending, both giving some badly needed optimism to the construction sector. —John MacKinnon Executive Director AGC of Alaska

he Legislature must work together in 2018 to implement a comprehensive fiscal plan that promotes stability and economic growth. If not, we will see further cuts to troopers, local law enforcement, public schools, healthcare, and infrastructure. We must put Alaskans first, or lack of action will drive Alaska further into recession and hurt our current healthy industries like tourism and our world class fisheries. The House Majority stepped up to the task, did their job,

and passed a sustainable plan last session. It is time for the Senate to do the same—put working Alaskan families first and make the tough political decisions. —Senator Berta Gardner Senate Democratic Leader, Alaska

laska, as America’s Arctic, will continue to see attention paid to the challenges and opportunities in the region, which should result in improved community and economic development. Since the US Chairmanship of the Arctic Council ended in 2017, the Nordic states and Europe, as well as Asia, will increasingly have a role in this process. Alaskans should expect greater cooperation with Asian states like Singapore,

SHIP REPAIR, CONVERSIONS & NEW BUILDS FROM VIGOR ALASKA

Korea, and China, and bilateral relationships develop between the state and organizations or even governments from Norway, Finland, Iceland, and across North America. This cooperation will involve knowledge exchange and the sharing of solutions, but most importantly we hope to see business development and partnerships emerge that positively contribute to Alaska’s companies and communities. —Nils Andreassen, Executive Director Institute of the North

onocoPhillips Alaska (COPA) plans significant activity on the North Slope for 2018. In addition to completing the final year of construction for Greater Mooses Tooth 1 (GMT1), we are also planning to drill five exploration wells. GMT1 represents about $900 million in investment (gross) and is estimated to have peak gross production of about 30,000 barrels of oil per day (BOPD.) The project will support 600 to 700 construction jobs during this winter season, and first oil is expected in late 2018. Nearby drill site GMT2—which represents about $1.5 billion in gross investment—is still working through the federal permitting process. For the exploration season, COPA is planning three wells in the National Petroleum Reserve-Alaska: two to further appraise the Willow discovery we announced in early 2017, and one exploration well nearby. Two additional exploration wells are planned on state acreage. In addition, we are planning new seismic on the state leases we picked up in December 2016. We completed the first extension of the CD5 development during the 2017 winter season and are planning a second extension to add ten more well slots, for a total of forty-three wells. CD5 is currently producing 28,000 BOPD, significantly more than the 16,000 BOPD first estimated. Finally, in November we announced that viscous oil development 1H NEWS began producing two months ahead of schedule and at peak will add about 8,000 BOPD to TAPS. The key elements of the 2013 production tax restructuring (Senate Bill 21) are still in place and have been important in ConocoPhillips’ decision to invest in Alaska. Keeping a stable, competitive fiscal environment will be critically important in attracting future investment dollars. —Scott Jepsen Vice President of External Affairs and Transportation ConocoPhillips Alaska

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ver the past year, GCI has made great strides in bringing better Internet and improved wireless service to communities throughout the state, through the expansion of 1Gig Internet, to the ringing of the TERRA network, and more. And with more than $160 million slated for capital investment in 2018, GCI plans to continue that trend of upgrading and expanding our services to improve the customer experience for Alaskans and businesses throughout the state. Through our ongoing investment, GCI aims to make

Alaska Business | January 2018 www.akbizmag.com

Alaskans more connected in 2018 than ever before. —Heather Handyside Senior Director of Corporate Communications GCI, Inc.

s we look forward into 2018, there are numerous promising developments with exploration and production activity in Alaska’s oil and gas industry. However, the oil industry and other potential investors need to have confidence in our state fiscal situation before they will further invest in our state. In the coming year, Alaska must find a long-term solution to its fiscal situation to stabilize our economy and stimulate growth. Despite the current recession, there are bright spots in Alaska’s economy. Military spending is ramping up with the F-35 squadron coming to Eielson, and the state’s tourism and healthcare industries continue to see steady growth. Wells Fargo remains firmly committed to fueling Alaska’s economy as we help our customers make the most of expansion opportunities and navigate through potential economic headwinds. —Greg Deal President, Alaska Region Wells Fargo & Co.

he clean energy sector continues to grow quickly worldwide. Wind and solar are competitive with coal and natural gas in many markets, and renewable prices are

likely to continue to fall. In Alaska, building owners are retrofitting inefficient building stock, investments that can have very short payback periods. Property Assessed Clean Energy (PACE) programs authorized by the legislature this year may soon provide another financing avenue for the commercial energy efficiency sector. The ability of the Railbelt utilities to consolidate grid operations and adopt regional rules will impact the private sector’s willingness to invest in renewable infrastructure. The Railbelt also continues to be influenced by the uncertainty associated with natural gas prices in Cook Inlet, which are highly susceptible to volatility associated with the availability of state production subsidies, and Alaska’s small market size. —Chris Rose Executive Director Renewable Energy Alaska Project

laska’s job count is expected to fall again in 2018, although the losses appear to be tapering. The majority of losses in oil and gas, state government, construction, and professional business services are likely behind us, although all four industries are expected to continue losing jobs in 2018. While the losses are slowing for the industries initially impacted by low oil prices, the effects of two years of overall job losses will continue to cause widespread—although potentially shallow—losses across most sectors of the economy. Healthcare is the only major exception, although its

recent Medicaid expansion-driven growth spurt will likely slow. Federal government is forecasted to remain stable, and local government, which has experienced growth in recent years despite the recession, may feel the effects of diminished state funding. —Karinne Wiebold Economist Department of Labor and Workforce Development, Research and Analysis

laska is a land rich in resources and people, with endless opportunities. Alaska needs diversification to build a stable and thriving economy. Oil and gas has been Alaska’s economic driver since the discovery of Prudhoe Bay. With oil being a global commodity, Alaska can no longer afford to base our economy on oil alone. Oil will always be a large part of our economy, but it can no longer be the only part. Alaska needs a moderate broad-based tax to help fund vital programs and services as our population grows. Alaskans need good paying jobs, which means we need a robust capital budget to maintain, repair, and expand our infrastructure. This can only happen with a predictable revenue source. Alaska would have an economic foundation to last generations if our revenue stream included a reasonable annual draw from the Permanent Fund earnings reserve, a moderate broad-based tax, and continued exploration and production of oil and gas. —Representative Paul Seaton Alaska State Legislature, District 31 R

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FINANCE

Rural Development Loans Benefit Businesses, Communities throughout Alaska Industries, individuals rely on loans to improve rural life By Tracy Barbour

Image courtesy of USDA-RD Alaska

Southeast Alaska fishing vessel facilitated by USDA-RD Alaska loan.

ural development loans are an important type of funding designed to help improve the economy and quality of life for Alaskans in small communities around the state. In Alaska, the concept of rural development loans is broadly applied to projects based on the location or population of a community. And often the term is loosely used to describe rural-oriented deals that don’t necessarily involve development. Regardless of how rural development loans are defined, they involve all regions of the state and are having a positive impact on Alaska. Rural development loans are available from a variety of sources, including entities such as the US Department of Agriculture Office of Rural Development Alaska (USDA-RD Alaska), Alaska Housing Finance Corporation (AHFC), the Small Business Administration (SBA), and financial institutions: Wells Fargo and First National Bank Alaska, for example.

USDA Committed to Enhancing Rural Communities USDA-RD Alaska is a key facilitator of commercial financing and other funding that enhances 14

living conditions in rural Alaska. In fact, from 2009 to 2016, the agency invested $2.16 billion in 236 rural Alaska communities, according to USDA-RD Alaska’s “Eight Year Progress Report.” During those eight years, the office supported manifold projects. It brought water and sanitation to villages still using honeybuckets; provided ambulances and public safety equipment to communities on and off the road system; financed the construction of critical access hospitals; helped families build, purchase, and repair their homes; invested in wind and other renewable energy systems; connected communities to broadband and high-speed Internet; and helped small businesses create and retain jobs in rural communities. The USDA-RD Alaska office provides guaranteed loans, direct loans, grants, and subsidies in five designated areas: the West, Interior, Central, Gulf, and Southeast. Most of the funding from 2009 to 2016 went to the Interior and West, with direct and guaranteed loans for housing and business comprising the bulk of investment in Alaska. A key USDA-RD Alaska resource for business owners in Alaska is the Business and In-

dustry Guaranteed Loans program. The program guarantees a significant portion of the loan amount for any legally-organized rural business entity. Borrowers can use the funds for land, buildings, machinery, equipment, infrastructure, and working capital. And the loan term can be up to thirty years for real estate, fifteen years for machinery, and seven years for working capital. Lenders typically use this program to finance loans for seasonal industries, such as commercial fishing and tourism, and startup businesses. The program mitigates risk for lenders, enhances their comfort level, and gives them incentive to provide loans to rural Alaska, according to Renee Johnson, business programs director, USDA-RD Alaska. “Since we provide a unique niche for the lenders, they’ll approach us when they feel a guarantee is warranted,” she says. The loan guarantee was a key factor in the financing for Bering Air Inc.’s project. USDARD Alaska in partnership with Alaska Growth Capital provided Bering Air with a $10.5 million Business and Industry guaranteed loan. The vital funding was used to purchase six new

Alaska Business | January 2018 www.akbizmag.com

Aspen Suites Hotel, a USDA Business and Industry Guaranteed Loans project located in Haines. Photo by Jessie Huff

Cessna Caravan aircraft and helped thirty-two remote communities in Western Alaska gain reliable access to food, fuel, medical supplies, and other necessities. Businesses can also capitalize on USDA-RD Alaska’s Intermediary Relending Program and Rural Energy for American Program (REAP) Loan Guarantees. The Intermediary Relending Program involves loans made to “middle men” who then provide revolving loans to borrowers financing rural business facilities and community development projects. Borrowers can use the financing for land, buildings, machinery, equipment, and working capital. Intermediaries for the program are Haa Aani Community Development Fund Inc. and the Juneau Economic Development Council. REAP loan guarantees can be used by small businesses and agricultural producers for energy efficiency improvements, renewable energy systems, land acquisition, and working capital. Loan guarantees are provided for up to 75 percent of project costs, not to exceed $25 million. While population limits don’t apply to the agricultural producer, REAP loans are designed for locations with fewer than 50,000 residents. Johnson says 16

USDA’s business loan programs are essential because they help to sustain rural areas throughout Alaska. “The business programs provide access to capital to stimulate the community and jobs,” she says. USDA-RD Alaska also offers financial assistance for building and rehabilitating multifamily housing. The Rental Housing Loans program, for instance, offers direct loans or loan guarantees to developers of rental housing for low- to moderate-income individuals in areas with populations of up to 35,000. Often, multi-family housing projects in rural Alaska are supported by a combination of loans, guarantees, and tax credits, according to Deborah Davis, Multi-Family Housing program director, USDA-RD Alaska. The recent rehabilitation of Mews Apartments in Cordova is a good example of this type of financial support. The project was a joint effort between USDA-RD Alaska and the low-income housing tax credit program administered by AHFC. The twenty-two unit complex offers one- to three-bedroom apartments and caters to families, seniors, and disabled tenants, many of whom are longstanding residents. “It’s a very good thing,” Davis says. “The property is always full.”

Davis says multi-family housing programs create positive partnerships between public and private sources. They also help create better-quality, affordable housing that’s critically needed in the community. “It pulls at my heart strings when I go out to an apartment that has been built and rehabbed and one of the residents will say, ‘This is the best home I’ve ever had.’” Business owners can take advantage of two main housing programs through USDA-RD Alaska: Rural Rental Housing Direct Loans and Rural Rental Housing Loan Guarantees. The Rural Rental Housing Direct Loans program offers up to 95 percent of the cost for new construction or substantial rehabilitation on a thirty-year term with up to fifty-year amortization. “They were the long-standing funding facility that allowed us to build properties since the early 70s,” Davis says. “It created many of the affordable housing units that are in our portfolio.” Today, developers are increasingly using the Rural Rental Housing Loan Guarantees program to construct or renovate affordable apartments. Under the program, which guarantees up to 90 percent of the principal for lenders, borrowers can obtain loans with

Alaska Business | January 2018 www.akbizmag.com

a fixed interest rate and at least a twenty-five year term. “It allows the lender to extend more capital because of the guarantee,” Davis says. Over the past ten years, Davis has seen more rental housing turning over between developers. Often, the incoming buyer assumes the existing loan, updates the property, and continues to offer it as an affordable housing option. “Some developers may want to retire, so another developer may come in, purchase the property, and rehab it,” Davis says. “The properties are typically managed by professional management firms.”

AHFC and SBA Facilitate Financing Entities such as AHFC and the SBA also facilitate funding for businesses and individuals in small communities statewide. AHFC is a self-supporting public corporation with offices in sixteen communities in Alaska. AHFC doesn’t offer loans; instead it’s an investor much like Fannie Mae and Freddie Mac. “We purchase the loans from banks, mortgage companies, and credit unions,” says Mortgage Underwriting Manager Michelle Graves. “AHFC also partners with federal agencies to provide options of lower down payments for borrowers.” In its role, AHFC offers various loan programs for single- and multi-family projects in urban and rural areas. The corporation doesn’t provide rural development loans in the literal sense, but homeowners in rural areas make up a substantial share of its portfolio. “AHFC offers rural loans to communities on the road

system with a population less than 1,600 and communities off the road system with a population less than 6,500,” Graves says. AHFC provides two options for rural communities: the Rural Non-Owner-Occupied Loan Program and the Rural OwnerOccupied Loan Program. Under the NonOwner-Occupied Loan Program, borrowers can include businesses, Alaska residents, and local government entities. They can purchase duplexes, triplexes, or fourplexes, and each unit must measure at least 600 square feet. The Owner-Occupied Loan Program provides financing to purchase or renovate properties with one to four units, including condos. The program also offers long-term financing for owner-built, newly-constructed homes. Mortgage insurance is required if the down payment is less than 10 percent. Since 2008, AHFC has purchased 2,976 Rural Loan program loans (non-owner occupied and owner-occupied) totaling nearly $636 million. The average loan amount was $213,686, with the loan types being fifteenand thirty-year loan terms. “Loans in our rural areas are pretty steady and I believe always will be because we are able to offer financing in areas that would be difficult to finance with standard investor [Fannie Mae and Freddie Mac] loans,” Graves says. The SBA also works with eligible lenders to provide loans to small businesses, including those in rural Alaska. It doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by its partner-

ing lenders, community development organizations, and micro-lending institutions. The SBA guarantees repayment of the loans that its partnering lenders make, eliminating some of the risk involved. In turn, participating lenders must pay the SBA an incremental guaranty fee on the guaranteed portion of the loan, as well as a monthly fee on the outstanding balance of the guaranteed portion. SBA lending programs include 7(a), CDC (Certified Development Company)/504, and Microloan options. The 7(a) loan program allows businesses to borrow $50,000 to $5 million for a wide variety of purposes, including starting and acquiring a business; purchasing machinery, equipment supplies, and fixtures; acquiring land and a building location; and working capital and refinancing existing debt. Loan terms can include five to seven years for working capital, up to ten years for business acquisition and equipment, and up to twenty-five years for real estate. Under the CDC/504 loan program, borrowers deal directly with a CDC, which is a nonprofit corporation set up to contribute to the economic development of its community. Certified and regulated by the SBA, CDCs work with the SBA and private-sector lenders to provide growing businesses with longterm, fixed-rate financing for major fixed assets such as land, buildings, machinery, and equipment. The loan amount can range from $25,000 to $5.5 million, with a twenty-year term for real estate and a ten-year term for equipment.

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January 2018 | Alaska Business

The New Stuyahok tower was facilitated by USDA-RD Alaska loan. Image courtesy of USDA-RD Alaska

The Microloan program provides small businesses with small, short-term loans— up to $50,000—for working capital or to buy inventory, supplies, furniture, fixtures, machinery, and equipment. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit organizations with experience lending and offering technical assistance. These intermediaries then issue loans to eligible borrowers.

Financial Institutions Support Rural Projects Borrowers are able to secure rural development and rural program loans directly from lenders including Wells Fargo and First National Bank Alaska. Wells Fargo, for example, primarily uses SBA 7(a) and 504 loans to meet the financing needs of its rural custom18

ers, according to Alaska Regional Business Banking Manager Darren Franz. Alaska is a different kind of place—especially rural Alaska, Franz says. That’s why the bank constantly strives to ensure it offers financial expertise and resources that cater to small Alaska communities. “Our bank has become very good over the years with having more people out there who understand what the needs are in rural communities,” Franz says. “We’re the biggest lender in the state and rural Alaska.” As is common with commercial financing, Wells Fargo considers the project and strength of the borrower when providing rural loans. Having a guarantee of repayment from an entity like the SBA can also be a determining factor for loan approval. Such a guarantee encourages the bank to be more open to a given project. “We try to mitigate

the risk as best as we can… We’re lending out little old ladies’ deposits,” Franz says. Outside Anchorage, Wells Fargo developed $87 million worth of business loans in 2015, $80 million in 2016, and $65 million in 2017 (as of late October). Although Wells Fargo has experienced a decline in rural Alaska loans, Franz has noticed some positive developments taking place. “We’re starting to see families and individuals [beginning to] invest and upgrade their boats, and I think that trend will continue.” Larger companies and organizations such as Trident Seafoods Corporation and Community Development Quota groups are also investing money into the fisheries. In mid-November, Trident and the Aleutian Pribilof Island Community Development Association (APICDA) announced an agreement in principle for Trident to make an investment in APICDA’s processing facility and fuel farm in False Pass and in Cannon Fish Company of Kent, Washington. APICDA and Trident will have joint- venture ownership in all three operations. Franz says he also sees more business owners make investments in tourism and healthcare. And in spite of the economic recession, Wells Fargo is still positive on Alaska. “The longer the recession goes, the bigger the bounce back is going to be,” he says. First National Bank Alaska, as an AHFCapproved lender, offers a wide array of loan programs, including conventional, Federal Housing Administration (FHA), Veterans Administration (VA), Housing and Urban Development (HUD) 184, and rural development. The bank offers many different types of commercial loans that work well in rural areas. It works with many partners, including the state of Alaska, Alaska Industrial Development & Export Authority, USDA, SBA, and HUD loans, according to Vice President and Regional Manager Julie Woodworth. Different loan programs possess unique aspects and benefits. Some offer loan guarantees or participation, while others come with lower interest rates or a lower down payment. Sometimes the benefit is the difference between an approval or not. “When we get an application in, we look at all the options and see what the best fit for that project is,” Woodworth says. “Then we would look for a partner that would reduce the risk to the bank and make the deal feasible.” Homer-based Woodworth says First National has a good presence in rural communities and is well-versed in the many programs available to meet the needs of Alaskans. The bank uses a diverse range of programs to finance fishing vessel upgrades, housing, transportation, commercial facilities, retail stores, and hotels. Financing rural development projects, Woodworth says, is not only good for businesses and communities but it’s also good for Alaska. “Having these rural development programs available helps all of Alaska because all of our economies are so interconnected,” she says. R Tracy Barbour is a former Alaskan.

Alaska Business | January 2018 www.akbizmag.com

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FINANCE

The Grand Bargain Protecting employees and employers with workers’ comp insurance By Tracy Barbour

or most employers in Alaska, workers’ compensation insurance is an integral part of operating a business. Workers’ compensation is a system of insurance that protects workers and employers from some of the losses caused by on-the-job accidents and job-related illnesses. Before the system was implemented, injured workers would have to sue their employers for negligence to receive compensation. However, proving negligence was a time-consuming and costly endeavor for the injured worker as well as the employer. In response, states began adopting legislation to establish a system of insurance between employees and employers to compensate injured workers while still protecting employers from lawsuits. The resulting system is based on what is known as the “Grand Bargain,” according to Marie Marx, director of the Alaska Workers’ Compensation Division. Marx explains: “If a worker is injured, the employer’s insurance company or the self-insured employer pays medical and wage replacement benefits due to the worker. In exchange, the injured worker receives prompt, limited benefits and gives up the right to sue the employer. This allows employers to stay in business and continue to provide jobs. Under this limited benefits system, there is no compensation for non-economic damages such as pain, suffering, or loss of consortium. There is also no compensation for punitive damages. It is a no-fault system; an employee does not have to prove an employer was at fault to receive benefits and an employer does not have to admit fault.” The Alaska Workers’ Compensation Act governs employee and employer rights and duties and obligations related to a work-related injury. The intent of the act, Marx says, is to ensure quick, efficient, fair, and predictable delivery of benefits to injured workers at a reasonable cost to employers. “If an employee suffers a work-related injury, the act requires an employer to report that injury to the Alaska Workers’ Compensation Division and provide medical, indemnity [wage loss], and reemployment [retraining] benefits,” she says. “In cases involving fatalities, dependents may be eligible for death benefits. For insured employers, their insurance policy claims administrator takes care of the process for them.” All fifty states have workers’ compensation laws, which are unique to each state. And compensation benefits vary significantly from state to state, with the rules being far from uniform. For example, under the Alaska Workers’ Compensation Act, all employers with one or more 20

full- or part-time employees are insured for general liability and obligated to purchase and mainworkers’ compensation,” she says. tain workers’ compensation insur“This is important because business ance policies to cover all employowners likely will not know if their ees, Marx says. Sole proprietors, contractors and subcontractors are partners, and limited liability misclassifying employee labor.” members are exempt from having Sometimes organizations charto insure themselves for workers’ acterize their business relationships compensation liability. However, contrary to the views of the Departthey still must insure employees, ment of Labor, Internal Revenue including family members, who do Service, or workers’ comp insurChris Pobieglo not have legal ownership interest President of Business ance carriers. But they need to base in the business. Incidentally, ex- Insurance Associates their perception on official stanecutive officers of a corporation— dards, says Christopher Pobieglo, Image courtesy of those with titles such as president, CIC, CRIS, president of Business Business Insurance Associates vice president, secretary, and treaInsurance Associates. “Just because surer—are considered employees you 1099 another party doesn’t under the act. They must be insured unless automatically make them an independent they obtain an executive officer waiver from contractor and absolve you from the responsithe Alaska Workers’ Compensation Division. bility that comes with an employer-employee The Alaska Workers’ Compensation Act relationship—notably workers’ compensation contains exemptions for certain individuals coverage,” he says. “Establishing a contractorin AS 23.30.230, including part-time babysit- independent contractor relationship, which ters, a cleaning person, contracted entertain- could absolve some of the employer responsiers, commercial fishermen, harvest help or bilities like workers’ comp, requires a litmus other transient help, referees and other sports test, and a 1099 might be a piece of that but by officials, taxi drivers with specific contractual no means constitutes the totality of it. There relationships, real estate agents with specific are a number of factors to be considered, and contractual relationships, and most recently, company policies on this should be crafted individuals who fit the definition of a trans- and implemented under the guidance of an portation network company driver (Uber and attorney and a risk management professional/ Lyft, for example). “However, exemption un- insurance broker.” der AS 23.30.230 depends upon the particular circumstances surUnderstanding rounding the work relationship,” Workers’ Comp Costs Marx says. “It is important to note Alaska has the unfortunate distincthere is no such thing as an exempt tion of carrying some of the highbusiness under the act. Only indiest medical costs in the nation, and vidual workers under specific cirthose costs are major drivers of cumstances and business owners workers’ compensation premium may be exempt from the requirerates. In Alaska, medical benefits ment to insure.” contribute 72.9 percent of total Under AS 23.30.045, a project benefit costs, compared to 58.6 perowner and/or contractor is responcent nationwide, says Dave Kester, Dave Kester, CPCU, Senior sible for ensuring employees on CPCU, referencing figures from Account Executive a project are covered by workers’ National Council on Compensacompensation insurance, includ- with RISQ Consulting tion Insurance (NCCI), the rateing employees of any subcontracsetting organization for Alaska Image courtesy of RISQ Consulting tors or contractors it hires. The and about forty other states. “That purpose of AS 23.30.045 is to cremakes the cost of doing business ate “downstream responsibility” to make sure that much higher than in the Lower 48,” says that every employee on a project is covered for Kester, a senior account executive with RISQ workers’ compensation liability, Marx says. Consulting. “And because medical costs are Therefore, an employer should carefully impacting healthcare, that’s a double whammy. vet all individuals and businesses with which It just continues to add to the high cost, plus it does business. “It should ensure those busi- Alaska is an expensive place to do business.” nesses, as well as all the subcontractors those He adds: “In a state that’s experiencing a businesses may hire, are properly licensed and couple of years of recession now, that’s just

Alaska Business | January 2018 www.akbizmag.com

more pressure on employers and est year falls off with each incoming premiums, the frequency of losses or the severbusinesses in the state. Whatever year and the more current year is ity of each loss? That’s a tough question, and can be done to bring medical costs added. “The mod is negatively af- the answer is: it depends, Muir says. “If all of more in line with the rest of the fected if there are losses during that the small, frequent losses are medical-only, nation would be very beneficial time and positively affected if there they will be discounted and not have much not just to workers’ compensation are no losses,” Muir says. “Medical- of an impact on the experience mod. Most of but also to the costs of employers.” only claims are discounted by 70 the time, the larger losses are indemnity losses, There are many factors that percent, and full payouts are used and the full value would have a negative effect determine how much a comfor indemnity losses.” on the mod. Carriers that see small, frequent pany pays for its workers’ comEssentially if the insured has a losses may think the company needs a better pensation insurance premium. few medical-only claims, it may loss control program and either will not write Kristin Muir The gross premium is calculated not have much of an impact on the it or choose to add a schedule debit, whereas a CIC, AINS, of HUB International based on gross payroll, class mod. This can be a significant ad- large infrequent loss may just be bad luck and Northwest codes, and the rates for each of vantage, given Alaska’s high medi- the debit mod will roll off in three years.” the class codes. “This gross precal costs. Like Muir, Pobieglo says the experience Image courtesy of HUB mium is then adjusted by a few International Northwest So which one has the bigger modification loss computation is weighted topotential variables such as the eximpact on workers’ compensation ward frequency. It’s a better indicator of loss perience modification rating and carrier credit/debits, such as premium size discounts, surcharges, safety program credits, and drug testing credits, to come up with a net premium,” Pobieglo says. Among these factors, the experience modification—often called the EMOD or mod—is Helping businesses grow through consultative risk an important part of determining a company’s workers’ comp premium. And calculatintelligence services and integrated insurance programs. ing the EMOD rating is a complex actuarial process that involves a number of variables and elements. But in layman’s terms, it’s determined by comparing claims data and payroll data against other employers with similar business operations to develop expected losses factored against payroll, Pobieglo says. Essentially, the formula incorporates factors that account for company size, unexpected large losses, and the incidence of loss frequency and loss severity to achieve a balance between fairness and accountability. When calculating the EMOD, the experience rating for a three-year window of time is used— Employee Commercial & Business excluding the prior year—so that years two Insurance through four apply. Benefits “A neutral EMOD is 1.00,” Pobieglo says. “Anything below that is a credit, and everything above that is a debit. A $10,000 claim will hurt a company running $100,000 in payroll annually, more than it would a company running $1 million in payroll annually, so in Employer Specialty Insurance Individual & Family that sense you see more volatility in the EMSolutions Services Insurance ODs on smaller businesses, but any increase or decrease is also proportionately weighted.” “The bottom line is that a bad EMOD rating and bad claims history can drive you right out of business by making the overhead on your ™ products and services uncompetitive for the market,” he says. “Of course there are typically other underlying factors that cause busiInsurance Brokers of Alaska and Northrim Benefits nesses to fail aside from just the EMOD, but a Group have joined together to form RISQ Consulting, bad EMOD rating can be indicative of a commaking us Alaska’s largest risk consulting firm. pany not appropriately managing risk, which doesn’t speak well for the long-term viability.” To be eligible for an experience modificaRISQ Consulting has over 60 years of combined tion, a business needs to have a premium of experience providing custom insurance solutions for $5,000 or greater for two years, according to Alaskan businesses. Kristin Muir, vice president of commercial RISQConsulting.com lines with HUB International Northwest. If it doesn’t, it will have to wait a third year before 888-910-6667 Our consultants help businesses grow through RISQ’s a mod factor is developed. The larger the comproprietary Business HealthIQ™process, ensuring pany, the more potential for a lower experience you spend time, money, and energy only on areas of mod, says Anchorage-based Muir, CIC, AINS. your business which add value. With the three-year premium information that NCCI uses to calculate the EMOD, the old-

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January 2018 | Alaska Business

“There’s a risk management saying that frequency tends to bring about severity. So the more losses you have, the more probability you will have a severe loss.”

Dave Kester, CPCU, Senior Account Executive, RISQ Consulting

control practices and the safety culture of an organization than severity, he explains. Any company can be at risk of having a severe claim; even those that implement the best safety practices and aggressively manage risk can have a one-off event that results in extraordinary medical and indemnity costs. “Having five workers comp claims of $5,000 will have a more detrimental effect on your experience rating then having a single claim of $25, 000,” he says. Kester agrees, saying that a trend of frequent losses—even small ones—can be damaging for an employer in the long run. “There’s a risk management saying that frequency tends to bring about severity,” he says “So the more losses you have, the more probability you will have a severe loss.” With the many complexities surrounding workers’ compensation, companies are often left with misconceptions about workers’ comp insurance. For instance, some business owners feel that all companies in their industry pay the same premium rate regardless of their insurance company. But that’s not true, Kester says. “Every insurance company adds

on an expense ratio to the base rate,” he says. “It’s kind of their ‘mark-up’. As a broker, we get quotes from different insurance companies because they do differ.” Also, many employers think if they have a workers’ comp claim, their premium will go up and they will end up paying for the claim themselves based on the increased premium, Muir says. “In reality, if a client has a large workers’ compensation claim and the premium ends up being increased through an increase of the experience modification, the additional amount of premium that they pay is pennies on the dollar compared to what the carrier pays out to the injured employee,” she says.

Trends and Changes The good news is that workers’ compensation medical costs are trending down in Alaska. In 2014, the overall medical average cost per case in Alaska was $62,000, compared to $28,000 countrywide, Marx says. In 2015, the overall medical average cost per case went down to $49,000, with the national average remaining at $28,000.

And there’s more positive news: Workers’ comp costs have gone down since December 1, 2015, when the Alaska Division of Workers’ Compensation implemented a new medical fee schedule that completely changed how providers are reimbursed for their treatments and services. In addition, NCCI has proposed a decrease in Alaska’s overall average workers’ comp loss cost level. If approved by the Alaska Division of Insurance, benefit costs and loss adjustment expenses could decrease 7.9 percent overall than those underlying the January 1, 2017, approved loss cost level, Marx says. This would be a significant development because the voluntary market loss costs are the “building blocks” to final manual rates that insurers calculate. Marx says she is optimistic that workers’ comp costs will continue to trend downward in Alaska. “However, there are many drivers to the overall loss cost level, in addition to changes to medical fee schedules themselves,” she says. “The trends and loss cost levels are re-evaluated with each filing, so the future trends are not yet determined.” As another major trend, insurance auditors are requiring their insured employers to provide very detailed information not only about employee payroll and duties but also about the employer’s contractors, subcontractors, and vendors. However, Marx says, “An employer’s insurance company is well within its rights to conduct these audits and require the information because, under the Alaska Workers’ Compensation Act, the employer’s insurer may end up paying for the work-related injury of an uninsured contractor or subcontractor’s employee.”

Reducing Costs Companies can use a variety of strategies, including loss control and safety programs, to lower their workers’ compensation insurance costs. Loss control usually translates into lower losses. And the lower the losses, the lower the experience modification. This translates into a lower premium. “You can sometimes negotiate schedule credits on a policy if the carrier is aware the insured has an active loss control program,” Muir says. Beyond using loss control, employers can also employ safety meetings, drug testing, and claims monitoring as cost-reduction strategies. They should also pay attention to their final audit. “Auditors sometimes misclassify employees or don’t catch the excess payroll on overtime,” she says. Keeping clerical staff in a separate area from other operations can sometimes help and always get certificates from subcontractors, Muir says. Exercising good hiring practices right from the start is also a benefit. She explains, “Don’t put the wrong employee in a job that is not appropriate for them and be sure you provide the appropriate training for the job.” Wellness programs can also have an impact on workers’ comp costs because the personal health of an injured employee can affect the outcome of a claim. Likewise, drug and alcohol abuse, diabetes, obesity, and smoking can all affect the outcome of an employee’s claim. R Tracy Barbour is a former Alaskan. 22

Alaska Business | January 2018 www.akbizmag.com

JA Inducts Four Laureates at 2018 Annual Alaska Business Hall of Fame General Mark Hamilton, JA students to emcee event’s 31st year By Flora Teo and Cory Quarles

This important event is a fundraiser for Junior Achievement, an organization dedicated to providing economic and entrepreneurial education in Alaska. Since 1973, Junior Achievement has served K-12 students statewide from Utqiaġvik to Ketchikan. Junior Achievement serves nearly 14,000 students annually in fifty-five Alaska communities. As demand for the program continues to grow, Junior Achievement partners the business community with educators to prepare young people for a global economy. Through the continued support of corporations and businesses in Alaska, we can continue to reach more students in Alaska. It is our privilege to invite you to attend the 2018 Alaska Business Hall of Fame, presented by Alaska Business. This year we are honored to induct Thomas Barrett, Alyeska Pipeline Service Company; Robert B. Gillam, McKinley Capital Management; Robert Penney, Real Estate Development and Investor; and a posthumous induction of C.E. “Chuck” Robinson, Alaska Communications—congratulations to you all! The Alaska Business Hall of Fame is annually attended by nearly 600 guests, including many past laureates, government officials, 24

leaders from the business community, and supporters of Junior Achievement. We are again pleased to have General Mark Hamilton emcee the event along with our Junior Achievement students. For table reservations, or to inquire about the limited remaining sponsorship opportunities, we encourage you to call Junior Achievement at (907) 344-0101 or visit Alaska.ja.org. Tables of ten are $1,500, or individual reservations may be made for $150 per ticket. Junior Achievement of Alaska is a registered 501(c)(3) and the majority of your purchase may be tax deductible. The Alaska Business Hall of Fame will be held Thursday, January 25, 2018, at the Dena’ina Civic and Convention Center. Doors open at 5:30 p.m. for a no-host reception with the dinner and awards ceremony begin at 6:30 p.m. From the board, staff, and students of Junior Achievement of Alaska, we wish you the very best in 2018 and we look forward to seeing you on January 25! R Flora Teo is president of Junior Achievement of Alaska. Cory Quarles is Junior Achievement’s board chair and ExxonMobil Alaska production manager.

Image courtesy of Junior Achivement of Alaska

oin us for the 31st Annual Alaska Business Hall of Fame, an event that celebrates the past, present, and future of business in Alaska. In 1987, Junior Achievement began the Alaska Business Hall of Fame to honor outstanding individual leaders of Alaska business. Since then, the Hall of Fame has become one of the state’s most prestigious events, inducting new laureates on an annual basis. These individuals are honored for their direct impact toward furthering the success of Alaska business, support for Junior Achievement’s mission and programs, and demonstrated commitment to the Alaska economy. Flora Teo

Image courtesy of Junior Achivement of Alaska

SPECIAL SECTION

Junior Achievement

Cory Quarles

Alaska Business | January 2018 www.akbizmag.com

Junior Achievement of Alaska

            

Chip Abolafia, Anchorage School District Logan Birch, Member, Alaska Growth Capital Ryan Cropper, Member, Able Body Shop Reed Christensen, Dowland-Bach Corporation Travis Frisk, Member, Wells Fargo Ken Hanley, Member, First National Bank Alaska Michael Haynes, Member, CH2M Heath Hilyard, Member, Rep. Cathy Tilton Mark John, Member, Petro Star Inc. Krag Johnsen, Member, GCI Tali Birch Kindred, Secretary, Holland & Hart Kristen Lewis, Member, Alaska National Insurance Co. Kurt Martens, Member, Leonard & Martens Investments

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Image courtesy of Junior Achivement USA

Statewide Board of Directors 2017-2018

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Mark Mathis, Member, Arctic IT Cory Quarles, Chair, ExxonMobil Tom Redmond, Vice Chair, SolstenXP John Sims, Member, Enstar Natural Gas Jana Smith, Member, Parker Smith & Feek Mark Smith, Member, Retired USAF Beth Stuart, Member, KPMG Greg Stubbs, Member, Sullivan Arena

   

Lynda Tarbath, Treasurer, GCI Shaun Tygart, Calista Kevin Van Nortwick, Member, BDO USA Derrell Webb, Member, NANA Management Services  Rick Whitbeck, Member, CBI Media Group  Derrick Yi, Member, ConocoPhillips Alaska R

January 2018 | Alaska Business

SPECIAL SECTION

Junior Achievement

SPECIAL SECTION

Junior Achievement

2018 Donors Platinum Plus $10,000+  Alaska Airlines  Alaska Business  Alaska National Insurance Company  Arctic Slope Regional Corporation  AT&T  BP  ConocoPhillips Alaska, Inc.  Delta  E xxonMobil Production Company  First National Bank Alaska  GCI  Kendall Lexus of Alaska  KeyBank  Northern Lights Bingo  Rasmuson Foundation  Saltchuk  Wells Fargo Platinum - $5,000+  Alaska Commercial Company  Alaska Community Foundation  Barbara Schaeffbauer  Bristol Bay Native Corporation  ConocoPhillips Alaska, Inc.  Credit Union 1  ENSTAR Natural Gas Company  B.J. Gottstein Foundation  Katmailand, Inc.  Kinross  Linda Eliason  Lynden  Northrim  Odom Corporation  Ravn  Tesoro  The Hartford  Watterson Construction Company Gold - $2,500+  3M Company  Alaska Commercial Fishing and Agriculture Bank  Alaska Communications  Alaska Growth Capital  Anchorage Economic Development Corporation  ASRC Energy Services  Avis Rent A Car  ch2m  Calais Company, Inc.  Janco Commercial Cleaning  John C. Hughes 26

Foundation  KPMG LLP  Mary Hughes & Andrew Eker  Matanuska Valley Federal Credit Union  Old Harbor Native Corporation  Petro Star Inc.  Ted Quinn  The Wilson Agency, LLC  TOTE Maritime  Udelhoven Oilfield System Services, Inc.  Weaver Brothers, Inc.

Silver - $1,000+  Able Body Shop  Alaska Cruise Association  Alaska Housing Finance Corporation  Alaska Railroad  Alaska Regional Hospital  Alaska Sales & Service  Alaska USA FCU  Arctic IT  BDO USA LLP  Bill Odom  Capital Office Systems  Dave & Pam Marquez  David & Betsy Lawer  Denali FCU  Denali Foods, Inc.  Derrell Webb  Derrick Yi  Doug & Jana Smith  Dowland-Bach Corporation  Doyon  Elizabeth Stuart  Frontier Hangar Group, LLC  George Gates  Girdwood 2020  Chris Hodel  Harry McDonald  Holland America Line Inc.  James Udelhoven  Jared Green  Jennifer Johnston  Joe Everhart  Kevin Van nortwick  Kristen Lewis  K TUU  Leonard & Martens Investments LLC  Logan & Heather Birch  Mark & Laurie John  Mark Smith  Marsh USA  NANA Development Corporation  NANA Management Services

 NANA Worley Parsons  Parker Smith & Feek  RIM Architects  RIM Design  Sams Club  SolstenXP  Taco Bell of Alaska  Talitha Birch Kindred  Tangerine Promotions  The Alaska Club  Tom Corkran  Tom Redmond  Usibelli Foundation  Wells Fargo Advisors

 Pita Pit  Premier Alaska Tours  Price Gregory  Sarah Springer  South Anchorage High School  Starbucks  Steve Adams  Suzanne Linford  Texas Roadhouse  Tom Barrett  Tom Newins  UnWined  Willies Marine Inc

Green - $500+  Alaska Pediatric Therapy  All Alaska Tours  Alyeska Pipeline Service Co.  Alyeska Resort  Automated Laundry Systems and Supply  Barbara and Wayne Pichon  Barbara Cash  Calista Corporation  Capital Office Systems  Carl Marrs  Carl Propes  Catherine Claxton  Charles Schwab  Chena Hot Springs Resort, LLC  Chubb  Colonial Life  Cory Quarles  Costco  Delta Constructors  Diana Livingston  Diane Hoffbauer  Douglas L. Chapados  Eileen Thompson  Flora Teo  Grant Shearer  Greg & Wendy Gursey  Harri Plumbing and Heating, Inc.  Janet Johnson  Jeffrey Sinz  Joe Beedle  Julie Taylor  Keri Melvin  Kevin Meyer  The Lakefront  Lee & Amy Cromwell  Lexus Champions for Charity  L&B Realty Advisor  Margaret and Michael Price  Ret. Gen. Mark Hamilton  Marsh  Michael Barnes  Michael Haynes  Michael L. Todd  Moira Smith  Oil & Vinegar  Petro Marine Services

White  Afognak Native Corporation  Airgas  Alaska Appraisal and Consulting Group  Alaska Chip Company LLC  Alaska Pure Water Products  Alaska Rubber & Supply, Inc.  Alaska SeaLife Center  Albert Allen  Alex Hotel and Suites  Allen Hippler  Amarin Pokrivnak  Amy Kelly  Anchorage Golf Course  Anchorage Symphony Orchestra  Andria Agli  Angela Burris  Angela Speight  Anne and Dwayne Sakumoto  Anne Courtright  Annette DeLong  Arby’s  Arctic Roadrunner Inc./ Local Burgerman  Artique, Ltd.  Bagoy’s  Barbara Fullmer  Ben Schoffmann  Betty Sheldon  Beverly J. Walsh  Bill Spindle  Bill Popp  Blockbuster Video  Bovey Trophies  Brad Osborne  Bradley Loncar  Brent Kimball  Brian Murkowski  Bridgette Coleman  Briley Loncar  Brittan Olson  Bryan Clement  BurgerFi  Calvin Koshiyama  Carol Wren  Catherine L. Duxbury  Cathy Boulay  Cessilye Williams

 Charlie Miller  Charlotte Mac Cay  Chris Birch  Chris Shockley  Christian Deykes  Christine Anderson  Christopher C. McGee  Christopher Slottee  Claire Joseph  Clark Courtright  Colleen Stephens  Cory Hinds  Cynthia Berns  Daniel Garcia  Dave & Beth Macdowell  David A. Asi  David Courtright  David Springgate  David Stafford  Dawn Bishop-Kleweno  Delta Western, Inc.  Dency Dokoozian  Dennis Metrokin  Diana Livingston  Diane Hoffbauer  Diversified Tire, Inc.  Don & Joan Bantz  Donna Walker  DoTopia  Duane Dudley  Dustin Miller  Electa Kean  Eric Dompeling  Erika Herlugson  Father Leo Walsh  FireTap Alehouse  Frederick G. Miller  FSBO System, LLC  Glacier Brewhouse  Great Harvest Bread Company  Greg Hobson  Greg Loudon  Greg Stubbs  H2Oasis Indoor Waterpark  Harold Hollis  Inez & Mark Bielefeld  J.P. Hoff  Jack Sheppard  Jacob Polzin  James F. Boltz  Jason Metrokin  Jay Hermanson  Jeff Bool  Jenna Pace  Jeremy Albright  Jewel Lake Tastee Freez  Jim Brady  Jim Lund  Jim Winegarner  Joe Mathis  Joe Murry  Joel Kadarauch  John L. Amor  Johnny Rusch

Alaska Business | January 2018 www.akbizmag.com

www.akbizmag.com

Junior Achievement

Learning to Live an Entrepreneurial Life

Image courtesy of Junior Achivement of Alaska

 Pita Pit  PJ Hill  PND Engineering  Powell Gallagher  Ravenstar Pacific Shipping, INC.  Rebecca Kennedy  Rebekah Tabor  Red Robin Alaska, Inc.  Reed Christensen  Richard Baird  Rick Mystrom  Rita and William McKenzie  Robert L. Shake  Robert Teachworth  Rodolfo Robaina  Ron & Margo Pichler  Ryan Jimenez  Ryan York  Samantha Pham  Sams Club  Sappore Coffee  Sarah Rygh  Scan Home Inc.  Scott Jepsen  Scott Pessetto  Security Aviation  Sharon Gagnon  Shattuck & Grummett Insurance  Sheli Dodson  Shirley Steger  Sidney Flores  Stacey L. Horn  Stan Stephens Glacier & Wildlife Cruises  Stephanie Spring  Steven R. Krohn  Sue Wolfe  Suite 100  Susan Sanders  Suzanne Whittle  Terry & Karen Smith  Tennys Owens  Teresa D. Newins  The Mail Cache  The Moose’s Tooth and Bear Tooth  The Shimizu Foundation  Thomas Karpow  Tim Green  Timothy D. Beichley  Toni Roberts  UAA Department of Athletics  Unwined  Valdez Gold Rush Inc.  Vicki Jansen  Voni Kauffman  W G. Stroecker  Will Smith  William Gornto  William Polley  Zoe Olson R

JA teaches students money matters, the value of hard work, and the meaning of dedication By Ashley Jean Marie Smith

unior Achievement (JA) has, and continues to be, a positive and impactful experience in my life. I apply the lessons of JA in my everyday life whether I’m buying a new t-shirt or putting together a business plan to start a snow removal business with my younger sisters. Understanding how to manage my money and calculate a profit comes in handy. I learned those fundamental lessons through my JA courses at Northern Lights ABC School. I participated in JA from Kindergarten through the 8th grade. Each year brought a new, fun, and educational activity based on financial literacy. It gave students the opportunity to learn about finances taught by a professional, not a parent or teacher with a textbook. Our advisors guided us with their real-life experiences and allowed us to make our own decisions. Simple decisions such as whether to use my lunch money for lunch or for splurging on a brand new bouncy ball at the school store had new meaning. Though this may seem irrelevant to most, fast forward thirty years. In 2047 these same students, now adults, will be deciding if we should buy food for our families or the newest electronic device on the market. A memorable JA course for me was second grade, Mrs. Bissell’s class. We launched a donut shop and were taught the word “entrepreneur.” It was the biggest and most difficult word to pronounce! At the time, the word had no particular meaning to me. I then learned an entrepreneur could become rich from selling donuts and that was exciting [to me] as a nine-year-old. Some of the sacrifices and difficult choices a business owner faces daily were eye opening. I now know that an entrepreneur is so much more than a word, it’s a lifestyle. An entrepreneur puts their business before themselves. They get stronger with the obstacles they face,

and especially in Alaska, it means giving back to the big “907” and the people who live in it. To sum it up, the word “entrepreneur” also means dedication, determination, and almost always, sleep deprivation. When a group of my classmates and I decided to start a business through JA’s CEO Academy, I thought I knew it all. Boy was I wrong! I never knew how quickly the confusion set in. There was inventory, receipts, people, and marketing that I had to take care of as president, and I was only in 7th grade. At times, I thought I was crazy to get myself into this position. While some kids were off studying for a math quiz, I was filing, signing payroll checks, and wondering if I was ever going to make a profit at the time of liquidation. An employee from production was suspended three times because of his behavior. His behavior improved, and the experience made him realize the team depended on him and [that he] was valuable. The experience changed him for the better. Trust me it was not a one woman show. There were many kids I never would have met outside of JA who helped make the company a success. Everyone pitched in to create our amazing business. It taught me employees are the greatest assets when building a business. When it was all said and done, I look back and see incredible memories in between the blood, sweat, and—sometimes—tears. JA fuels the spark in thousands of children in Alaska to dream big and helps us think differently about the business world we are entering in the near future. R

Ashley Jean Marie Smith is in the ninth grade and is a Junior Achievement Academy graduate. January 2018 | Alaska Business

JUNIOR ACHIEVEMENT SPECIAL SECTION

 Jon Bittner  Joseph Chythlook  Joseph M. Beedle  Joseph M. Schierhorn  Josh L. Vandagriff  Julie Johnson  Julie Taylor  Kaladi Brothers Coffee Company  Karen Hume  Karen L. Wallace  Karen Vezina  Kathleen Redmond  Katie Bender  Kelly & Frans Droop  Kenneth P. Hanley  Kennington Lynn  Kim Frensley  Kirk Payne  Kirk R. Fisher  Kjirsten Langland  Laura Bruce  Laura D. Walsh  Laurie Butcher  Lee’s Heavy Equipment Repair  Lennie Dees  Leslie Helmers  Lessmeier & Winters  Linda M. Golding  Liz Perry  Lois Conley  Lon Wilson  Loren Lounsbury  Lori McCaffrey  Lynda Tarbath  Mahay’s Riverboat Service, Inc.  Marc Langland  Marilyn Sarvela  Mark Bugher  Mark Hylen  Mark Johnston  Mark Mathis  Mark Pohler  Mark W. John  Marsha K. Fry  Marshall Pickering  Mary Gasperlin  McDonalds  Megan K. Riebe  Michael Anderson  Michael Buzinski  Michael Heiring  Mike Akers  Mike Faust  Mt. Mc Kinley Lions Club  Nordstrom  Nugget Alaskan Outfitter  Pam Orme  Patrick Lampi  Paul Rusch  Peppercinni’s  Phil Cochrane

SPECIAL SECTION

Junior Achievement

Image courtesy of Junior Achievement USA

Why Junior Achievement? Program Results Speak For Themselves

Alumni report greater career satisfaction, financial intelligence, entrepreneurship

n the spring of 2016, Junior Achievement USA conducted a survey of a scientifically valid sample of more than 700 JA alumni. The intent of this research is to better understand the impact JA has on the lives of the more than 100 million people who have gone through JA programs since the organization’s founding in 1919. JA alumni were asked about a variety of topics, including educational attainment, career satisfaction, financial capability, income levels, and business ownership. These results were then compared to general population data from a 28

variety of sources, including the US Census, the US Department of Education, and the Global Entrepreneurship Monitor.

Education Related to educational attainment, 93 percent of JA alumni graduated high school or have a GED. This is compared to a high school/GED rate of 88 percent in the general US population, using 2015 US Census data. When it comes to higher education, 42 percent of JA alumni have a four-year degree, compared to 32 percent of the general US population.

“A JA connection turned into a [high school] internship, connections, scholarship, four-year degree, and my first job out of college.”

—Evan Frazier Senior Vice President of Community Affairs, Highmark Health

Alaska Business | January 2018 www.akbizmag.com

n the career front,might 62 percent Alumni [business] have beenofa JA mystery. I used my Junior experience and e currently working in Achievement positions that are can-do to According put together the a business managermy status or attitude above.” U.S. plan on how to get to the break-even point… ureau of Labor Statistics (BLS), 58.7 percent of today the company exceeds $150 million in mericans are paid hourly wages 2, compared revenue. I wouldn’t be where I am today if it 38 percent of JA Alumni. In terms of career weren’t for Junior Achievement.” —Bob Coughlin piration, 30 percent of JA Alumni, or nearly 1 in Founder and CEO credit JA with influencing their career choice, Paycor hile 20 percent of JA Alumni, or 1 in 5, say they This means JA alumni are nearly 30 percent more likely to possess ork in thea four-year samedegree. career as 20the JAofvolunteer At thefield same time, percent JA alumni earn an advanced degree, compared to 12 percent of the US population, ho taught them as a student. Additionally, meaning JA alumni are 67 percent more likely to obtain an advanced degree. percent of JA Alumni report that they are tisfied with their careers, Career compared to 48.7 On the career front, 62 percent of JA alumni are currently working rcent ofin the general public, theof Lapositions that are “manager statusaccording or above.” The USto Bureau INCOME bor Statistics reports that 58.7 percent of Americans are paid hourly 3 onference Board. In terms of toperceptions of the U.S.of career aspiwages, compared 38 percent of JA alumni. In terms ration, 30 percentsystem, of JA alumni75 creditpercent JA with influencing economic of thetheir UScareer choice, while one in five JA alumni say they work in the same career population havewho a taught median household field as the JA volunteer them as students. Additionally, 88 percent ofof JA $51,939, alumni report according they are satisfied to withthe their careers, income compared to 48.7 percent of the general public, according to The Conference Board.Reserve 8. In comparison, Federal

JA Alumni Career Aspirations

88%

Satisfied with career

General Population

1 in 3

Credit JA for influencing career decision

1 in 5

Work in same field as their JA volunteer

JA Alumni Household Income

20%

A Alum Insight

Higher income

Image courtesy of what’s nifer credits her success to JA as it “started [her] momentum toward ‘I can do this.’ I know Junior Achievement USA median household income for JA Alumni eded to lead, sell a product and be successful. It starts at a young age. You get the right impression $62,500, Alumni make he right is time.” It evenmeaning “open[s]JA doors by the very nature of reaching out and connecting with people nearly 20 percent more than the general tside of their little bubble.”

General Population

SAVE THE DATE

population. In terms of social mobility, 38 percent of JA Alumni describe their standard of living growing up as “Lower Income” (low to low-middle income) while 23 percent Jenifer Picard, VP of Global Fund Management & Strategy at Prologis describe it as “Upper Income” (upper to upper-middle income). In comparison, 28 percent of these alumni describe their standard of living today as “Lower Income” – a 10-pointAlaska drop – andBusiness 31 percent describe it asFame “Upper Income” – an 8-point increase. Hall of

Honoring NANCES When asked how JA impacted their lives, 36 percent of JA Alumni said JA “Increased

My what Self-Confidence/Belief in Myself.” was the second choice behind ThomasJA Barrett, Alyeska Service Co. hen asked impact has had onPipeline theirIt lives, 30 percenthighest of JA Alumni say it “Gave Me learn an Idea of How Business Works” atManagement 55 percent. In terms of standard of living, Robert B. Gillam, McKinley Capital lped them to better manage their money. In fact, 90 percent of JA Alumni are when it comes to JA Alumni who said JA increased their sense of self-belief, the comparison nfident in their abilityCharles to manage money. An example of this may be demonstrated in E. “Chuck” Robinson, Alaska of “Lower Communications Income” between growing up and today drops from 36 percent to 22 percent (being honored posthumously) w JA Alumni approach paying for college.

JUNIOR ACHIEVEMENT SPECIAL SECTION | ALUMNI SURVEY

AREER“Without Junior Achievement,

– a 14-point decline – and “Upper Income” rises from 27 percent growing up to 39 Robert Penney, Real Estate Developer/Investor percent today – a 12-point increase.

ccording to the Institute for College Access & Success, 69 percent of graduating Dena’ina Center - Thursday, January 25, 2018 llege seniors have student loans 4. Comparatively, 55 percent of JA Alumni who 5:30 p.m. reception, dinner/ceremony 6:30 p.m. CONCLUSION ent to college took out student loans. U.S. News reports that it takes an average of tickets online at alaska.ja.org Thecollege resultsPurchase of this research JAdegrees Alumni, when to the general years for graduates with indicate four-year to paycompared off their student loans 5public, . or fteo@ja-alaska.org have higher levels of educational attainment, career satisfaction, financial capability, early half of JA Alumni, or 47 percent, paid off their student loans within 10 years, with Call Flora at (907) 344-0101 toincome. ask about entrepreneurial activity, andyear household At the same time, a considerable ost of those occurring by the five mark. sponsorship opportunities

portion of JA Alumni credit Junior Achievement for promoting their understanding of business, influencing their career goals, fostering a sense of self-belief, and enhancing www.akbizmag.com January 2018 | Alaska Business https://www.bls.gov/opub/reports/minimum-wage/archive/characteristics-of-minimum-wage-workers-2014.pdf their understanding of how money works. Given the overall gains demonstrated by 29

JUNIOR ACHIEVEMENT SPECIAL SECTION | ALUMNI SURVEY

can have on an income. Understand what matters most

“One of the best things [Junior Achievement] does and can do is help students understand how erPoint to live in a balanced budget. Understand the lifestyle you can have on an income. Understand what matters most in life and how to fund it.”

—Scott Prochazka President and CEO, CenterPoint Energy

JA Alumni Business Ownership

mic

143%

More likely to be involved in Entrepreneurial activities

ent

g e

ed to mni to

75%

Believe U.S. economic system benefits most

55%

Learned how a business works through JA

Finances When asked about the impact JA has had on their lives, 30 percent of JA alumni say it helped them learn to better manage their money. In fact, 90 percent of JA alumni are confident in their ability to manage their finances. An example of this may be demonstrated in how JA alumni approach paying for college. According to the Institute for College Access & Success, 69 percent of graduating college seniors are burdened with student loans. Comparatively, 55 percent of JA alumni who went to college took out student loans.

“The interaction with the volunteers: they were professionals—lawyers and accountants. Individuals we didn’t get exposed to. It was a sea of change for me. We were seeing a different world, a different life. That’s what was important to me. I said, ‘I can do it.’ It was eye-opening for me and my character.”

—Yesenia Cardenas-Colenso Attorney/Partner, Bowman and Brooke

Image courtesy of Junior Achievement USA

evement, it might have been a mystery. I used my attitude to put together a business plan on how to get ceeds $150 million in revenue. I wouldn’t be where I am

-on-economy-government-services-trade/

A PROUD SUPPORTER OF

JUNIOR ACHIEVEMENT 30

Alaska Business | January 2018 www.akbizmag.com

loans. Nearly half of JA alumni, 47 percent, paid off their student loans

93%

Have a High School Diploma or GED

30%

67%

More likely to have an More likely to have a Bachelor’s Degree Advanced Degree

General Population General Population

General Population

Image courtesy of Junior Achievement USA

ated to educational attainment, 93 percent ofmark. JA within ten years, with most of those occurring by the five-year mni graduated high school or have a GED. This is Entrepreneurship In terms of perception of the US economic 75 percent of of JA mpared to a high school/GED rate ofsystem, 88 percent alumni have a favorable view, compared to only 30 percent of the according to the Pew Research Center. When it generalgeneral U.S. population, population, using 2015 U.S. Census comes to business ownership, 55 percent of JA alumni say that the a. Whengreatest it comes higher impact to JA had on theireducation, lives was helping42 thempercent understand how business works. The Global Entrepreneurship Monitor reports A Alumni a four-year to thathave 14 percent of Americans degree, are involved compared in business ownership, compared to 34 percent of JA alumni, meaning JA Alumni are 2.5 percent times of the general U.S. population. This means more likely to be involved in starting a business. Alumni are nearly 30 percent more likely to have a Income r-year degree. At the same time, percent JA Of the US population, 75 percent report a20 median householdof income of $51,939, according to the Federal Reserve. In comparison, the memni havedian anhousehold advanced degree, income for JA alumni iscompared $62,500, meaningto JA 12 alumni make nearly 20 percent more than the general population. In terms of cent of the U.S. population, meaning JA Alumni are social mobility, 38 percent of JA alumni describe their standard of livgrowing up as “lower income” to low-middle income) while1 percent ing more likely to have an(lowadvanced degree.

23 percent describe it as “upper income” (upper- to upper-middle inThe results of this research indicate that JA alumni, when compopulation, US Census 2016 come). In comparison, 28 percent of alumni describe their standard pared to the general public, achieve higher*Compared levelstoofgeneral education, greater of living today as “lower income”—a ten point drop—and 31 percent career satisfaction, increased financial capability, entrepreneurial acdescribe it as “upper income”—an eight point increase. tivity, and household income. At the same time, a considerable porAlum Insight When asked how JA impacted their lives, 36 percent of JA alumni tion of JA alumni credit Junior Achievement for promoting business say JA “increased my self-confidence/belief in myself.” It was the sec- literacy, influencing their career goals, fostering a sense of self-belief, ond highest choice behind “gave me an idea of how business works” and enhancing their understanding of how money works. Given a 10th grader, Evan For was make JAoverall that gains would significantly affect thecompared to the at 55 percent. JA able alumnito who reportaJAconnection increased their through sense of the demonstrated by JA alumni when self-belief, the comparison of “lower income” between growing up general public, plus the benefits many JA alumni attribute to their ction of his JAfrom connection turned intofourteen a HSpoint internship, connections, scholarship, and life. today “A drops 36 percent to 22 percent—a de- JA experience, it is reasonable to concludefour-year that participation in JA cline—and “upper rises from 27 percent to 39 percent to- programs contributes to positive knowledge, attitude, and behavioral ree and my first job outincome” of college.” day—a twelve point increase. outcomes for a significant portion of JA students. R

Evan Frazier, Senior Vice President of Community Affairs for Highmark Health

ps://www.census.gov/content/dam/Census/library/publications/2016/demo/p20-578.pdf

www.akbizmag.com

January 2018 | Alaska Business

JUNIOR ACHIEVEMENT SPECIAL SECTION | ALUMNI SURVEY

US News & World Report notes that it takes an average of twenty-one JA Alumni Educational Attainment UCATION years for college graduates with four-year degrees to pay off their student

Junior Achievement 2018 Hall of Fame Laureate Admiral Thomas Barrett

his month marks Admiral Thomas Barrett’s seventh anniversary at Alyeska Pipeline Service Company where he has served as president since January 1, 2011. He’s bullish about the role of business in Alaska, saying, “I believe that ultimately it is Alaska businesses that will continue to help transform the state in positive ways and help the state achieve its potential. More than 75 percent of [Alyeska] business is conducted with Alaskabased companies, and we take pride in that. Business is undervalued in what it adds to the communities up here. There’s too much negativity anymore in society, and Alaska businesses have the opportunity to transform that dialogue if we can talk a little better about what we do and the value it brings to our communities.” Below are selections from an interview with Barrett, conducted by Alaska Business. How did you get your start? My first career was in the US Coast Guard, and I learned a lot there. It’s a great organization and it does a lot of really good things, and it honed in for me fundamental values. It taught me that preparation equals performance and to focus on what you’re about and really drive hard on it and do the best you can at it, but be prepared for what you might encounter and try to anticipate that. That has served me well in everything I’ve done since. How did your career bring you to a leadership role at Alyeska? When I left the Coast Guard I was a COO for a science and technology group in [Washington] DC. I was asked to take over what was then the Pipeline and Hazardous Materials Safety Administration for the US Department of Transportation. I ran that for about sixteen months and then was moved to be the Deputy of Transportation. [After exiting government service] I wanted to get back to Alaska, so I was looking for opportunities and I took a job as the Alaska Director for the federal gas line coordinators office; I wasn’t there very long when I was approached about the pipeline job at Alyeska… I was delighted by the opportunity and I’ve been here since. What was your life like growing up? I grew up in a village called Lynbrook, a small village on Long Island outside New York City. It was just a small village on the island, but I had a pretty secure, happy childhood. We had a lot of freedom as kids then—I don’t think you had to worry as much. My friends and I could get on our bikes and run around town, and we had a volunteer fire department. When there was a fire, they had to blow 32

the sirens in the community to tell the volunteers where to go so we’d listen to the code and then we’d hop on our bikes and go—a very secure environment chasing fire trucks and things like that [he laughs]. The community was heavily populated by WWII veterans [including Barrett’s father] and most of them had also lived through the depression before the war. They worked hard; most of my life my dad worked two jobs and never complained about it. They were just happy to be alive and happy to have opportunities in small business. It was a very patriotic community and was colored by that large group of folks that were just happy to be alive, happy to have an opportunity to succeed. What kind of role models did you have growing up? Obviously my dad was one. He worked hard and never complained. We didn’t have a lot, but we didn’t know that we didn’t have a lot. We always had kind of what we needed… You look at people and you decide what you like about them—whether it’s their success in a business or in a community, or how they’re respected in a community, or aspects of how they dealt with you as a kid or as a young adult—did they respect you, did you respect them, and you start shaping from looking at other people the kinds of characteristics that you value. You start with your family, and I always felt I had unconditional love, and it wasn’t always deserved [he laughs], but it was there. There were many types of people that looked to me like somebody I would try and model myself after: from a fireman to an insurance man or people I worked with or worked for in the Coast Guard. How can we keep youth from falling into financial pitfalls? One is literacy, understanding how money and business and capital work. The other thing to help people succeed is to create a culture where what businesses do is valued. Businesses, sometimes too often, are perceived as being something that’s not positive that’s not healthy for communities, whether it’s small businesses or medium size or bigger ones. [We need to build] a culture where young men and women can understand the transformational power of businesses to create a better quality of life for people, to drive technology, to better our life; it’s painting a picture of how businesses can transform an individual, a community, a state, a country. I’m not talking just about corporate philanthropy; every corporate business in Alaska that I know tries to support their communities up here. But I also see what our people, our em-

Image courtesy of Junior Achivement of Alaska

SPECIAL SECTION

Junior Achievement

ployees, do every day—they’re active in their schools, they’re active in supporting Covenant House and Bean’s Cafe and Brother Francis Shelter, reading programs in the schools, and many other community endeavors. I’m not sure that a lot of students see business for what it is as well as they might. Did you participate in Junior Achievement or a similar program as a young person? No, I did not, but I wish I did… business is fundamentally a potentially transformational opportunity… Exposing young men and women, young boys and girls, to the opportunities that business can offer is a key role for Junior Achievement. That’s one of the reasons that we’ve supported it. Certainly financial literacy, and the understanding how capital markets or money works and how to be careful of it, is important. My grandmother used to say, “Take care of your pennies and your dollars will take care of themselves.” The opportunity to do so many things is what business offers and I think Junior Achievement and other business activities in the education space can help people see that. How do we change that? We don’t always communicate well that that’s part of the value of the business. It’s not simply the profitability. That’s a key and easy metric for business. But the value of businesses go a lot beyond that. I see it, and I’d like more people to see it… We do intern programs at Alyeska, as a lot of businesses do, to expose young men and women to our business what our values are and maybe spark some interest. A great example [of a program] is the Alaska Native Science and Engineering Program, ANSEP, at UAA. They’re at middle schools right now trying to get kids excited about the potential of STEM careers. And once they build that excitement, they help students track through middle school and high school the kind of courses that will allow them to succeed… It’s contact; it’s reach out and spend time with young men and women to let them see what businesses do and how they interact with their communities as well as how they produce the service that they do and their products.

Alaska Business | January 2018 www.akbizmag.com

Alaska, and I got to see a lot of Alaska many people have not, perhaps, even though they live here. Alaska always kind of fit us as a family. My kids like the outdoors. Beyond that, I always saw opportunity here. Alaska has this enormous potential. Part of it is the resources, both the natural resources and the people. People have got a lot of grit, it’s a tough place. There’s this great potential, and also the scale of things is not unmanageable. There are only 740,000 people here, about—that’s not much in the scale of American cities as things go. Anchorage is the biggest city in Alaska and it’s only about 300,000 people. That means that the opportunities are great and the problems, though they can seem daunting, are on a scale where if we’re smart about how we do things, and I

mean business and government, we can solve them. We should be able to solve them here better than anywhere else. I always thought Alaska had a lot of potential for people that wanted to have a bit of freedom and define their own life… My wish is for Alaska and Alaskans to achieve their potential. Business plays a huge role in that. For my own future, I’m grateful to be where I am with the family I have, the job I have, and with the people I get to work with every day, including those in other businesses. I’m on the board at First National Bank and several nonprofits and I get to see some great people. I like being around people that work hard and are willing to give back a little—take care of their families and give back to their communities. R

What accomplishments are you the most proud of? The first one is I convinced my wife Sheila to marry me. She’s very active in the community… and she’s helped me: she’s more sensitive to people, listens a bit harder, and helps drive a lot of community involvement. I would say I married up or married well, and that partnership has been helpful in many ways for our life. Like most people, I’m most proud of my family. I want them to feel what I felt—despite some things we didn’t have, I always felt I had unconditional love, and I want my family to feel that. What would you like your legacy to be? I’d like to be known for helping others succeed. I don’t think you succeed in life or in business or in pretty much anything by yourself. Here at Alyeska, if I can help others succeed with their jobs, then we’ll be a better, stronger, higher performing business. I’m always trying to look and create opportunities for other people to be successful. Where I can look back on people that have done well in a variety of government and businesses, and I feel that I’ve had some part in helping them to get to where they are in life in a broad sense, then I feel successful. What do you hope for the future? I love Alaska. We love it. We came up here in 1981 with the Coast Guard, and I was fortunate: I had great jobs with the Coast Guard in www.akbizmag.com

January 2018 | Alaska Business

JUNIOR ACHIEVEMENT SPECIAL SECTION | LAUREATE THOMAS BARRETT

How do we prepare youth for a global economy? Education is always going to be a key. The global economy and global businesses are competitive. America has always been a trading nation. We’re still American tradesmen, and our businesses can still go toe-to-toe with anybody anywhere in the world… The Coast Guard foundations are honor, respect, devotion to duty. Focus on respect; if you’re dealing with people anywhere, but particularly globally, you have to be respectful of where they come from, how they think, how they operate. You don’t necessarily have to agree with all of it, because I certainly sometimes don’t, but I think people react well to being respected… Don’t be afraid of some failure; some of the business men and women I’ve known haven’t always been successful, and I don’t think that’s a problem. Take risks and it’s not always going to work out. You pick yourself up and you get going. Languages are always an issue. One of my jobs early on—this was striking for me—I loaded baggage for Scandinavian Airlines at John F. Kennedy International Airport when I was going through college, and it was a great job for a kid. But I encountered there, for the first time in my life, people that were fluent in five or six languages. They were incredibly valuable to that airline company because they had passengers from all over the world. For most Americans, certainly at my school, learning another single language was a big deal. That fluency exists more than we think around the world, and fluency in languages would help us with that competition, so I would encourage it.

Junior Achievement 2018 Hall of Fame Laureate Chuck Robinson

harles “Chuck” Robinson was a monumental figure in the development of communications in Alaska. Starting shortly after Alaska became the 49th state, Robinson worked at statewide White Alice Communication System sites for the military and continued his endeavors in the Last Frontier in telecommunications for the next five decades, serving as the president and CEO of Alascom; president and CEO of Pacific Telecom; and founder, chairman, and CEO of Alaska Communications Systems. Robinson’s daughter, Robin, describes her father as “intelligent, dedicated, and hardworking,” adding that he was a born leader and team builder who valued loyalty and was generous “on all levels.” His son Bret also spoke of Robinson’s work ethic, saying, “That’s why he was so well respected; nothing was handed to him,” he started from the bottom and worked his way to the top. Robinson was born in 1933 in Salem, Arkansas; Robin says, “His family had very little and life was not easy. From a very early age he worked to support his mom, brother, and two sisters.” Beyond his family, Robinson served his country as a communications specialist in the Korean War.

Building an Industry Tom Jensen, who worked with Robinson for twenty years, says Robinson’s experience as an Army signal technician was his first step into the communications industry: “He worked his way up as a technician to become a manager.” In 1969, when RCA purchased what was then called the Alaska Communications System from the military, Robinson went to work at the company, newly-named Alascom, where he worked his way up from a technician to being the vice president of operations. “That title meant that Chuck was in charge of overseeing the entire operation of the company statewide.” As part of the purchase agreement, RCA committed to providing telecommunications services to every Alaska location with a permanent population of more than twenty-five people, “so from the very beginning, that was a heck of a challenge,” Jensen says, as that amounted to more than 250 rural locations ranging from Barrow to Ketchikan to Little Diomede Island. When the trans-Alaska pipeline was under construction, Robinson led Alascom as the company installed a microwave communication system that spanned the state from Prudhoe Bay to Valdez and “provided voice, data, and all the electronics required to handle each and every one of the pumping stations along the route,” he says. “Because Alaska was so vast—that was an 80034

mile private line system—Alascom put in a backup satellite system so that, if the microwave system for any reason failed, we could go immediately to the satellites to back it up and make it work. That was done more than forty-five years ago… and that basic backbone microwave system is still in operation, backed up by satellite and now also by fiber optics,” Jensen says. In 1979 RCA sold the company to Pacific Telecom, headquartered in Portland, Oregon. Robinson was brought in to the Pacific Telecom team as president, CEO, and chairman of the board. The Alaska telecommunications network and services continued to expand: “Chuck was in charge of the company that installed, over the next several years, more than 250 to 300 small satellite earth stations in rural locations that provided not only long distance communications but also provided television communication,” Jensen says. It was under Robinson’s guidance that telecommunications in Alaska developed to provide transportable satellite earth stations that could be loaded into an aircraft and set up anywhere and were used when the Exxon Valdez ran aground and in various military operations, including Desert Storm and Desert Shield in Saudi Arabia and Operation Just Cause in Panama. Robinson was at the helm as cellular phones and Internet services entered the market causing disruption to the telephony market and changing forever how people communicate. His daughter Robin says, “He created his own opportunities by perseverance, dedication, and a strong desire to succeed. He was a self-made man who surrounded himself with dedicated, loyal, and talented personnel.” This was particularly evident in 1995, when Pacific Telephone sold Alascom to AT&T; this time Robinson didn’t go with the company. He worked in the industry for about another year before endeavoring to form his own business. Jensen says, “He and some of his telecommunications associates went to the Lower 48, raised more than $700 million in investment capital, came back to Alaska, and established the company that we now know as Alaska Communications Systems [ACS],” with Robinson again at the head of the company as president and CEO. “He ran ACS up here, expanding and improving in all areas, until his retirement in 2003.” Robin says that Robinson’s legacy was “modernizing telecommunications throughout Alaska (especially bringing services to rural Alaska), such as the launch of Alaska’s first telecommunications satellite, the first fiber optic connection between Alaska and

Image courtesy of Junior Achivement of Alaska

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Junior Achievement

the Lower 48, and his role in the first direct undersea fiber optic cable between the United States and Japan.” His other career and personal achievements included his appointment to the National Security Telecommunications Advisory Committee under several US presidents and honorary degrees from both the University of Alaska and Alaska Pacific University.

Outside the Spotlight Although Robinson was the public head of a $200 million to $300 million corporation, his preferred role was outside of the limelight. Son Bret says Robinson “would’ve been humbled by this honor.” Jensen says, “Robinson was not the guy that would stand up in front of a crowd and make a speech… he believed if people wanted to know about the company, let them talk to the people that were making the company work. It’s interesting when you consider a fellow who was running those kinds of assets and had that kind of business expertise, one of his best days would be if he could walk through a building and not be recognized.” Jensen continues with an example: “I was with him one day when it happened; we walked through an Anchorage telephone facility building where we had just installed a several-million-dollar new piece of equipment, and they were having an open house where they were showing it off. As we walked through, several of the people that were running the event said, ‘Well hi Tom, nice to see you, glad that you could make it today, and who’s that with you?’ And there was this huge smile on [Robinson’s] face because he was anonymous. The answer to the question was he’s the guy that paid for this; he’s the guy that runs the company.” In another incident, at the ceremony in Fairbanks when Robinson was awarded

Alaska Business | January 2018 www.akbizmag.com

—Tom Jensen

his honorary degree from the University of Alaska, Jensen had to search the room twice, only to find Robinson standing behind a plant. “He was just the kind of individual that didn’t want the headlines,” Jensen says. “He was a leader who led, but wasn’t looking for the glory. The first time I met [Robinson], he said, ‘Whenever you have a request for someone to show up and speak to the media, just remember it isn’t me,” Jensen laughs. “And that lasted the entire time I knew him; from that point on I was his director of public affairs, and I can count probably on one hand the number of times Chuck actually made a public appearance.” Robin says his personal legacy is “children who loved him very much and will pass down his story and ‘stories’ to their children.” “We’ve very proud of his accomplishments,” Bret says. While Robinson was invested in his family, he also supported other youth within his sphere of influence. Robin says, “Dad was a strong believer and supporter of higher education, whether it was a traditional college or technical school. Both personally and

professionally [Robinson encouraged youth] through generous donations and contributions to higher education, nonprofit organizations, youth groups, and mentoring programs.” Jensen says that part of his responsibilities was to manage donations and contributions made by the telecommunications company, which in some years amounted to about $3 million. While Jensen managed the philanthropic endeavors, he emphasizes that Robinson had to approve both the amounts of funding and the organization receiving the funds. “We underwrote countless baseball teams, little league teams, pony league teams, basketball teams, soccer teams,” and other community organizations. “Our basic philosophy was that we made our money here, and we were strictly an Alaska company, so we had no problem with putting some of it back into the community, supporting the people who supported us.”

People First People mattered to Robinson. Jensen says he built relationships working in rural Alaska in

the late ‘50s and early ‘60s: “Years later, in the ‘90s, he’d get off a plane in say, Kotzebue, and walk down the street and ten people would know him on a first name basis, and they’re people he met thirty or forty years ago. The friends that he made coming up, the friends that he made from the time he first got here, they were his friends for life.” Jensen concludes: “I’m seventy-five years old, and I’ve met a lot of people in my life, but he is one of the top three or four that was truly unique… At [Robinson’s] memorial service, Donn Wonnell, who was his attorney and general counsel for more than thirty years, was asked to speak, and he said Chuck Robinson was a man of considerable accomplishment, but he also inspired loyalty. He was somebody that earned your trust because of who he was and what he did. You were pleased to say, ‘This is my friend.’ He was a guy that could make you laugh, he had a sense of humor, and ‘[his passing] is the first time ever that he’s made me sad.’ I think about myself—if somebody could say something that nice about me when I’m gone, I’d consider my life successful.” R

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January 2018 | Alaska Business

JUNIOR ACHIEVEMENT SPECIAL SECTION | LAUREATE CHARLES ROBINSON

“He was just the kind of individual that didn’t want the headlines. He was a leader who led, but wasn’t looking for the glory. The first time I met [Robinson], he said, ‘Whenever you have a request for someone to show up and speak to the media, just remember it isn’t me.”

Junior Achievement 2018 Hall of Fame Laureate Robert Penney

obert Penney is the founder of Penco Properties, a business he continues to operate today with his son, Henry. Penney grew up in Portland, Oregon; his father was a fireman and his mother was an assistant in a dentist’s office. On September 4, 1951, he arrived in Anchorage, where he launched a lifelong career in business. Penney says that instead of a deep interest in any one industry, he had a passion for business and entrepreneurship: “My first semester of college after high school, I couldn’t figure out what I wanted to be—a CPA, a doctor, or a scientist, and I kind of lost interest [in college]. Then when I moved to Alaska and started in a retail lumber yard, all of a sudden, I said, ‘I want to be a business man,’ so that’s been my goal since.” Below are selections from an interview with Penney, conducted by Alaska Business. How did you get your start in business? I’ve done about everything you can imagine in Anchorage, business-wise. From 1957 forward I’ve been a mobile home dealer, been an RV dealer, developed real estate and mobile home parks, [and] I’ve had quite a few retail businesses—everything I thought there was an opportunity for and I had the resources for, I would try and see if I could make it work. What drew you from Oregon to Alaska? I used to work in a lumber yard when I was in high school and I worked all the time on weekend and evenings. One of the brothers [at the yard] had been in WWII up here, and he told us that one of his partners would like to open a branch lumber yard in Anchorage. So, we drove up the Alcan at 1951 and we opened up a lumber yard on Post Road. At the time, I think the only streets paved in Anchorage were 4th and 5th Avenue, 9th Avenue, and Spenard Road. There were roughly 25,000 people in Anchorage. What was your first business? If you won’t laugh at me, it was trying to make French fries. At the time, I was mopping out a restaurant every day for my meals. While there, sometimes I’d have to make French fries for the restaurant. I said, “Why the heck don’t I try to do that?” So I went down to Gottstein’s, bought two tons of potatoes, shaved them, got a French fry slicer, and sliced them and delivered French fries to a whole bunch of businesses in Spenard. The problem I had is, if they didn’t use the French fries right away, they’d start going brown. I didn’t know anything about blanching them 36

like they do today, [he laughs]. It was successful, but not as successful as it should be because of all the labor involved. I started Alaska Sign Art with [a partner], and we ran that for a lot of years, and I also had a company called Duststop. I bought an asphalt distributer (a used one) and I drove down to the docks in Anchorage, loaded it up, and at the time there was no pavement over in Fairview, so I used to oil all the roads over there once a month. Today your primary line of business is real estate? Yes, I built mobile home parks in Anchorage and Fairbanks during construction of the pipeline, and in Valdez, North Kenai, Soldotna, and other places in order to have a place to park the mobile homes we were selling because there was no housing then; without the mobile homes that we were selling people literally would not have had a place to live. We’ve continued our real estate endeavors to where we own properties now along the West Coast, nothing huge or gigantic, but we have interest in quite a few thousand apartments in Seattle and there are six buildings we’re working on in Phoenix. Wherever there is a demand and an opportunity, we’ve gone there. We’ve evolved now into where we are just about entirely in real estate. If you’re honest and work hard and are fair with everybody else, that’s the key to business, I don’t care who you are. If you aren’t honest, if you don’t work harder, you’re not going to succeed—that’s the key. One [point of advice] I told my kids and my grandkids is [five] words, and those [five] words are wear the other guy’s shoes. If you’re trying to buy a piece of property [for example], and you don’t know for sure what the other guy wants, it’s going to be difficult. But if you can find out what he wants, and you already know what you want, then you can blend the two together and then you’re able to close the deal. Is there value in educating young people about free enterprise and business? How else can our nation become great? How else can we go forward? The biggest single thing the United States has got going for it is capitalism—the people that do the best work, that get the best return, are the ones that make the money. If that incentive wasn’t there, the United States would be a lot like the other countries in the world; it would be a secondary nation. But we’re a primary nation because you’re paid when you succeed.

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Junior Achievement

How do you think we can educate young people about entrepreneurship and business? Just exactly the way Junior Achievement is doing it. You give them opportunity; you show the kids the possibility. There’s no greater satisfaction I ever had in my life than trying to do something in business and being successful at it. I don’t think there’s anything that comes close to it as far as gaining selfconfidence and a reward for hard work. What can parents and educators do to help young people avoid financial pitfalls? I think it all starts with being honest, you need to wear the other guy’s shoes. [But] you don’t make any money without taking a risk. You have to make a calculated risk, but being honest and trying to provide a fair service for fair return is the most successful thing you can do. Stay away from drugs, stay away from anything that is going to interfere with your goal of being a successful business person. How can the business community engage with young people? I think there should be an opportunity during high school to where young people get a chance to go to different workplaces and get directly involved with it, see how it really works. [Students need to] understand that it’s not easy, you have to have a set of rules and you have to follow those rules, and one of the most important things to learn is self-discipline. You don’t do “one, two, three, four, seven, eight, nine,” you have to go through the numbers and do everything in sequence to achieve a goal. There’s no better way than getting your

Alaska Business | January 2018 www.akbizmag.com

Alaska Business Hall of Fame Past Laureates 1987-2017            

Don Abel Jr., 1996 Jacob Adams, 2002 Bill Allen, 1995 Bob & Betty Allen, 2001 Will Anderson, 2012 Eleanor Andrews, 2001 Robert Atwood, 1988 The Bailey Family, 2010 Bernard M. Behrends, 1987 Earl H. Beistline, 1998 Jim Binkley, 1989 Bill Bishop, 1994

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Jim Bowles, 2011 Carl Brady, 1990 Carl F. Brady Jr., 2004 Alvin O. Bramstedt Sr., 1991 Charles H. Brewster, 1999 Brice Family, 2011 W. Brindle, 1993 Margie Brown, 2009 Edith Bullock, 1987 Michael Burns, 2016 Jim Campbell, 2006 Larry Carr, 1988

What accomplishments are you most proud of? A lot of those are cultural and social things. We lived in Anchorage for fifty-eight years: I’m a past president of the Chamber of Commerce, I started the Mayor’s charity ball, I built the first indoor tennis complex in the state. Being a part of the community and giving back is part of all of that. I also became very enamored over the biggest salmon in the world, the Kenai River king salmon, and I started the Kenai River Sportfishing Association about twenty-five years ago. We are the most active organization in the state working for conservation of salmon and other species, and I’ve been on the board for twenty-five years.

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What do you want your legacy to be? I’d like to have my legacy be that I am an honest, successful businessman, somebody that loved Alaska and always worked for everything I possibly could. I’d like to be remembered as a person that was very active in a lot of civic functions, certainly in conservation like the Kenai River Sports Fishery. I’d like to be able to say I held my head high and don’t have any black marks that I know of on my past. I’d love to be an example someday for the kids in Junior Achievement to follow and say, “I’d like to have some money like that someday.” Do you have other comments about Junior Achievement? I don’t think Junior Achievement gets the breadth and the width of opportunities within the community that it should. Junior Achievement should be taught in the schools. It should be a course, maybe in grade school but definitely in high school, that you can take to help train you to be a contribution to the community and to be a good business person. It’s not used enough, and we need to broaden the program and let more youth have access to it. R

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Image courtesy of Junior Achievement USA

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Larry & Barbara Cash, 2017 Richard Cattanach, 2008 Frank Chapados, 1991 John B. “Jack” Coghill, 2006 Jack J. Conway, 1995 William A. Corbus, 1999 Ron Cosgrave, 2007 D. H. Cuddy, 1993 Bob Dindinger, 2012 Don Donatello, 1995 The Doyle Family, 2014 Ron Duncan, 2007 Oscar & Peggy Dyson, 1992 Ken Eichner, 1990 Andrew Eker, 2009 Mark Eliason, 2013 Carl Erickson, 1999 Arnold G. Espe, 2001 Al Fleetwood, 2005 Conrad Frank, 1999 Clyde Geraghty, 1999 Conrad Frank, 1999 Clyde Geraghty, 1999 Barnard J. Gottstein, 1989 The Green Family, 2012 Robert & Barbara Halcro, 2008 Ernie Hall, 2002 Lloyd Hames, 1998 Jana Hayenga, 2015 Carl Heflinger, 1999 The Helmericks Family, 2014 Michael Heney, 1995 Willie Hensley, 2009 Walter Hickel Sr., 1988 Walter Hickel Jr., 2014 August Hiebert, 1989 Max Hodel, 2017 Roy Huhndorf, 1992 Robert Jacobsen, 2006 Jim Jansen, 2009 Lynn Johnson, 2016 John Kelsey, 1991 Bruce Kennedy, 2007 Clarence Kramer, 2008 Herbert Lang, 1994 Marc Langland, 2001 Austin Lathrop, 1988 Betsy Lawer, 2007 Pete Leathard, 2003 Oliver Leavitt, 2017 Dale & Carol Ann Lindsey, 1997 Suzanne (Sue) Linford, 2002 Loren H. Lounsbury, 2002 Zachary Loussac, 1989 Richard Lowell, 2005 Byron Mallott, 2013 Harvey Marlin, 1999 Carl Marrs, 2005 Vern McCorkle, 2010 Harry McDonald, 2011 James A. Messer, 2000 Jason Metrokin, 2016

January 2018 | Alaska Business

—Continued

JUNIOR ACHIEVEMENT SPECIAL SECTION

feet wet. There’s no better way than starting off small… I would say that one of the biggest differences about Alaskans compared to anybody else I’ve ever met is, years ago people that came to Alaska were risk takers—you came up to Alaska to try and achieve something, you came there to try and make something better of yourself. Young people that live here today have to understand that they’re in an environment where there’s lots of opportunity to do things, to make things happen, and you’ve got to be aware of what the risks are and the returns are and then take calculated risks in an honest manner.

Junior Achievement 2018 Hall of Fame Laureate Robert Gillam

cKinley Capital Founder and CEO Robert Gillam graduated from The Wharton School, after which he attended UCLA and earned his master’s degree in finance. He got into the business of investment in 1970 and founded McKinley Capital in Anchorage in 1989/1990. He says, “I’ve been interested in the public markets forever. Even when I was a junior in high school, I used to get a copy of the Seattle PI, three days late, and I would look at all the stock tables and that sort of thing. I’ve been in the brokerage business, investment banking business, general partner of a major firm... But what I’ve always wanted to do was make money for people and that’s what I do. And I’m very good at it, I think.” Below are selections from an interview with Gillam, conducted by Alaska Business. What was your family life like as you were growing up? How did you develop an interest in finance? Well, my dad and my mom came to Alaska in April of 1941 [just before Pearl Harbor]. They came on a honeymoon... and when they got here, the war broke out, martial law was declared in Alaska, and they got stuck. Well my dad had been a West Pointer—got in, got out, did his service—but when the local garrison commander in Seward found out that he had attended West Point, they arrested him. Arrested him and said: “Here’s the deal, Gillam. You either join up or spend the war in the brig.” So my dad wound up being kind of the quartermaster for Alaska… When the war ended, they’d been here five years and they kind of liked it, so my dad relocated the family to Fairbanks whereupon I arrived. One of the parts of martial law that was particularly acute was that… you could not buy any liquor in Alaska. [When martial law ended] my dad got in the liquor business, and that led to the grocery business, which lead to other things in Fairbanks. Dad was a retailer and merchant, as he used to call himself. But he didn’t know anything about accounting, finance, public markets, and he kept telling me, “Son, you need to learn about that. That would be really helpful.” So I did. And I particularly was interested in the statistical interfaces between theory, theoretical markets, real markets, and why did certain securities go up and down, and what moved them? Was it the time of day, or sunshine, or what was it? [At McKinley Capital] we’ve now figured out a lot of that. Did you have a role model growing up? I had two: Number one was my dad. He was

a guy that worked twelve hours a day, eight days a week. He had a phrase, he said: “Come early and stay late.” I still work on weekends. The other one, of course, was George Patton, who won the Battle of the Bulge. If it had been another general—who would have likely lost because he would have gotten there two days late—the war would have gone on for another two, three years and killed who knows how many more people. And the reason he was able to do that is he was a bullheaded guy. You have to have some stick-to-it-iveness. You don’t have to be smarter; you have to be willing to outwork them. When I went to an Ivy League college fresh out of West High School, which was the only option for me, all the kids that I came up against had gone to prep schools. So the only way that I could do better was outwork them. Every Saturday they’d all go to the football game and I’d stay and work. Work harder, work more often, and you don’t have to be blessed with the world’s greatest IQ; you have to be blessed with the world’s greatest work ethic. What are some of the factors that can lead to success in business? The first thing is that you have to be an entrepreneur, and you’ve got to go out on your own. And that’s the reason that I’ve funded the Gillam Foundation; that’s why I’ve funded almost three hundred scholarships for young men and women, not based upon their grade average. [Instead, student applicants] write an essay on either “What business did you start in Alaska?” or “What business do you think you would like to start in Alaska?” Explain that to us, and if we like it we’ll send you to college. Grade point average is really secondary to the entrepreneurial spirit: Do you have the capacity to take a risk, go out on your own? I’ve been in the investment business for a long time, and I knew a little bit about what worked and what didn’t, but ours is the business of making people money and doing better than the benchmark, and that’s what we get paid to do. That’s why we get hired in the Middle East, that’s why we get hired in Canada, in Europe, China, and all over the world. The business has changed a lot; it’s primarily based upon your capacity to build a new product. So business is about entrepreneurialism. And if it weren’t, we’d still all be building buggies for horse carriages. There’s always an idea out there and the idea needs to be capitalized on, and it’s almost always capitalized on in this business, my business.

Image courtesy of Junior Achivement of Alaska

SPECIAL SECTION

Junior Achievement

Did you have any involvement with programs like Junior Achievement that encourage youth to participate in business? The one that I was involved in was, at the time, called the Soap Box Derby, which was sponsored by General Motors, where young men and women built race cars. And these race cars were gravity driven, so the design was really important. I built three cars and I finished second, second, and first in Alaska. I took this car that I built, [which was] built out of ironwood and had a great big sign on the side that said “Alaska.” And I went to Akron, Ohio, where the nationals were and I won race after race; two more races and I would have been world champion… There were 100,000 people there watching this Alaska car beat everybody in sight. But [the program] was about entrepreneurialism, because you had to design your own car; you had to build it on your own, you couldn’t have somebody else do it. And you learn how to use a table saw, you learn how to use a sander, and you learn how to get up early and work two hours before you go to school, because you have to build this car on your own. Do you see value in educating young people about free enterprise, business, and entrepreneurship? Oh yes. The future is all about young people today, isn’t it? For well over twenty years, my foundation [The Gillam Foundation] has sponsored programs both at UAF and at APU to teach young men and women about the management of pools of capital… be-

Alaska Business | January 2018 www.akbizmag.com

How do we involve youth in business? I’m all in favor of youth. I just think that you’ve got to start kids early. It starts at the home; people need to be motivated to get up and go to work, go to work early, and to use your head. Some of these ideas that young people came up with—it is just incredible some of the things that they do. I’ve sent kids to schools all over the country, all over the world. One was a young Alaska Native gal up on the Yukon River where they had the highest suicide rate in the world for elders. There’s five villages there, and they’re spread out over twenty miles; this young woman was living in a house where they had one wage earner, the grandmother, who worked at BIA. This young woman noticed that the community had the highest suicide rate in the world, so she got together with a couple of her friends and scrounged up three snow machines. For many of these elders, they’re in these little cabins, it’s springtime, they’ve endured the whole winter, their kids are gone, so they get depressed and commit suicide. So she visited every elder cabin, every day. And the suicide rate went from the highest in Alaska to one of the lowest. She wanted to go to the University of Arizona, so we sent her there. I’m told she now occupies a position with the State of Alaska and she has suicide prevention programs all over in villages. These young men and women just need a little hand-up. We found out that if you fund them for the first year, so they get to go to school, almost always the university would step up for years two, three, and four because they didn’t want to lose a student. So the real push was to get them in and see to it that their bills were paid. We’ve done that for almost three hundred young men and women. And we didn’t use a governwww.akbizmag.com

ment program either. We used our money. Life is not about what you get, it’s what you give back that matters. How do you think we can best teach young people to be responsible about finance? First thing is don’t take out any student loans. That’s the biggest trap of all time. Second, of course, is credit cards. The student loan program is just a, it’s a terrible program because students have to pay it back with after-tax money. So if they borrow $100,000 to go to college, they’re going to have to make $140,000 or $150,000, pay the taxes, and then pay it back. Right? Now, the worst one of all used to be credit cards, because it would charge you 20 percent. But at least with credit card debt, young men and women can get out of it if it gets really bad—they can do bankruptcy. You cannot do that with a student loan, which is, in my opinion, a catastrophe. So young men and women today get locked into this terrible debt cycle, and they can’t get out. And for that reason, they’re not able to get married and have a family, they can’t buy a house, and in twenty states in the United States, they can [lose] a professional license for not paying [student loans]. What do you hope for the future of Alaska? For Alaska, we need to develop and diversify our economy. For example, it’s 12,000 miles to the nearest medical school. Now why is that? It’s because we haven’t taken the time and the money to build one. I can get the money together to do it. We need, in Alaska, a medical school that graduates doctors and dentists. How many villages in Alaska have dental coverage? None. So we have a crying need for additional professionals here. We have to attract them up from elsewhere. Why not train the young men and women in this state that would like to be doctors, dentists, and so on? We have an RN program out here, that’s not enough. We are retiring more of our doctors a year than we’re getting in. We need to be able to train our own… The long and the short of it is I think we need a medical school. It attracts federal money, you can’t go out of business; it brings in a lot of smart people. Why don’t we have international casinos here, and let these people get off the cruise ships, leave some money in our casino? Why don’t we do that? Well, that’s the idea of private equity. We’re in that business, we finance deals all over the world, whether it’s in Australia, South America, Florida, Nevada. And let’s do more of them here. We’ve got all kinds of opportunities here in Alaska, and the only thing that we lack is a little entrepreneurial talent and a little financial help, and it just so happens that’s the business we’re in, among other things. So let’s develop our economy, let’s use our brains—there’s not a lack of brains here, there’s a lack of opportunity—so let’s get our young people cranked up to take advantage of those things. We can do that, can’t we? R

Alaska Business Hall of Fame

JUNIOR ACHIEVEMENT SPECIAL SECTION

cause where else [in Alaska] can you learn about the global markets except at the program that we have? Now I’m not in the education business, but I am in the promotion of youth business, and I like to see a steady flow of young men and women come here. We also, through the Alaska Permanent Fund and others, take in interns here in the summer time. We take two or three through the Permanent Fund, and then we’ll take another two or three of our own, and it gives them a chance to show up and sit on the trading desk. The first thing you learn is, you better be here at five thirty, because that’s when the market opens. I don’t mean five forty, I mean five thirty. So you have to learn the rhythm of the global markets… We used to be strictly Alaskan talent. We had to teach them. But now what’s happened is, because we have a reputation, we have young men and women in here from Macedonia, China, Russia, recently Israel, from all over the world—they want to work here. And we have plenty of people, young men and women from Alaska, that want to work here, too. And that’s good for us.

Past Laureates 1987-2017 continued                                                   

Jo Michalski, 2015 The Miller Family, 2005 Robert Mitchell, 1999 William G. Moran Sr. & William G. Moran Jr., 2004 Mayor Rick Mystrom, 2013 Les Nerland, 1987 Matthew Nicolai, 2010 Milt Odom, 1992 The Odom Brothers, 2015 Pam Oldow, 1990 Tennys Owens, 2005 E. Al Parrish, 2006 Sherron Perry, 2015 Raymond Petersen, 1988 Martin Pihl, 2014 Dana Pruhs, 2015 Quinn Brothers, 2011 Elmer Rasmuson, 1987 Edward Rasmuson, 2000 Frank M. Reed Sr., 2000 Robert Reeve, 1987 David Rose, 2003 Jim Sampson, 2008 Helvi Sandvik, 2006 Grace Berg Schaible, 2004 Leo & Agnes Schlotfeldt, 1993 Orin D. Seybert, 2006 Bill Sheffield, 2003 Merle (Mudhole) Smith, 1993 Charles Snedden, 1989 Ted Stevens, 2010 William G. Stroecker, 1997 Bill & Lilian Stolt, 1998 A. C. Swalling, 1987 Cliff Taro, 1992 Walter & Vivian Teeland, 1997 Morris Thompson, 2001 William J. Tobin, 2004 James Udelhoven, 2017 Joseph Usibelli Sr., 1988 Joseph Usibelli Jr., 2013 Chris von Imhof, 2014 Lowell Wakefield, 1990 Leo & Beverly Walsh, 1996 Pat Walsh, 2008 Chuck West, 1991 Noel Wien, 1989 Richard A. Wien, 2003 Lew Williams, Jr., 1994 William Ransom Wood, 1996 R Image courtesy of

Junior Achievement USA

January 2018 | Alaska Business

ALASKA NATIVE

Keeping Cultural Traditions Alive with Modern Skills

A collaborative workshop between ASRC, NANA, and CIRI. Interns from each of the respective organizations met with board members, executives, and leaders in a round table/Q&A format. Each of the interns was given forty-five minutes to interact with the individual representatives. Image Courtesy of ASRC

Alaska Business | January 2018 www.akbizmag.com

The ASRC Summer Hospitality & Culinary Camp is heled in Utqiaġvik at the Top of the World Hotel. Students, which are ASRC shareholders from Utqiaġvik, participated in a four-day camp, learning hospitality basics. The summer camp was held in collaboration with Iḷisaġvik College in July 2017. Image courtesy of ASRC

Alaska Native Regional Corporation shareholders, descendants learn job skills, further education through grant programs By Julie Stricker

n mid-winter, the night sky over Alaska’s North Slope seems impossibly distant. But for an Inupiaq teenager, it could be the window to a future career. That’s because Arctic Slope Regional Corporation (ASRC), headquartered in Utqiaġvik, each year sends shareholders to the US Space & Rocket Center’s Space Academy in Huntsville, Alabama. Other shareholders may attend the Alaska Native Science and Engineering Program (ANSEP) or another of several programs focusing on STEM fields. ASRC also offers a variety of training programs focused on Alaska-based industries: construction, petroleum refining, operations and maintenance, and professional support services, for example. ASRC isn’t alone. All twelve of Alaska’s Native regional corporations offer a wealth of

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January 2018 | Alaska Business

ASRC Interns for the 2017 program at the end of the collaborative workshop between ASRC, NANA, and CIRI. Image courtesy of ASRC

OUR GREATEST RESOURCE

Our employees are our greatest resource. Whether running construction equipment in Nome or managing projects in the Lower 48 or abroad, our employees have the skills and values to succeed.

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programs to help shareholders and descendants learn new jobs and skills, further their education, and learn more about their traditional cultures. It’s one of the things that sets these corporations apart from others in the Lower 48, and it’s an integral part of their dual corporate mandates to create wealth for shareholders via for-profit ventures and to foster shareholders’ educational, cultural, and social needs. The corporations set up educational scholarships, but over time they also have added programs that provide grants for job training, leadership training, and cultural programs that benefit thousands of shareholders and their descendants. In 2016, a total of 121 shareholders participated in nine different training programs hosted by various ASRC subsidiar-

ies, says spokesperson Morgan Thomas. These programs are geared toward meeting the corporations’ needs in their subsidiary businesses.

Growing Our Own “Growing our own is important,” says Miriam Aarons, a spokesperson for Bering Straits Native Corporation (BSNC), who notes that fifty-one shareholders, descendants, and shareholder spouses are currently employed by the corporation or its subsidiaries. “BSNC gives hiring, promotion, training, and retention preference to BSNC shareholders, BSNC shareholder descendants, and BSNC shareholder spouses, in that order. BSNC descendants receive many of the same benefits as BSNC shareholders.”

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January 2018 | Alaska Business

BSNC summer interns from 2017. Image courtesy of BSNC

ers and last summer provided an internship at its Aurora Hotel. BSNC’s summer internship program places interns in its Anchorage corporate office or at its Nome headquarters. “BSNC continues to grow its commitment to providing meaningful benefits to our shareholders and descendants through employment opportunities,” says President and CEO Gail R.

Schubert. “Our paid summer internship program continues to be highly regarded among Alaska’s Native corporations for the quality and breadth of training provided to our young emerging leaders. The program has served as an excellent tool for recruiting highly qualified shareholders and descendants to join our growing company, while educating interns about the

Image courtesy of BBNC

BSNC, based in Nome, operates subsidiaries in need of workers in the hospitality industry. They need CDL-certified truck drivers. The construction industry needs workers for general maintenance and for electrical and laborer positions. To help fill these jobs, BSNC provides apprenticeship opportunities in Nome for electrical and construction work-

General maintenance tech trainees at SAVEC in King Salmon.

Alaska Business | January 2018 www.akbizmag.com

Image courtesy of BBNC

Alaska Native Claims Settlement Act and how their own work bridges our Alaska Native cultures with the corporate business model.” At Bristol Bay Native Corporation (BBNC), Carol Wren, vice president of shareholder development, says the corporation’s overall goal is to increase education, training, and job opportunities for shareholders. “In the Shareholder Development department, we become familiar with all of our subsidiary and job opportunities and really look at training that will help us achieve our goal of hiring shareholders within our companies but also in other career areas that shareholders have an interest in,” Wren says. “We have partnered with our education foundation and with our subsidiary operations to provide training that we are hopeful will lead to jobs.” Those efforts have changed over the years, depending on current needs, Wren says. Recent programs include UXO unexploded ordinance technician training. One of BBNC’s subsidiaries hires UXO technicians on military bases. Apprenticeship programs are planned for an airplane mechanic position with BBNC’s wilderness lodges and a pipe fitter at a Lower 48 subsidiary. The corporation also partnered with Northern Industrial Training to offer CDL training. “We hire for those types of positions on the North Slope, as well as some of our construction companies,” she says. “We have done what we call general maintenance technician training, where we look at all the certification minimum requirements to get a job on the North Slope as a laborer.” In partnership with subsidiary Peak Oilfield Services, BBNC offers specialized training to operate Mack Supersucker industrial vacuum loaders. “For those that operate equipment, this is training that we’re providing to folks to gain hands-on experience with that particular type of equipment,” Wren says. “The more equipment

Shareholder Jordan Fisher received industry credentials in crane operating that allowed him to pursue his career goals.

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January 2018 | Alaska Business

you’re able to operate, the more opportunities to be hired for.” The corporation is recruiting for an administrative training program, an area with a lot of job potential both in Alaska and across BBNC subsidiaries. “It’s a one-year program to prepare our shareholders for jobs in an admin-related position with the intent of feeding the opportunity toward human resources, toward contract administration, toward executive assisting,” she says. “So really, we’re gearing a lot of our training program towards the job opportunities that we know we are going to be recruiting for,” Wren says. “We’ve worked really closely with our subsidiaries, the leadership, and surveyed our shareholders for the different types of opportunities they have interest in 46

and tried to align and create those opportunities based on those and their feedback.”

CIRI Offers Wide-Reaching Internships Cook Inlet Region, Inc. (CIRI) offers a booming internship program, says spokesperson Jason Moore. “It is a fairly substantial program that offers good pay and a lot of opportunities for interns,” Moore writes via email. “The idea behind it was to help foster the professional growth of CIRI shareholders and descendants. Since it launched, we have had success with some interns landing positions here at CIRI and with our subsidiaries.” In addition to internships, many of the regional corporations have programs that seek to identify managers capable of leader-

ship roles within the organization. Bristol Bay’s program is one of the longest-running leadership development programs among the regional corporations, Wren says. “It’s a two-year leadership program,” she says. “We recruit shareholders to gain needed leadership skills. We incorporate classroom topics related to leadership and they have a cohort, or peers, that already lean towards management or are already in a management position.” The Training Without Walls program, which currently includes about twenty students, allows the corporation to help these shareholders grow in their work and learn leadership skills, incorporating cultural activities as well as insight into the corporation’s varied business interests. “We talk about issues that are relevant to the Bristol Bay region,” Wren says. “We con-

Alaska Business | January 2018 www.akbizmag.com

Image courtesy of BBNC

A group of shareholders who provided guidance to high school students about their college and career experience.

BBNC Training Without Walls students at BBNC. Image courtesy of BBNC

nect them with personnel in the corporation to learn more about our board and our leadership and their responsibilities. They learn about legal aspects of management and then they learn to develop their own personal leadership style. They do that in a supportive environment.” In addition, the corporation offers a management training program through which it recruits shareholders for specific management-level positions. “They train for about two years in a particular position that we know we have a need [for] across our operations, with the intent of them moving right into that managementlevel position at the conclusion of that training period,” she says. Not all the grants are strictly for businessand job-related training. Fairbanks-based www.akbizmag.com

Doyon, Limited offers annual grants called Daaga’ Awards to programs and projects that promote healthy, clean, and sober Alaska Native communities. Dagga’ means “get up, move, do something.” The $3,000 annual grants reflect Doyon’s belief “that communities are healthier when Native values are alive and traditional skills are prized—such as beadwork, artwork, hunting, and trapping.” Since 1990, Doyon has awarded more than $220,000 to Interior Native people and organizations. In 2017, twelve organizations received grants, according to Lessa Peter, a communications specialist with Doyon. Activities included culture camps, song and dance camps, and a cultural sewing workshop in which a woman from Birch Creek, a tiny village north of Fairbanks, taught people how to sew traditional clothing such as fur hats, mittens, and slippers, Peter says. In a similar vein, Chugach Alaska Corporation shareholders participate in the Nuuciq Spirit Camp, located at the old village site of Nuuciq on the 800-acre Nuchek Island at the entrance of Prince William Sound. For the past six years, shareholders and descendants fly to the camp about twenty minutes by air from Cordova to learn about their heritage from the elders. Campers gather and prepare subsistence foods, learn about their traditional language, conduct woodcarving and beading, and listen to elders’ stories. The camp is managed by the nonprofit Chugach Heritage Foundation. In Northwest Alaska, NANA Regional Corporation’s Aqqaluk Trust oversees its traditional cultural summer camp called Camp Sivunniigvik. The corporation provides about $200,000 annually for the camp, which brings children and elders together “to learn and share the skills of hunting, fishing, and gathering that are essential for a subsistence lifestyle.” Looking ahead, the corporations are trying to gauge their regions’ needs in the coming decades. In Southwest Alaska, the prospect

of development of the Donlin Gold mine spurred an uptick in mining prep training, including partnerships with Donlin Gold, the Mining and Petroleum Training Service, and other organizations, according to Calista Corporation representative Thom Leonard. To the north in the Norton Sound region, leaders at BSNC are preparing for expected big changes in the years to come. “It is difficult to determine what developments will occur within the Bering Straits region in the next ten years and what will be needed—in terms of workforce—to meet these challenges,” says Matt Ganley, BSNC vice president of media and external affairs. “We can be fairly certain that mining will increase, particularly projects involving deposits of critical minerals for the technology industries (graphite, fluorite, rare earth elements, tin, tungsten). However, the timeframe for large mining ventures likely stretches beyond the ten-year window. A premier graphite deposit is in the research and feasibility study phase now and may prove to be a viable project within four to eight years. Rock and gravel production will continue steady, but slow growth until demand increases as infrastructure improvement and climate change abatement projects become necessary. “Answering the need for Arctic marine infrastructure development and improvement may lead the way in the next ten years, as the need for port of refuge and shipping support facilities increase with the increase in shipping traffic through Bering Strait. As such facilities come online, the mining and export sectors (sand, rock, gravel) will expand to take advantage of (relatively) lower shipping and fuel prices and the opening of broader markets for local commodities.” And more opportunities for shareholders. R Julie Stricker is a journalist living near Fairbanks. January 2018 | Alaska Business

SPECIAL SECTION

Oil & Gas

Optimism for 2018 and Beyond in Alaska’s Resource Development Community Elections matter By Rebecca Logan

n January 20, 2017, the day that President Donald Trump was inaugurated, AK Headlamp, a blog published by the Alliance, posted: “Republicans push to allow oil exploration in ANWR buoyed by Donald Trump’s election to the Presidency. Prospects for the industry look better than they have in recent years with Republican control of the White House and of the Congress.” One year later, and that optimism is still prevalent in the oil and gas industry and has overflowed to include many other projects and issues beyond ANWR. With the help of the Congressional Review Act resolution and original sponsors and co-sponsors US Senator Lisa Murkowski and US Representative Don Young, Trump didn’t waste any time rolling back Obamaera regulations that hindered progress for the industry. This focus, at the federal level, on breaking down barriers to responsible resource development led many Alaskans to believe that we can finally begin to develop our world-class resources. The Pebble Project has gotten new life, drilling in ANWR was approved in a very short amount of time, lease sales in the NPRA have been held, and Italian giant Eni received approval to drill offshore. With all of these wins in such a short amount of time, its hard not to see Alaska’s glass as half—heck— three-quarters full. For the members of the Alaska Support Industry Alliance, who have laid off more than 3,000 workers since early 2015, the promise is real.

Meeting Words with Actions We haven’t yet crossed the finish line. At the state level, there are still many elected officials who believe that it is the beginning of the end for Alaska’s oil industry, that an LNG project without the private sector will be commercially viable, and that Alaska’s mining industry should be taxed more. Recently, while testifying before the Senate Committee on Energy and Natural Re48

sources, Governor Walker said, “Alaska’s economic future should not be a partisan issue. Nine in ten of Alaska’s legislators—on both sides of the aisle—support oil and gas exploration and development of the 1002.” In the same hearing, Lieutenant Governor Mallott, a Tlingit clan leader, added his support for responsible resource development. “We live in a petroleum era, that is reality,” he said, and, “The oil must come from somewhere; why not here, in the United States, where we control the environmental rules?” The US Secretary of the Interior, Ryan Zinke, has said many times, “Alaska is key to the nation’s energy dominance.” If Alaska’s elected officials want to put our state on the path to prosperity, while dealing with the largest fiscal crisis in our state’s history, they must take actions that support the picture they are painting with their words. Creating a favorable business climate for responsible resource development can be done while the state works its way out a fiscal crisis, but it won’t be done without the private sector and it can’t be done with a punitive tax policy directed at the industries that need to grow.

Don’t Confuse Activity with Results The oil, gas, and mining work for 2018 is already pretty much set in terms of committed project work and drilling. The long-term success, beyond 2018, will be framed by three major factors for Alaska:  How the state deals with, and hopefully resolves, tax credit payments to junior explorers.  How quickly the US Department of the Interior can turn around or modify Obama-era restrictions on development and permitting within NPR-A and ANWR.  How successful the newly-announced deal is between Alaska LNG and China. When Governor Walker vetoed $200 million of tax credits in 2015, he sent a chill through the investment community and that chill started a domino effect. It was the beginning of a recession here in Alaska, ignited by low oil prices. With the stroke of a pen, Governor Walker stopped activity in the Cook Inlet and on the North Slope, kept Alaska contractors from being paid, and put

more oil industry workers out of jobs. Companies such as Caelus, BlueCrest, and Furie had no choice but to stop their exploration and development programs. If Governor Walker can develop and carry out a plan to pay what is owed in tax credits, a number of projects in Cook Inlet and the North Slope will get new life—that means jobs for Alaskans and tax revenue for the state. The US Department of the Interior has set a brisk pace repealing or modifying restrictions on development and permitting in NPR-A and ANWR. If this pace continues, development for Greater Mooses Tooth 2, Willow, Nanushuk, and Smith Bay could move forward without significant delay. The new deal between China and the Alaska LNG project has been met with both hope and fear. If Sinopec and the Bank of China become engaged and move quickly, the gasline could move to FEED (front end engineering and design) in 2018. There are many “ifs” still in the way of a rosy, long-term view of resource development in Alaska. The good news? The federal government is on our side, many of Alaska’s elected officials recognize the need to continue developing our resources, and groups like the Alliance, the Resource Development Council, the Alaska Chamber, and the Alaska Miners Association dedicate all of their time advocating for resource development and jobs for Alaskans. The future is bright. Let’s make sure it stays that way! R Rebecca Logan is CEO of The Alaska Support Industry Alliance. Logan has a long resume of leadership in the Anchorage community, including an upcoming 2018 mayoral run. Prior to working for the Alliance, Logan served as President of Associated Builders and Contractors of Alaska. She also owned and operated restaurants in the Anchorage area for ten years. Logan served two terms on the Chugach Electric Association Board of Directors, leading the board as chairman for two terms.

Alaska Business | January 2018 www.akbizmag.com

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SPECIAL SECTION

Oil & Gas

2018 Oil and Gas Forecast Discoveries, production increases lead to industry optimism By Julie Stricker

hile oil prices are expected to remain low for at least the next decade, Alaska got some good news in late 2017: oil production is rising. After years of gloomy reports of falling production, state budget deficits, job losses, and a half-empty trans-Alaska pipeline, Alaska’s Department of Oil and Gas revenue and production forecast offered some muchneeded good news for Alaska, according to Kara Moriarty, Alaska Oil and Gas Association president and CEO. “Oil production increases don’t happen by accident—they require a lot of work, commitment, and investment in exploration and development,” Moriarty said in a media release. “We are proud of the men and women of the Alaska oil and gas industry who are on track to pull off the third straight year of an oil production increase.” What’s remarkable about the production increases is that they occurred during a period of low oil prices, she says. “In our view, this shows that even at low prices, investment can continue when good policies are in place,” Moriarty says. The production increase is small, about 1.7 percent, according to a presentation Paul Decker and Ed King of the Alaska Division of Oil Gas gave to the House Finance Committee. They project an increase in production from 514,900 barrels per day in fiscal year 2017 to 524,000 barrels per day in fiscal year 2018. This follows a 3 percent increase in production from 2016. By comparison, more than 2 million barrels of oil traveled through the pipeline daily at peak production in 1988. 50

“Oil production increases don’t happen by accident—they require a lot of work, commitment, and investment in exploration and development. We are proud of the men and women of the Alaska oil and gas industry who are on track to pull off the third straight year of an oil production increase.”

—Kara Moriarty, President and CEO, Alaska Oil and Gas Association

The production increase comes even as oilfield operators are “doing more with less.” According to the Alaska Department of Labor and Workforce Development, fewer people were working on the North Slope in 2017 than a decade ago. In May 2017, 8,923 people were employed in the region, almost all of whom work in the oil and gas industry. That’s a steep drop from March 2015, when North Slope operations employed 13,485 people. In late 2014, oil prices topped $110 per barrel, but slid to $30 per barrel in early 2016. They have recovered somewhat, but are expected to remain in the $50 to $60 per barrel range for years to come. The precipitous drop devastated the Alaska economy, as state government has relied on oil revenues that comprise as much as 90 percent of the state’s unrestricted revenue. In fiscal year 2017, which began July 1, 2016, and ended June 30, 2017, oil prices ranged between $38 and $56 per barrel, according to the Alaska Department of Revenue. Oil prices are expected to average $54 per barrel in fiscal year 2018, the Department

of Revenue says in its preliminary fall 2017 revenue forecast. By fiscal year 2027, oil is expected to average $75 per barrel, but in real terms oil prices are expected to stabilize at $60 per barrel. Any additional increases are due to inflation. The department expects production to average 533,000 barrels per day in fiscal year 2018, declining to 493,000 barrels per day by fiscal year 2027. That creates state budgetary deficits of between $2.5 billion and $3 billion per year, according to Department of Revenue Commissioner Sheldon Fisher. “Compared to the department’s previous forecast, this preliminary fall forecast represents a modest decline in forecasted oil prices combined with a material increase to the oil production forecast, leads to an overall increase in expected revenue during most of the forecast period,” Fisher says. “Alaskans should be pleased with the potential of these new developments to stabilize Alaska’s oil production and add to our economy.” The state has been unable to come up with a long-term financial plan to balance the

Alaska Business | January 2018 www.akbizmag.com

The Caelus discovery at Smith Bay could lead to a significant increase in oil production on the North Slope.

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January 2018 | Alaska Business

OIL & GAS SPECIAL SECTION | AOGA FORECAST

Image courtesy of Caelus Energy

OIL & GAS SPECIAL SECTION | AOGA FORECAST

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“1H NEWS is an exciting project for us. Viscous oil is more challenging to produce, but state-of-the-art technologies are allowing us to pursue projects like this that put more oil in the pipeline.”

—Joe Marushack President, ConocoPhillips Alaska

budget in the face of current deficits, which it has been bridging by using its savings. It’s a less than ideal solution. Fisher notes that the $2.5 billion “uncertainty gap” “is causing investors to hold back and harming our economy.” The Department of Revenue notes that the price of oil would have to average between $100 and $110 per barrel to balance the current budget without using savings. (To bridge the gap using the new tax on legal marijuana, according to Cliff Groh, chairman of Alaska Common Ground, every Alaskan over the age of twenty-one would have to buy nine pounds of marijuana.) In fiscal year 2017, petroleum revenue accounted for 65 percent of the state’s unrestricted revenue. In fiscal years 2018 and 2019, petroleum is projected to represent 70 to 72 percent of the state’s unrestricted revenue, largely due to oil price and production increases. The production increases can be tied to a number of factors such as improved technology and the payoff from the state’s 2013 legislation for production tax credits. Much of the increased production is from existing fields in Prudhoe Bay and Alpine, but several other fields are only months or years away from production. Some estimates indicate that Alaska’s North Slope could hold 40 billion barrels of conventional oil, more than any other Arctic nation. Compared to other basins, it is largely unexplored with 533 exploration wells on the North Slope, compared to 19,000 exploration wells in Wyoming, according Alaska Department of Natural Resources Commissioner Andy Mack. Lisa Bruner, ConocoPhillips’ vice president of North Slope Operations and Development, told the audience at the Resource Development Council for Alaska’s annual conference in Anchorage in November that the company expects to see increased production, as well as new production soon. She notes, however, that much of the future development plans depend on the state of Alaska maintaining a “stable, competitive fiscal environment.”

ConocoPhillips’ 1H NEWS Could Add 8,000 BPD to Pipeline In the meantime, ConocoPhillips’ 1H Northeast West Sak began producing oil in November, two months ahead of schedule. 52

Alaska Business | January 2018 www.akbizmag.com

Image courtesy of Caelus Energy

“1H NEWS is an exciting project for us,” Joe Marushack, president of ConocoPhillips Alaska, said in a news release. “Viscous oil is more challenging to produce, but state-of-the-art technologies are allowing us to pursue projects like this that put more oil in the pipeline.” 1H NEWS required a 9.3-acre extension to the Kuparuk Drill Site 1H. It consists of horizontal multi-lateral production wells supported by vertical injectors, the news release states. Nineteen wells are planned. It is the first penta-lateral well in which all five layers of oil can be accessed. 1H NEWS is expected to add about 8,000 barrels of oil per day to the pipeline at peak production in 2018. The project cost about $400 million, $60 million under its initial estimate. “1H NEWS is the largest investment in viscous oil at Kuparuk since 2004,” the release states. “Advances in technology, cost reductions, a positive business climate, and improvement in oil price helped move development forward.” ConocoPhillips is using coiled tubing drilling to boost production at its Kuparuk field. The technology uses spools of continuous tubing to go back into existing wells and drill multiple lateral wells from a central wellbore. Rotary drilling techniques allowed the company to drill the two longest wells at Kuparuk. At its Alpine field, ConocoPhillips can reach more than fifty square miles of subsurface from a single drilling pad through extended reach techniques, which also allows the company to limit its footprint. Wells www.akbizmag.com

January 2018 | Alaska Business

OIL & GAS SPECIAL SECTION | AOGA FORECAST

Aerial view of Smith Bay, a Caelus discovery with significant potential for future development.

OIL & GAS SPECIAL SECTION | AOGA FORECAST

Image courtesy of Caelus Energy

A Caelus employee in front of the Smith Bay site.

that were once spaced 120 feet apart can now be drilled every ten feet. Lateral drilling can access deposits as far as eight miles from the well. Grind and waste technology allows companies to reinject drilling waste underground instead of storing it in surface pits.

Hilcorp, Eni, Caelus, Repsol in Exploration, Discover Mode Hilcorp Alaska plans to inject polymers to boost production at its Schrader Bluff viscous oil deposit, Vice President David Wilkins told the audience at the Resource Development Council conference. The polymers are expected to loosen the thick oil and increase production as much as 40 percent. The goal, he says, is to “develop new oil at $40 to $50 a

barrel.” The company has several projects on the North Slope, including the offshore Liberty deposit, which could add 80,000 barrels of oil per day to the pipeline if approved. Another offshore project was given the go-head in October by the Interior Department’s Bureau of Safety and Environmental Enforcement. Eni, an Italian multinational corporation, plans to build exploratory wells from a manmade gravel island in the Beaufort Sea. It’s the first project approved for the Outer Continental Shelf since Shell pulled out of the region two years ago. Eni’s plan is to use extended-reach techniques to get to deep petroleum deposits in federal lands under the Beaufort Sea from the eleven-acre Spy Island, located about three miles off the Alaska coast. Spy Island is one of four artificial islands used for oil and gas production in the Beaufort Sea. Other finds such as Caelus Energy’s Smith Bay discovery and Repsol’s Nanushuk Play discovery could hold billions of barrels of oil. Department of Revenue Commissioner Fisher notes that production from several new developments was taken to account in its production and revenue forecast, which predict revenue gains of approximately 2.5 percent annually from fiscal year 2018 to 2027. However, Alaska Senator Lisa Murkowski released legislation in the Republican tax reform bill passed by the Senate in November that could open the “1002 Area” of the Arctic National Wildlife Refuge to oil drilling. It’s a step closer to development of the region,

which has been sought by Alaska’s delegation for nearly four decades. During a hearing to gauge the potential for oil and gas exploration in 1002, Richard Glenn, Arctic Slope Regional Corporation vice president of lands and natural resources, told the committee, “On the North Slope, we believe that exploration and production can be conducted safely. The reality is that the survival of our region and the development of our communities today depend on continued exploration and production. Without this economic driver, our communities will need access to greater subsidies and programs in order to be sustained.” AOGA’s Moriarty also welcomed the provision to allow drilling in the 1002 region. “The US Senate’s decision to include two lease sales in the coastal plain of ANWR in its tax reform bill is welcome news for the 70 percent of Alaskans who have supported development in the area specifically set aside for oil and gas, the 1002 area, for decades,” she says. “We couldn’t agree more with our fellow Alaskans, especially those who live in the region, who want and need the jobs, revenue, and opportunity provided by the bill. “Allowing access to federal lands for responsible development increases the prospect for more oil flowing through the trans-Alaska pipeline, Alaska’s economic artery.” R Julie Stricker is a journalist living near Fairbanks.

Alaska Business | January 2018 www.akbizmag.com

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New Year Offers Promise, Progress for Liberty Project

Map courtesy BP Exploration

SPECIAL SECTION

Oil & Gas

TAPS could see much-needed throughput increase By Judy Mottl

f there was just one word to describe the long-in-the-making Liberty Project slated for Alaska’s North Slope—a light-oil drilling operation that would boast a man-made 9.3-acre island and is projected to cost more than $1 billion—it would likely be “arduous.” A review of the project’s long and winding history is illuminating: Liberty Project faced two decades of hurdles and obstacles since Shell Oil Company drilled four wells to evaluate marketable oil reserves between 1982 and 1987, 56

as noted in a chronology published by the Bureau of Ocean Energy Management (BOEM). In 1996 BP Exploration (Alaska) acquired the Liberty lease and, in 1997, drilled the first exploratory well five miles off the coast in Foggy Island Bay. That initial drill revealed an estimated 120 million barrels of recoverable reserves— indicating that the site could be the largest light oil reservoir found on the North Slope. For the next sixteen years Liberty underwent a series of regulatory reviews relating to a long list of potential issues, from impact to a wide range of endangered species to geomagnetic observations. The project essentially stalled in 2012 with BP’s announcement that it would not pursue the proposed Liberty project in its current form. Then BP, in the first half of 2014, sold its interest in four North Slope Alaska oil fields to

Hilcorp Alaska LLC, including a 50 percent stake in Liberty (BP retained a 40 percent stake). ASRC Exploration holds the remaining 10 percent. The partners estimate Liberty is home to 150 million to 330 million barrels of oil-in-place. So, while Liberty has faced an arduous journey, its future appears to be brighter than ever as 2018 dawns and all its predicted benefits—from increased state revenue and an economic boost tied to hundreds of new construction jobs to ensuring a longer lifespan for the 800-mile Trans Alaska Pipeline System (TAPS)—are closer to becoming a reality. In fact, 2018 may very well mark the most critical timeframe for a project that would create Alaska’s 19th artificial island and its biggest one to date.

Alaska Business | January 2018 www.akbizmag.com

OIL & GAS SPECIAL SECTION | LIBERTY PROJECT

So, while Liberty has faced an arduous journey, its future appears to be brighter than ever as 2018 dawns and all its predicted benefits—from increased state revenue and an economic boost tied to hundreds of new construction jobs to ensuring a longer lifespan for the 800-mile Trans Alaska Pipeline System (TAPS)—are closer to becoming a reality. Where Liberty Stands as the New Year Begins The start of the New Year should find federal and state agencies two months into what is expected to be a ten-month regulatory review. The assessment was scheduled to begin immediately after a ninety-day public comment period that ended November 18, 2017. The comment period followed the issuance of a draft environmental impact statement (EIS) in August of 2017 from the BOEM and an EPA proposed National Pollutant Discharge Elimination System permit authorizing wastewater discharge. In publishing the draft EIS, BOEM described the document as “another important step in the department’s strategy of responsible resource development,” and stated that the agency is “committed to working with [the] state, Alaska Native communities, investors, and all stakeholders when we analyze development and production plans.” The agencies, which collaboratively held four public hearings regarding their respective actions in October 2017, are playing leading roles because Liberty lies within federal waters inside the Beaufort Sea’s barrier islands. A Whole Lot of Scrutiny and a Whole Lot of Permitting The draft EIS and EPA permit actions represent a substantive milestone in the project’s history and a crucial one given sixty federal, state, and local permitting and authorizations are required for project implementation, according to Hilcorp’s Liberty Project Manager Mike Dunn. “The final EIS and Record of Decision are expected by fall of 2018,” says Dunn, noting Hilcorp is working to complete permitting requirements necessary to construct the project. The project calls for an artificial island to be built in nineteen feet of water, and the drilling operation’s lifespan is expected to be fifteen to twenty years, according to Hilcorp. There will be no permanent road or causeway; access will be via a temporary ice road www.akbizmag.com

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OIL & GAS SPECIAL SECTION | LIBERTY PROJECT

Rendering courtesy of Hilcorp Alaska LLC

Rendering of the Liberty Project, a light oil drilling project on the North Slope.

in winter and boats, helicopters, and hovercraft used for transportation needs when the ice road is not available. The build, says Hilcorp, will benefit from three decades of learning gleaned since North Slope’s first offshore oilfield, Endicott, went online in 1987, and its construction will closely reflect the construction at Northstar. “Liberty will utilize the construction and operational technology perfected at Alaska’s other offshore facilities,” says Dunn. Once operational, Liberty’s oil will be transported via a subsea buried pipeline to a new onshore pipeline, tying into the Badami

pipeline, and then eventually into TAPS. The environmental review is being closely monitored by the Alaska Department of Natural Resources given the potential impact to fisheries, wildlife, animal habitat, and the possibility of oil spills and leaks. The state’s role, however, is more limited than in past drilling operation proposals, explains Ed King, special assistant to Andrew T. Mack, Alaska’s commissioner of natural resources. “Most of the process will occur with the BOEM; however, the state is involved in some portions of that process and is watching its progress closely,” says King, noting the state

is always interested in the safety of its people and environment. “We believe that the EIS process will ensure that development occurs in a responsible way and the state permitting process for any activities on state lands will adequately protect the state’s interest.” Liberty, King says, is roughly twice the size of any of Alaska’s other eighteen offshore oil exploration and development islands. That list includes three drilling operations that are still up and running: Northstar (2001), Oooguruk (2008), and Nikaitchuq (2011). “The prospect of it being developed is meaningful to Alaska and is important to the North Slope,” says King. The meaningful aspect is not just big; it’s better described as huge.

A Long List of Potential Benefits Liberty not only boasts the potential to offset declining oil production on the North Slope and extend the life span and efficiency of TAPS (given it is projected to provide 60,000 to 70,000 barrels of oil per day), it promises to bring much needed jobs and state revenue. Both would be welcome given Alaska’s current economics. An Alaska Labor Department report, “Alaska Economic Trends January 2017,” notes the state’s economy “is shrinking faster than at any other time since the 1980s,” with 6,800 jobs lost in 2016 and spread through nearly all sectors of the economy. Initial job losses in 2015 were tied directly to oil production and the result of failing prices.

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Alaska Business | January 2018 www.akbizmag.com

—David Wilkins Senior Vice President, Hilcorp

According to the report, the impact of declining oil production marks a historic point and puts Alaska “in unchartered territory… For the first time in nearly forty years the State of Alaska will have to fund the majority of its budget with something other than oil revenue.” As critical as oil production is to the economy, it is just as critical to the health and future of TAPS. “New oil is needed to keep the pipeline operating efficiently now that throughput is less than 25 percent of capacity,” says David Wilkins, Hilcorp senior vice president, adding the oil operation will play an important role in keeping TAPS operational for decades. “It will provide important tax and economic benefits to the federal government, the state, and communities across the North Slope,” adds Wilkins, stating the needed construction jobs will be primarily for Alaskans and that Liberty, as an operation, will create opportunities for many Alaska-based businesses.

www.akbizmag.com

Liberty is expected to create 200 to 300 jobs during construction and require 20 to 30 full-time operations staff once production begins, according to Hilcorp. On the tax and revenue side, King says, Liberty would generate revenue for the state from federal royalty sharing and property taxes for the portion of the project on state land. The much-needed production for TAPS, notes King, will play a big factor in extending the life of TAPS infrastructure. According to an online fact sheet, almost 17 billion barrels of oil have moved through TAPS since it went online. Overseeing the future of TAPS is the Alyeska Pipeline Service Company, established in 1970 to help design, oversee construction, and perform operation on and maintenance for the pipeline. At its peak in 1988 the pipeline was pumping 2.1 million barrels per day, according to Tom Barrett, Alyeska Pipeline’s president. That figure plummeted to about 518,000 barrels per day in 2016. “These lower throughput levels create serious challenges for the long-term operation of TAPS,” explains Barrett. In response, the company has had to make large investments to re-engineer and adapt the pipeline to the declining capacity. “The changing hydraulic profile on TAPS has already triggered the replacement of mainline pumps and certain station piping, additional pigging, and additional pig launchers and receiver,” says Barrett. The challenges, he explains, will continue if throughput continues to decline and the

best solution is for more oil to be delivered via TAPS from the North Slope. “The Liberty Project could play a vital role in that long-term solution,” he says. “As we focus on ensuring the nation continues to benefit from the investment in the critical energy infrastructure of TAPS over the next several decades, we support responsible exploration efforts that could result in increased throughput into the pipeline. The Liberty project is one of those efforts.” Alyeska Pipeline Service Company’s contention is echoed by the Resource Development Council for Alaska, an organization that believes Liberty will provide “energy security” for not only Alaska but the United States. “The ever-changing oil tax structure in Alaska has caused a lot of uncertainty and has damaged Alaska’s reputation as a stable jurisdiction to invest in the development of energy resources,” says Marleanna Hall, executive director. “Moreover, responsible resource development projects across Alaska often face overly burdensome and often unnecessary regulatory hurdles,” she adds. While the organization will not play a role in operations, Hall says its members “will have opportunities to work on developing this important project.” R

Judy Mottl writes about important issues country-wide with an affinity for Alaska.

January 2018 | Alaska Business

OIL & GAS SPECIAL SECTION | LIBERTY PROJECT

“New oil is needed to keep the pipeline operating efficiently now that throughput is less than 25 percent of capacity.”

TELECOM & TECH

Welcome to the Drone Age

Oil, gas, engineering, construction use UAVs to reach the unreachable By Heidi Bohi

One of Alaska Aerial Media’s drones staged on Matanuska Glacier during a recent music video shoot for Korean Pop Star Taeyang

he general public may consider drones a fun (if somewhat expensive) hobby, but what many may not know is that these commercial and government flying robots are revolutionizing the way Alaska companies and state and federal entities conduct business as manpower is increasingly replaced by unmanned aerial vehicles (UAV). By all indicators, the use of drones is not a passing phase. It’s expected that nearly every industry either already is using drones or will 60

be impacted by the use of drones in the near future, especially in Alaska where UAVs are used to reach the previously unreachable.

“If it’s dirty, dull, or dangerous… use unmanned aircraft.” The petroleum, engineering, construction, and filmmaking industries, along with public utilities and government entities, are some of the first industries to realize the revolutionary cost-saving benefits of drone technology,

and of course, there is the fact that there is virtually no limit to the potential uses for drones. Already they can be seen hovering over real estate lots, golf courses, major events, and farms. They are used for security and search and rescue missions, as well as to fly emergency food or lifesaving medicine and supplies to disaster zones or extremely remote parts of the world. On an even larger scale, early this year the US Patent and Trademark Office grant-

Alaska Business | January 2018 www.akbizmag.com

Alaska Aerial Media Crew: (from left to right) Tyler Currier (Founding Partner), Nick Morrison (Partner & Chief Pilot), Beau Bivins (Founding Partner), and Ryan Marlow (Founding Partner).

Image courtesy of Alaska Aerial Media

ed Amazon a patent allowing the company to launch Prime Air, a delivery system that delivers packages to customers in thirty minutes or less using UAVs. In addition to improving customer service for millions of customers, Amazon says it also increases the overall safety and efficiency of its transportation system. “If you think about it, the great number of different ways you can use drones, from doing mapping and surveying to mammal monitoring, package delivery, and agriculwww.akbizmag.com

tural spraying, means that many different businesses see ways to improve safety for their employees, reach more customers, reduce costs, and other benefits from the technology,” Catherine Cahill, director of the Alaska Center for Unmanned Aircraft Systems Integration (ACUASI), says. In other words: “If it’s dirty, dull, or dangerous, that’s when to use unmanned aircraft,” she says, a rule of thumb that applies to most of Alaska’s largest industries. “The use of drone technology for commercial purposes has only recently become legal and cheap enough that businesses can apply it to their challenges. The regulatory environment has evolved very quickly under pressure from businesses desiring to use the technology,” Cahill says. As part of the University of Alaska Fairbanks Geophysical Institute, ACUASI has been the University of Alaska’s Center of Excellence for unmanned aircraft since 2012, leading an FAA test site, which allows commercial, unmanned operators to test and evaluate systems so they can be safely integrated into manned airspace. Prior to the inception of such test sites, there was no route for commercial testing of the systems. “There has been an explosion in the number of businesses using this technology and a constant stream of new applications being tried—the drones have changed how business is being done,” Cahill says. “As the regu-

lations and technology continue to advance at this breakneck pace, we expect more businesses to be able to use drones to advance their business.” Drone technology is constantly evolving, but most of the miniature, pilotless aircraft possess similar characteristics and operating systems such as an aerodynamic design, light composite materials, circuit boards, chipsets, and software, the brain of the UAV. UAVs are controlled by remote systems or a ground cockpit. They come in a wide variety of sizes and can be equipped with a range of technological options such as infrared cameras. Before flight, they are programmed to complete a specific set of tasks on a specific flight path. UAVs were initially associated with the military until the commercial world saw how valuable drones could be to their daily operations. The first general-use drone was similar to the de Havilland DH82V “Queen Bee” airplane, outfitted with a radio and back seat controls. The term “drone” comes from this association. Commercial drone sales are expected to increase 51 percent by 2021, exceeding the consumer drone sector in both shipments and revenues, according to the Center for the Study of Drones at Bard College, a research institute that examines the opportunities and challenges presented by unmanned systems technologies in the military and civilian spheres. January 2018 | Alaska Business

Image courtesy of Alaska Department of Transportation and Public Facilities

A drone took this photo of the Susitna River Bridge in 2017; survey crews measure known points on the Susitna River Bridge to mointor it for stability. Each crew operates one drone to aerially map and document the project.

Recent changes to Federal Aviation Administration (FAA) regulations contributed to the measurable increase in drone activity over the past year or so. Previously, the FAA required drone pilots to undergo the same amount of training as pilots who fly manned aircraft, an expensive and arduous process requiring up to forty hours of flight time. Now, drone pilots must pass a comparatively simple test that costs $150, making it more accessible for the public to operate commercial drones. It is expected that the number of licensed drone operators will surpass the number of licensed private pilots (currently about 171,000) within a year. Quite simply, this means that more people will be able to do it, says Beau Bivins, cofounder of Anchorage-based Alaska Aerial Media (AAM), which specializes in aerial surveying and mapping and inspecting commercial infrastructure associated with some of Alaskaâ&#x20AC;&#x2122;s largest industries such as petroleum and mining. When Bivins and his partners started the business three years ago, clients hired them to capture commercial aerial videography for filmmakers and reality television in Alaska. Although they still work in that industry occasionally, he says they recognized early 62

on where the technology and regulations were heading, shifting in 2016 to surveying and inspection. Now, AAM is preparing for the next advancement in commercial drone technology that will accelerate the industry: the growth of artificial intelligence capabilities and machine learningâ&#x20AC;&#x201D;similar to the AI technology used to develop driverless cars. Although not every company will have the capability to operate its own drones, many will as technology becomes ever more automated. Troy Hicks, a land surveyor for the Northern Region of the Alaska Department of Transportation and Facilities (DOT&PF), started adding remote sensing information to land surveys last year, using both manned aircraft and drones, which substantially reduce the margin of error. By purchasing their own inexpensive consumer drones for $1,800 each and having survey-build crews become FAA-licensed UAV pilots, the department is realizing about a 10 percent savings on jobs that range in price from $30,000 to $120,000. Mistakes cost a lot more than drone imagery, Hicks says, which not only saves the time and money needed to deploy surveyors, it also helps DOT&PF make more accurate decisions with the drafting and survey data they collect. Crews capture roughly 95 percent of

the data needed and supplement that with traditional surveying methods.

FAA Out to Balance Consumer Safety, Privacy with Increasing Innovation A critical challenge facing the industry is the FAAâ&#x20AC;&#x2122;s difficultly keeping regulations in line with increasingly complex technology and operations. The organization must find the right balance between encouraging innovation while still maintaining public safety and privacy. This includes allowing pilots to fly long range, instead of being limited by the visual line-of-sight between the drone pilot and the subject. Although still in the early planning stages, ultimately, the FAA and Congress expect unmanned aircraft to be fully integrated into the airspace, with regulations for any type of operation, including long distance operations beyond the line of sight. Another big challenge having to do with drone regulation is enforcement. The primary problem is that violations are difficult to catch because even if the drone is seen operating outside the law, it is almost impossible to also see the drone operator or to know for what the drone is being used. Manned aircraft are marked with highly-visible registration numbers. And, while all commercial

Alaska Business | January 2018 www.akbizmag.com

Alaska Aerial Media was the first commercial drone company to operate in coordination with a national airshow: Arctic Thunder, 2016.

Image courtesy of Alaska Aerial Media

Photo by John Dibbs

Alaska Aerial Mediaâ&#x20AC;&#x2122;s UAV staged on the North Slope about to complete a LiDAR acquisition flight.

www.akbizmag.com

drones are required to possess registration numbers, they often cannot be seen by the naked eye. Alyeska Pipeline, responsible for monitoring the 800-mile Trans-Alaska Pipeline System, is one example of an enterprise that would benefit from regulations allowing long-range drone surveillance in remote areas, Sheyna Wisdom, Fairweather Science general manager says. Fairweather Science provides scientific support, logistics, and permitting for the oil industry and the university and works with various specialty firms, including AAM, to gather data using drones. Although she cannot identify all of Fairweather Scienceâ&#x20AC;&#x2122;s clients for confidentiality reasons, offshore projects include identifying ice that could block travel lanes and marine mammal scouting for whales and walrus to avoid disturbing them. Last year, Fairweather Science relied on the cutting-edge Flexrotor aerial system, which operates over oceans and remote areas, to help safely retrieve large anchors in the Arctic on behalf of Shell. Safety and cost cutting are the two biggest benefits of drone use, Wisdom says. Earlier this year, AAM used drones to take pictures of drilling platform legs in the dangerous waters of Cook Inlet to ensure the aging infrastructure is maintaining its integrity. They captured all the images they needed in four days, increasing efficiency and reducing the risk to divers who would otherwise dive off the platform while attached to a bungee-type cord to make repairs. Another oil industry client worked with Fairweather Science and AAM to collect various types of aerial imagery for a maintenance project, without having to shut down facilities to perform the survey. January 2018 | Alaska Business

Image courtesy of Alaska Aerial Media

One of Alaska Aerial Media’s UAVs equipped with a LiDAR sensor on the North Slope of Alaska being prepared for an acquisition.

Municipal Light & Power Using Drones to Streamline Operations Municipal Light & Power (ML&P), the cityowned electric utility for Anchorage and the surrounding twenty-square-mile area, services about 30,000 customers in the residential, commercial, industrial, university, medical, and military sectors. In addition to its own water, gas, generation, transmission,

and distribution, ML&P is the south-end controller of the single Intertie transmission line that runs from Anchorage to Fairbanks and sells utilities to other Railbelt utilities. As part of recent efforts to refine workflow processes, in the past year ML&P has been replacing the use of traditional air imagery from manned aircraft and has been working with AAM to more cost effectively capture

data, especially over large areas, which can be cost prohibitive. Because drones fly at low altitudes and at slow speed, they are also able to produce higher resolution images than typical surveying equipment. Since completing four major above- and below-ground projects, including one this past fall, the utility estimates it has conservatively saved at least 50 percent in surveying costs, Jake Maxwell, ML&P chief surveyor says. It is currently planning other surveying projects using UAV technology for 2018 and 2019. Aside from the lower cost of securing highresolution drone imagery, a major advantage of this method, Maxwell says, is that large underground projects can be surveyed in the fall and designed during the winter months, so milder spring and summer months can be dedicated to making improvements and repairs in the field. As an additional bonus, drones typically collect more data than is needed for a given project, which can be used for future planning or if the project scope should increase. “I [foresee] more utilities following our lead as this technology reshapes surveying,” Maxwell says, looking ahead. “UAV is redefining the industry.” R

Heidi Bohi is a freelance writer who has been writing about Alaska since 1988.

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Alaska Business | January 2018 www.akbizmag.com

Alaska SEARCH, LLC Making Drones, Robotics Systems Accessible, Affordable for Public Safety Agencies

Alaska SEARCH, LLC is the evolution of Alaska Aerial Technologies, a small aerial photography business that began in 2007. Alaska SEARCH, LLC will soon offer public safety agencies (PSAs), private security companies, and other PSA organizations, such as fire, EMS, and homeland security, the ability to implement and operate small unmanned aerial systems (sUAS) without the cost and complication involved in investing in such products. Drones and other unmanned systems, such as remotely operated vehicles for underwater use, make obtaining imaging from hard to reach and remote locations possible and even economical for many operations with the Alaska SEARCH, LLC service, which acts as a service provider. Brandon Anderson, Alaska SEARCH’s LLC’s lead, spent more than twentyfive years working in the public safety field including a long career with the Alaska State Troopers and time spent working in corporate security. With family members in both the Anchorage Fire Department and Anchorage Police Department, and friends in many other public service agencies, Anderson and Alaska SEARCH LLC’s other board members possess a solid network in and knowledge of the Alaska public safety domain.

“The group of people involved in this company all come from public safety backgrounds, they already have had security clearances, and they know the people and agencies operating here. Alaska SEARCH, LLC is building a service business that employs people with a public safety background who are sensitive to, and experienced with, the often-delicate nature of responding to emergencies that may require confidentiality and secure communications,” says Anderson. As active members of the Association of Unmanned Vehicle Systems International, the Airborne Law Enforcement Association, and the Professional Aerial Photographers Association, there’s no doubt Alaska SEARCH, LLC possesses the credentials PSAs need when looking for a high-quality, knowledgeable, discreet sUAS service provider.

While many local, state, and federal agencies are or have considered implementing their own sUAS programs, the process can be daunting, and the technology is advancing and changing at such a rapid pace that making decisions about which system to invest in is difficult. This is especially true with drone technology. Often a system purchased today is all but obsolete one year later. This fact makes it difficult to convince agency leaders to invest their increasingly tight funds. Alaska SEARCH, LLC takes care of all the red tape and expense involved in implementing a – PA I D A D V E R T I S E M E N T –

sUAS and/or ROV system, so instead of worrying about budgets and time lost sending workers to training, agencies can simply turn to Alaska SEARCH, LLC to fulfill all their unmanned aerial system needs. “There are many circumstances in which a particular agency may want to have these capabilities or equipment but they can’t justify the expense. This service allows us to be a ready provider for drones, underwater ROVs, and other types of robotic systems, so individual agencies don’t have to fund expensive equipment and operations. As an option, they can contract the service,” Anderson says. A growing concern almost everywhere is the danger posed by rogue and illegal drone operators. Alaska SEARCH, LLC has a partner agreement with a counterdrone technology company, and plans are in the works for demonstrations at key locations in the Anchorage area this summer. A goal for the company this year is to establish a small facility in Anchorage that will serve as a resource center for agency officials to obtain information, watch demonstrations, and gain access to robotic technologies that support public safety missions. “We look forward to launching more of our service capabilities this coming spring and summer and hope to fill in the gaps that very tight state and local government funding create to enhance public safety,” says Anderson. Representatives from public safety agencies who would like more information about Alaska’s sUAS operations may visit www.ak-search.com or contact Alaska SEARCH, LLC’s Anderson at brandon@alaskaaerial.com.

TRANSPORTATION

Online Delivery Options Have Alaska’s Delivery Services Scrambling Customer expectations lead to more, faster delivery options for even rural locales By Judy Mottl

here’s a maxim when it comes to the real estate industry: location, location, location. While a home may boast a beautiful design, impressive landscaping, and plenty of room for guests, it’s not going to be appealing if it’s sitting on a busy highway or next to a waste treatment plant or twenty feet off the railroad tracks. 66

Just as location plays a critical role in a home sale or purchase, location, at least in Alaska, plays a big role in whether residents and businesses are able to send or receive packages in quick fashion—such as sameday, next-day, or even two-day timeframes. Alaska’s unique weather—specifically its months of icy roads, ferocious cold temperatures, blustery winds, and fierce snow and sleet—presents distinct challenges when it comes to shipping or receiving deliveries, whether those deliveries are fresh fruit, timesensitive documents, medication, or basic life needs such as toilet paper. The good news is that Alaska residents and business owners have access to a deep pool of delivery services ready and waiting to make their next expedited delivery.

Who Delivers Fast and Quick The pool of expedited delivery options runs the gamut, including globally-known brand names such as UPS, FedEx, and the United States Postal Service (USPS). Also on the list are Alaska Airlines’ Goldstreak Package Express service, a provider of same-day service, as well as third-party and local goods and package transporters such as Reliable Transfer Corporation. Alaska Airline’s Goldstreak offers package express—a “next flight available service” for packages weighing up to 150 pounds. Priority service, from its air cargo office in Anchorage, is generally a next-day delivery (depending on schedules) for items weighing above that 150-pound mark, according to a spokesperson.

Alaska Business | January 2018 www.akbizmag.com

Reliable Transfer Owner Roger Calloway amidst his company’s transport fleet. Image courtesy of Reliable Transfer

The cost of using Goldstreak depends on several variables, such as the items being shipped, package dimensions, weight, and the time of year, though the service is available year-round. Goldstreak’s customers are a mixed bag, according to the company, but typically the service is used for packages that are either time sensitive or perishable in nature. For example, seafood, vegetables, and other perishable groceries are often delivered via the Priority service, as well as medicines and machinery and oil equipment parts. Customers choose a flight and drop the package at one of the company’s cargo locations one hour before flight departure. On the receiving end the package can be picked up by the recipient one hour after the delivery flight arrives. Goldstreak also offers a Pet Connect travel service; pet shipwww.akbizmag.com

ments require 24-hour advance booking. “In addition, we see more and more ecommerce shipments going to consumers around the state from online retailers,” says Goldstreak’s spokesperson. Using Goldstreak requires customers to be knowledgeable about flight times and the company’s policy regarding specific items labeled as “dangerous goods,” as those must be in Goldstreak’s venue at least four hours before a flight departure, according to the company’s online information. All air freight shipments require advance booking. If a package is not time sensitive, or a customer wants a lower cost option, Goldstreak offers air freight service in which delivery is made within forty-eight hours of the company accepting the package.

Alaska and Hawaii—More Similar Than Most Imagine Dawn Peppinger, Alaska marketing manager for USPS, likens Alaska’s expedited delivery scenario to package delivery in Hawaii, since very often packages travel via boat and ferry and plane and vehicle on the delivery journey. That’s because the two states, while at opposite ends of the weather spectrum, share very similar geographical traits that can stymie fast package delivery. For example, both are home to islands— Alaska, which is one fifth the size of the continental United States, has more than 2,600 islands. Hawaii, which has a land mass of 4,028 square miles and is just 93 miles across at its widest point, includes eight major islands. Both locations operate in their own time zones. The states’ common shipping logistics scenario is what birthed the often-seen message on delivery options: “Shipping available to addresses in the contiguous United States,” with data regarding delivery to Alaska and Hawaii landing under very different delivery stipulations. A good example can be found on an Amazon.com delivery information page. There is two-hour delivery in certain US zip codes for Amazon Prime members (who pay about $100 a year for cheaper and free shipping options), free two-day shipping, and free same-day delivery on qualifying orders in certain locations (and starting at $5.99 for most other orders). Then there’s free one-day shipping for certain cities with prices varying by item size and weight (starting at $2.99 an item) and completely free standard shipping that takes four to five business days. But the list of options is a bit shorter for Amazon Prime Members living in Alaska. The only free shipping is standard and delivery can take anywhere from three to seven business days. For speedier arrival there is priority (one to four days) and then expedited (two to five days) with pricing varying depending on size and weight. Amazon notes expedited can be “as low” as $5.99 an item and “as low” as $11.99 for priority. Within the USPS delivery environment, a package headed to Alaska can take as long as seven to ten days given it will likely include a water-travel delivery leg, says Peppinger, who has worked thirty-two years at the carrier. If packages are headed to what are called “bush” or “hub” points, they often end up on a small plane for a leg of delivery. And if weather plays havoc with small plane activity, packages can end up facing a back seat delay. “There’s a pecking order at that point [with a small plane] as people and their baggage are priority before items to be delivered,” explains Peppinger. But even if the plane delivery journey is a short one, Alaska’s weather is always a factor. “Smaller planes have trouble sometimes with heavy fog and high winds; weather can ground planes and passengers and luggage get [transported before packages],” she says. Climate also impacts roadway-based delivery, she notes. “Even where mail and packages January 2018 | Alaska Business

Image courtesy of USPS

The United States Post Office in Chicken, Alaska, is a six hour drive from Fairbanks and close to the Canadian border. The Chicken Post Office runs on a generator as there are no electricity lines. It houses sixty PO boxes but not all are in use. The area caters to miners that work in the summer, meaning customer service drops in the winter. Mail is flown in a few days a week, but the post office is open five days a week.

can be delivered by truck, roads are impacted by weather. While it’s rare, forty-below temp often means tires go flat,” she explains. In terms of shipping costs, Alaska delivery falls under USPS’ Retail Ground-Limited Overland Routes, with prices varying depending on designated postal zones. For example, a one-pound package can cost anywhere from $6.55 to $7.24 depending on the destination zone. Postal zones are based on the distance a mail piece travels from origination to destination. In most cases, with Alaska mail delivery, mail and packages are moved via Retail Ground service, says Peppinger, a lifelong Alaska resident.

“When it comes to Priority Mail, the standard is about three days or three to five days for some of the areas not on the road system—even coming from the contiguous United States,” she says. Within Alaska, she adds, most residents have access to traditional services found in the Lower 48. “There are same-day options in parcel selection and there are third-party consolidators doing delivery as well,” she says.

Partners Play a Role in Package, Freight Delivery One such service is Reliable Transfer Corporation, based in Juneau, which offers local courier services and air freight delivery for several international partners. The company often provides the final leg of service from Alaska Air Cargo to the destination address when shipments are tendered to Alaska Airlines with Reliable Transfer as the consignee, explains company clerk Kirk Haug. “Several national carriers offer next-day service but with restrictions on time of day of tendering,” explains Haug, adding that “any of these best-made plans can be laid to waste by the particularly challenging weather of southeast Alaska.” The cost of expedited package delivery is generally very high, says Haug, with packages first measured by weight and then with minimum density requirements imposed which results in a dimensional-weight calculation. Customers using Reliable Transfer are charged a standard courier service delivery

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rate plus a rush fee if the service is required within a two-hour window, he adds. The company’s busiest season in Southeast Alaska is May through October. “With up to six cruise ships and countless other independent travelers, the population of Juneau swells by a significant percentage on any given day [during the busy season],” says Haug. “This tourism drives much of the same-day and next-day service requests, but all year long we fulfill the same-day and nextday needs of our customers.” When it comes to expedited packages, Reliable Transfer’s customers are typically transporting life-saving medications, bid documents, and live animals, as well as replacement parts for machines, vehicles, and vessels. Haug believes the increasing demand for expedited package services is due to increasing consumer expectation of delivery capabilities. “Customers around the world have become accustomed to the increased level of services that they are provided in other markets,” he says.

What the Big Brands Offer for Fast Delivery For FedEx the quest to provide expedited delivery in Alaska is on par with its operations in the Lower 48, according to a spokesperson, though there are some exceptions in certain Alaska zip codes. FedEx offers priority service to and from parts of Alaska, including Anchorage, just as it does in the rest of the United States.

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A UPS truck on a roadway amidst Alaska’s Northern Lights. Photo by UPS Driver Stewart Sterling

“Weather in Alaska affects our deliveries just like it does elsewhere,” says the spokesperson. FedEx offers same-day and “same-day city” delivery as well as next business day, two- to three-day delivery, and business ground delivery of one to seven days. In Alaska, when it comes to quick deliv-

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ery of packages weighing 150 pounds or less, service is to a limited number of zip codes, outside its primary services, and may be provided through cartage agents. The vast majority of these, according to a FedEx shipping information website, are located in remote areas of Alaska.

At UPS, the delivery service known for its brown trucks and brown-uniformed drivers, there are a variety of service levels for fast delivery—from UPS Ground to UPS Next Day Air Early and even UPS Temperature True, which is popular within the healthcare industry, says spokesperson Matthew O’Connor.

January 2018 | Alaska Business

USPS mail sits on a skiff that just was delivered via a float plane. The skiff moves the mail closer to the Elfin Cove Post Office so it’s a shorter distance to walk on the boardwalk. Image courtesy of the USPS

“UPS Access Point locations in Alaska include UPS stores and UPS customer centers, but they can also be retail stores with evening and weekend hours such as convenience stores, dry cleaners, and delis.”

—Matthew O’Connor Public Relations Manager, UPS

But it does not offer same-day delivery service in Alaska. The next-day service is the most used, explains O’Connor, especially by companies shipping Alaska fish and seafood. Alaska service falls within UPS’ Northwest District, which includes Alaska, Wyoming, Montana, Idaho, Washington, Oregon, and a small section of northern Nevada. UPS, which is predicted to deliver a recordbreaking 75 million packages globally during the 2017 holiday season, launched a new delivery option in the latter part of the year called UPS Saturday, which provides ground pickup and delivery service for 4,700 cities and towns. The additional delivery day was prompted by the increase of online and mobile commerce within the retail segments, according to a press release. UPS service levels include UPS My Choice, which lets consumers choose how and when to receive deliveries. The service sends the recipient a text or email before a package is scheduled to arrive and lets the recipient give the UPS driver special delivery instructions. These instructions can include where to leave the package, a request for UPS to hold it, or a request to have the package sent to a UPS Access Point for pick-up at a later time. “UPS Access Point locations in Alaska include UPS stores and UPS customer centers, but they can also be retail stores with evening and weekend hours such as convenience stores, dry cleaners, and delis,” says O’Connor. The top challenges for UPS to deliver fast and quick in Alaska are the state’s vast size and its numerous rural areas. “The remote nature of many places in Alaska can be challenging, and that’s where local knowledge and expertise, working within local conditions throughout the year, is imperative,” says O’Connor, noting that UPS services do not change through the year despite the state’s unique weather conditions. “Delivery routes and techniques vary by locations and time of year,” he adds. “Online shopping has changed the nature of these deliveries, especially in more remote areas of Alaska, with more household supplies being purchased online.” R

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Alaska Business | January 2018 www.akbizmag.com

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Bright Lights in the Midnight Sky

any are aware of Alaska’s significant potential as a destination for visitors in the summer; however, Alaska’s winters are spectacular with beautiful vistas, untouched fields of snow, and crisp winter nights. The short hours of daylight allow for many opportunities to see one of Alaska’s unique offerings, the Aurora Borealis, also known as the Northern Lights. Many Interior and Arctic businesses offer tours and packages to give Alaska’s guests their best chance at catching a glance of this elusive, all-natural, outdoor light show. Northern Alaska Tour Company, founded in 1986, offers a variety of tours that feature the Auroras including overnight trips, driving tours, and driving and flying tours. For Example: The Homestead Aurora is a night of guided Aurora watching in Joy, Alaska. Tour groups meet with a friendly, informative Alaskan guide; head north on the historic Elliot Highway, crossing over Wickersham Dome to enter a remote region featuring a pristine winter sky; and watch the night skies for “nature’s greatest light show.” In Their Words: “Northern Alaska Tour Company is an Alaskan-owned tour operator based in Fairbanks… to provide unparalleled travel and touring experiences in Alaska’s Arctic for guests while maintaining the highest standards of safety and commitment to traditional culture and the environment.” northernalaska.com Go Alaska Tours offers several winter tour options, including Northern Lights Adventures, the majority of which are multi-day packages that span Alaska and Northern Canada and include daytime winter activities such as dogsledding or visiting the Ice Museum. For Example: The Fairbanks & Chena Aurora Winter Tour starts in Fairbanks, where guests are given ample time to explore the surrounding area, including an optional afternoon tour before transferring to an Aurora viewing lodge twenty miles north of Fairbanks. For the final night of the package, the tour moves to Chena Hot Springs Resort, known for its geothermal waters. In Their Words: “We conduct ourselves with uncompromising integrity and honesty as individuals, as a travel team, and as a tour operating company.” goalaskatours.com Several Aurora tours are available through 1st Alaska Tours with a range of prices and options, such as a visit to Chena Hot Springs, dining under the Aurora sky, a photo workshop, sled dog tour, and ice fishing. For Example: The Aurora Dinner with Dog Sled Tour is the combination of Northern Lights viewing, dog sledding, and a home-cooked dinner. The evening begins with a complimentary ride from the guest’s Fairbanks accommodations to the kennel, where a team of huskies is waiting. The sled takes place at night, allowing potential Aurora viewing throughout the ride to the cabin where dinner is served and additional Northern Lights viewing is available. In Their Words: “At 1st Alaska Tours we strive to open Alaska’s nature and beauty to all Alaska visitors. Our Alaska experts have designed fun, interesting, and educational Alaska sightseeing tours just for you.” 1stalaskatours.com www.akbizmag.com

Alaska Aurora Viewing offers Chinese and Japanese speaking guided tours, specialized for small groups ranging from two to eighteen people. For Example: The Alaska Aurora Tour whisks guests off on a four hour drive, traveling up mountains that overlook Fairbanks and the surrounding Interior wilderness. Tours stop along the way upon request to allow guests to snap photos or to grab a breath of fresh air. In Their Words: “Your Arctic adventure awaits with Alaska Aurora tours featuring the Northern Lights of the Interior.” alaskaauroraviewing.com The Aurora Borealis Lodge provides evening tours for guests staying in Fairbanks-area hotels. The Lodge provides two types of tours. For Example: The Premier Aurora Tour starts with a complimentary ride that picks up guests from their hotels and shuttles them to the Lodge at 10 p.m. From 10:30 p.m. to 2 a.m. guests can relax in the warmth of the lodge while checking for the Aurora outside the building’s large, north-side windows. Once the Auroras appear, guests can watch from the lodge or step outside onto the deck. In Their Words: “Aurora Borealis Lodge has been sharing our Alaskan accommodations and Aurora viewing tours with guests since 2003. The Lodge is family owned and operated by Mok & Akiko Kumagai… We hope that we can continue to share the joys of experiencing the fantastic Aurora Borealis and the surrounding Alaskan nature with you.” auroracabin.com Alaska Aurora Adventures offers their Aurora Viewing Lodge for those interested in the Northern Lights, with five-hour or overnight viewing options. For Example: All Night Aurora viewing starts at 9 p.m., a shuttle from the lodge will pick guests up if they’re at another location. Guests can spend the entire night, ten to twelve hours, viewing the Aurora while enjoying a warm fire, indoor bathroom, Aurora videos for entertainment, and a variety of snacks and drinks. In Their Words: “This is a great option for those looking to take advantage of every Aurora viewing opportunity.” alaskaauroraadventures.com The Aurora Chasers provide photography tours focused on the Northern Lights; the company has a set tour and a private charter, which is customizable to fit each guest’s needs. For Example: The Aurora Chasers Tour is available in September, October, February, and March, Monday through Saturday nights. It includes a 9 p.m. pick-

up and runs until 3 a.m. The tour includes transportation, Aurora portraits, and hot beverages. In Their Words: “With The Aurora Chasers, you’ll have an unforgettable Northern Lights photography tour complete with professional Aurora Portrait captured by world-renowned Fairbanks Aurora photographers and tour guides Ronn & Marketa Murray, the original Aurora Chasers of Alaska.” ronnmurrayphoto.com Fairbanks Aurora Tours uses their experience to provide guests with an opportunity to view the Northern Lights while offering tips, tricks, and technical knowledge about best practices for photographing the Aurora. For Example: Tours begin at about 9 p.m. and run until approximately 4 a.m. Tours are catered to small groups, allowing guests to receive personalized, hands-on technical training. The tour takes place in the Fairbanks area, far away from the lights of the city for a clear view of the sky from remote locations; if the

Aurora is particularly vibrant, the tour will stay out until the display wanes. In Their Words: “Fairbanks Aurora Tours strives to offer you an exceptional tour that maximizes your chances of seeing the Aurora Borealis/Northern Lights while assisting you with technical knowledge to take fantastic photos.” fairbanksauroratours.com Sirius Sled Dogs is a family-owned and -operated business located near Murphy Dome about twenty-five miles northwest of Fairbanks that provides access to beautiful, remote areas of the Interior. For Example: The Alaska Winter Adventure includes transportation within Fairbanks and Aurora viewing with the Sirius sled dogs, a dog sled ride, hot beverages, and dinner. Tours run from 8 p.m. to 2 a.m. In Their Words: “Explore life on the edge, living off the grid, and close to nature. Our cabin is cozy and warm and the Northern Lights can be seen from inside through our large north facing windows.” siriussleddogs.net R

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AURORA TOURS

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Anchorage JAN

Haggis Basher’s Ball and Burns Supper

13 This supper is in honor of Scottish poet Robert Burns. The gala event includes a four-course meal, a carafe of scotch at each table, Highland Pipers, and dancing, all at the Sheraton Anchorage. Drinks will be served starting at 6 p.m., the festivities start at 6:55 p.m. Corporate tables of ten may be purchased for $1,500 and single seats are available for $150. tarbas.org JAN

Silent Film Night: Buster Keaton’s The General

Buster Keaton was a comedy king of the Silent Film era; The General is considered one of the greatest films ever made. The Anchorage Symphony screens this masterwork premiering a new score by Eric Beheim. This film finds hapless Southern railroad engineer Johnny Gray facing off against Union soldiers during the American Civil War. Silent Film Night takes place at the Alaska Center for the Performing Arts at 8 p.m. anchoragesymphony.org JAN

Anchorage Folk Festival

17-28 The Anchorage Folk Festival’s goal is to support, encourage, and promote music and dance through

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performance and education. Across town artists take to the stage for free concerts, and the festival also includes workshops, contests, classes, and dances. anchoragefolkfestival.org JAN

Fairbanks

Anchorage

Anchorage Wedding Fair

This fair is a one-stop shopping solution for brides, grooms, wedding planners, and more. Peruse gown collections, catering samples, venues options, music, cosmetics, flowers, and more at the Dena’ina Center, from 11:30 a.m. to 5 p.m. Join fellow wedding aficionados and be the first to mingle with vendors while enjoying unlimited champagne and strawberries at the Strawberries & Champagne hour from 11:30 a.m. to 12:30 p.m. (must be 21+ to attend this portion of the Anchorage Wedding Fair). General entry is open to all ages, entry for children 12 and under is free. alaskabride.com

JAN

STAY

Ladysmith Black Mambazo

Presented by the Fairbanks Concert Association, Ladysmith Black Mambazo performs at Hering Auditorium beginning at 7:30 p.m. Assembled in the late 1960s, Ladysmith Black Mambazo–led by

JAN

Great Alaska Beer & Barley Wine Festival

festival features more than two hundred beers and barley 19-20 The wines from more than fifty regional brewers. Admission to the Egan Center for the Festival, which runs from 6 p.m. to 10 p.m., includes a six-ounce commemorative testing cup, thirty samples, an ID band, and an official program. auroraproductions.net R founder and leader Joseph Shabalala– celebrates more than fifty years of joyous and uplifting music celebrating the intricate rhythms and harmonies of the group’s native South African musical traditions. explorefairbanks.com

JAN

Backcountry Film Festival

27 The Backcountry Film Festival is sponsored by and takes place at the Nordic Ski Club of Fairbanks and celebrates the human-powered winter experience through film. nscfairbanks.org

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Alaska Business | January 2018 www.akbizmag.com

Museum of the North Open House

The University of Alaska Museum of the North offers a free, behind-the-scenes look at how researchers make discoveries about the culture and environment of Alaska. The open house runs from Noon to 4 p.m. at the University of Alaska Fairbanks campus. uaf.edu/museum/ JAN

C Note Poker Tournament

Held at Pike’s Waterfront Lodge, doors open at 5 p.m. for the tournament and players get their names entered into the prize drawing pot with their initial buy in and with each “double your chips” or regular buy back in. Play and prizes continue throughout the evening. Proceeds support the Fairbanks Symphony Orchestra. fairbankssymphony.org JAN

At this family-friendly event, guests enjoy a guided walk on the refuge trail at Creamer’s Field Migratory Waterfowl Refuge to find and learn to identify winter animal tracks. creamersfield.org

Haines JAN

JAN

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Alcan 200

Alcan 200, which begins 19-20 The at 10 a.m., is an international snow machine race from the US/ Canadian border to Dezadeash Lake and back on the Haines Highway;

Russian Christmas and Starring

Celebrate Christmas Russianstyle at St. Michael’s Russian Orthodox Cathedral, which celebrates a weeklong Feast of the Nativity based on the Julian calendar. The celebration features Festal Vigil and Matins, the Divine Liturgy, Great Vespers, a Christmas feast, and a nativity “starring”—the Orthodox practice of caroling and sharing the joy of Christmas. sitka.org R

it includes the Calcutta Auction at Fogcutter Bar and an awards banquet at the American Legion Hall. alcan200.org

Winter Track Walk

at 6 p.m. and Saturday and Sunday at 10 a.m. Demonstrations, organized games, miniature painting, and a huge lending library for open tables will be provided at the Juneau Arts and Culture Center. platypusgaming.org

Sitka

Juneau JAN

Arctic Dreams

Brio presents Arctic 12-13 Con Dreams, a program of contemporary music for gayageum (Korean zither), percussion, flute, and violin. Arctic Dreams will feature new music by Michael Timpson, Canadian composer; Christos Hatzis, Finnish composer; Risto Pulkkinen; Alaskan composer John Luther Adams; and more. Performers include Jocelyn Clark on gayageum, Morris Palter on percussion, Sally Schlichting on

Seward JAN

27 Starting at 12:30 p.m., individuals and teams dress in crazy, fun costumes and jump into Resurrection Bay at the Seward Small Board Harbor. Jumpers are required to find sponsors, raising money for the Alaska Division of the American Cancer Society. seward.com

flute, and Lisa Ibias on the violin. traveljuneau.com JAN

Wasilla

Martinis & Mozart

Hosted by Juneau Jazz & Classics, guests will enjoy a sparkling evening of Martinis & Mozart: four-handed piano featuring Julie Coucheron and Artistic Director William Ransom with a display of piano wizardry. This dynamic duo will perform music of Mozart, Debussy, and Saint-Saens, including a fun audienceinteractive “Carnival of the Animals” at the Juneau Arts and Culture Center. jazzandclassics.org

JAN

Seward Polar Bear Jump

Platypus-Con

community comes 26-28 The together to play new and old board and card games starting Friday

JAN

The Odd Couple (Female Version)

12-28 Valley Performing Arts presents Neil Simon’s hilarious contemporary comic classic, the female version of The Odd Couple. Instead of the poker party that begins the original version, Ms. Madison has invited the girls over for an evening of Trivial Pursuit. The Pidgeon sisters have been replaced by the two Costazuela brothers. But the hilarity remains the same. Dave Nufer directs and performances are on Fridays and Saturdays at 7 p.m. and Sundays at 2 p.m. at the Valley Performing Arts. valleyperformingarts.org R

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January 2018 | Alaska Business

EVENTS CALENDAR JANUARY 2018

JAN

RIGHT MOVES Perkins Coie

Perkins Coie announced that Kevin R. Feldis joined the firm’s Commercial Litigation practice as a Partner in the Anchorage and Washington DC offices with an emphasis on complex litigation, white collar investigations, Feldis cybersecurity, and corporate compliance. Feldis is a seasoned international lawyer and served as the Department of Justice legal advisor at the US Embassies in Baku, Azerbaijan, and Jakarta, Indonesia.

United Way

United Way promoted Sue Brogan to Chief Operating Officer at United Way of Anchorage. Brogan will expand United Way’s work in community engagement, advocacy, and volunteerism and will help sharpen the integration of community engagement, Brogan community results, and investment products. Brogan has worked in the nonprofit sector for thirty-five years, starting her United Way career in 1996. Additionally, Dr. Monica Gross joined the team as the Vice President for Community Impact, Education, and Income. Gross is responsible for United Way’s roles in 90% by 2020 and supporting children and youth, the Anchorage Community Plan to End Homelessness, and improving Gross financial stability for Anchorage residents. She received a medical degree from the University of Washington Medical School, completed her pediatric residency at the University of Michigan, and has a master’s degree in public health from the University of California, Los Angeles.

Northrim Bank

Northrim Bank appointed Joe Gelione as Vice President, Commercial Loan Unit Manager and Ervin Hetemi as Small Business Lender, as well as promoting Annie Her to AVP, Branch Manager and Micah Scott to AVP, BSA, and Deposit Compliance Manager. Gelione joins Northrim Bank with thirty years of experience in the financial sector and has worked in banking in Alaska for more than twenty-five years. He holds a bachelor’s in business administration: finance from Stockton University.

Gelione

Hetemi joins Northrim Bank with nearly ten years of banking experience. He has worked for various financial institutions in Alaska, including positions in branch and business development. Hetemi is working on his bachelor’s degree in economics from Hetemi the University of Alaska Anchorage. Her has been with Northrim Bank for more than four years and has eleven years of experience in the financial industry. She holds a bachelor’s degree in business administration: human resource management from Portland State University. Scott has been with Northrim Bank Her since 2006, where she has worked in retail banking in operations and sales and joined the compliance department in 2013. A longtime Alaskan, she studied at the University of Alaska Anchorage. Northrim named Jed Ballard as Chief Financial Officer following the voluntary transition of Latosha Frye to Senior Scott Vice President, Corporate Accounting Manager. Ballard is a Certified Public Accountant and has worked for KPMG for sixteen years in Alaska and Slovakia. Ballard has extensive experience in financial reporting in a wide range of industries, particularly those that make up the backbone of the Alaska economy Ballard including real estate, petroleum and natural resource contractors, construction, mining, fisheries, industrial manufacturing, hospitality, and tourism. He is a graduate of the University of Alaska Fairbanks with a degree in business administration and a major in accounting.

Pebble Partnership

The Pebble Partnership announced that long-time Alaskan and retired Major General Mark Hamilton will join the project as Executive Vice President of External Affairs. An Alaska resident for more than twenty years, Hamilton spent thirty-one years with the US Army, including involvement in successful negotiations in Somalia and in the United Nations, leading toward peace in El Salvador. He has been awarded the military’s highest peacetime award, the Joint Distinguished Service Medal, and was recognized by The National Association of Scholars for “resolute Leadership in Defense of Intellectual Freedom in Higher Education.”

Alaska USA Federal Credit Union

Alaska USA Federal Credit Union appointed three individuals to fill executive positions within the organization. Joel Swanson becomes Senior Vice President, Branch Administration. Swanson brings more than seventeen years of professional experience to his new position, including ten years with Swanson Alaska USA. Most recently he served as vice president, electronic services. Sonya Watkins has been promoted to the position of Vice President, Branch Administration, Alaska Region. Watkins has worked for Alaska USA for more than twenty-three years, primarily serving in positions of branch Watkins and area management. Most recently she served as area vice president, South Anchorage. Elizabeth Rense Pavlas fills the position of Vice President, Electronic Services. Pavlas has worked for Alaska USA for nine years in positions of increasing responsibility. Most recently she served as card products manager. Pavlas

US Bureau of Ocean Energy Management

The US Bureau of Ocean Energy Management hired Megan Carr, PhD, as supervisor of the Alaska Region’s Resource Evaluation office, where she will supervise a team of about twenty geologists and geophysicists. Carr is a Certified Professional Geologist and comes to BOEM with Carr more than fifteen years of experience in the environmental sciences, geological sciences, and in academia. She holds a bachelor’s degree in geology and a master’s degree in environmental science from Baylor University. Her PhD is in geophysics from the University of Tennessee.

R&M Consultants

R&M Consultants appointed three new members to its Board of Directors: Kim Nielsen, PE; Bill Preston, PLS, GISP; and Tim Grier, PE. Nielsen is a Senior Waterfront Engineer with more than twenty-four Nielsen

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Compiled by Tasha Anderson years of waterfront and environmental engineering experience in Alaska. She joined R&M in 2011 to lead the firm’s waterfront engineering group. Nielsen holds a bachelor’s degree in ocean engineering from the Florida Institute of Technology. Preston is R&M’s Vice President of the Geomatics Department. He brings more than seventeen years of experience in land surveying and mapping in Alaska to his position. Preston joined R&M in 2000 as a college intern and graduated from the University of Alaska Anchorage with a bachelor’s degree Preston in geomatics. Grier is R&M’s Group Manager of Surface Transportation. He possesses twenty-seven years of civil engineering experience managing and designing a broad range of highway and related transportation projects, including the past ten years with R&M. Grier holds a bachelor’s degree in civil engineering Grier from the University of Alaska Fairbanks.

Coffman Engineers

Coffman Engineers announced the addition of two new employees: Rob Wasserman, SE, PE, joined the Structural Engineering Department as a Senior Project Manager and Natsuko Ito joined the company as Administrative Assistant. Wasserman is a registered Civil and Structural Engineer in Alaska with more than a decade of professional experience working on petroleum facilities and refineries, structural engineering and design, and construction management projects throughout Alaska, Washington, California, Utah, Wasserman and Wyoming. Wasserman is a member of American Society of Civil Engineers. Ito was born and raised in Alaska. She spent most of her life in Fairbanks and graduated from the University of Alaska Fairbanks with a bachelor’s degree in business administration with a concentration in marketing. Ito has worked in a variety of industries including guiding visitors in Alaska’s Ito Arctic, working road construction on the Dalton Highway, and managing a small acupuncture clinic in Anchorage.

Denali Federal Credit Union

Andrew Lyle joined Denali Federal Credit Union’s Business Lending Department as Assistant Vice President where he’ll work to maintain and further develop Denali’s Business Lending portfolio. Prior to coming to Denali, Lyle spent the last three years working in commercial banking at The Bank of Lyle River Oaks in Houston, Texas, focusing primarily on commercial real estate and healthcare lending. Lyle graduated from Lewis & Clark College in 2011. He also spent one year studying at the Ludwig-Maximilian University in Munich. His academic interests include finance, financial journalism, and German language and literature.

Credit Union 1

Credit Union 1 hired Joseph Martin as its new BSA Manager. Martin brings with him experience in anti-money laundering and illicit finance investigation. Prior to joining Credit Union 1, Martin managed complex anti-money laundering investigations to mitigate reputational and compliance risk. He also conducted sanctions and illicit Martin finance investigation as a certified anti-money laundering specialist with counter-terrorist diligence designations and helped build and enhance due diligence investigations for top-tier financial institutions and Fortune 500 companies. As the BSA Manager for CU1, Martin is responsible for implementing the credit union’s BSA program, which manages reputational, legal, and regulatory risk for issues related to money laundering, drug trafficking, terrorist financing and related suspicious activities. Martin also oversees compliance with US sanctions programs administered by the Office of Foreign Assets Control (OFAC) at the US Department of the Treasury.

at a number of different airlines, in addition to building his own consulting company focused on international sales and distribution within the hotel, car rental, and airline industries.

Sitnasuak Applied Technologies

Sitnasuak Native Corporation announced that Pat Leary was hired as the new Senior Vice-President of Technical Services for Sitnasuak Applied Technologies, based in Anchorage. Leary manages the marketing and operational activities to support federal and commercial service contracting with Sitnasuak Applied Technologies. Leary’s primary focus of work will be “remote” supervisory control and data acquisition, IT network and physical security, and general IT system operations and maintenance.

United Fishermen of Alaska

United Fishermen of Alaska announced Frances Leach is its new Executive Director. Leach, a Juneau resident, was raised in a commercial fishing family in Ketchikan. Leach states, “I understand the importance of commercial fishing to Alaska’s economy and cultural heritage. The commercial fishing industry faces many challenges at the state and federal level, and I look forward to addressing these challenges as UFA’s executive director.”

Office of Lisa Murkowski

US Senator Lisa Murkowski appointed Brian Hughes to Energy and Natural Resource Committee Staff Director. Hughes first came to Washington, DC to intern for Senator Ted Stevens during college. After working as Stevens’ speechwriter, he moved to the committee in 2007. He held a variety of positions, ranging from legislative aide to senior writer and policy advisor. Hughes left the committee briefly to serve as a speechwriter on the Romney-Ryan presidential campaign in 2012. He has served as the committee’s deputy staff director since December 2015. Hughes was born and raised in Anchorage.

Ravn

Ravn Air Group announced that Derek Shanks, a seasoned airline and travel industry executive, joined the ranks of Ravn’s new world-class leadership team. Shanks is the company’s first-ever Chief Commercial Officer, responsible for leading the airline’s commercial team and all aspects of Ravn’s sales, Shanks marketing, network planning, and distribution efforts. With more than twenty-five years of experience in the airline and global travel industry, Shanks played key roles

Mat-Su Health Foundation

The Mat-Su Health Foundation welcomes Lindsay Prunella as program coordinator for ROCK (Raising Our Children with Kindness). In her new role Prunella will advance the mission of ROCK Mat-Su by supporting dayto-day communication and administration, community engagement, and funding development. Prunella earned a master of social work degree from Loyola University with concentrations in alcohol and drug counseling and school social work. She also earned a bachelor’s degree from Michigan State University in interdisciplinary studies. R

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January 2018 | Alaska Business

Business Events JANUARY

JAN

Health Summit

JAN

Alaska Wholesale Gift Show

Hotel Captain Cook, Anchorage: The 2018 summit theme is “Finding Our Way Forward” and the conference will focus on building public health system capacity, health promotion, health protection and security, public health research and evaluation, and emerging issues. alaskapublichealth.org

16-18

Dena’ina Center, Anchorage: This event provides an opportunity for small business owners and producers to grow their buyer base and meet face-to-face with other business owners, buyers, and managers. Show specials are available for lodging, car rentals, travel concierges, etc. 10times.com/wholesale-alaskan-gift

18-20

JAN

Meet Alaska Conference & Trade Show 2018

Hotel Captain Cook, Anchorage: Hosted by the Alliance, this is the largest one-day energy conference in Alaska and includes educational forums and a tradeshow. alaskaalliance.com

JAN

Alaska Marine Science Symposium

Hotel Captain Cook, Anchorage: Scientists, researchers, and students from Alaska, the Pacific Northwest, and beyond come together to communicate research activities occurring in the marine regions of Alaska. amss.nprb.org

22-26 JAN

Junior Achievement of Alaska Awards Banquet

Dena’ina Center, Anchorage: Four new Alaskans will be inducted and recognized with this prestigious award. Attended by more than 400 business representatives, the program consists of a networking reception, dinner, and awards ceremony. www.juniorachievement.org/web/ja-alaska

Compiled by Tasha Anderson JAN

25-27

Anchorage AEYC Early Childhood Conference

Hilton Anchorage: The 2018 theme is “Big or Small, Success for ALL: Supporting the Leaders of Tomorrow.” Join other early childhood community members to learn new strategies, hear about the latest research, try out a few practical techniques, and discover new tools and resources to help face any challenge. anchorageaeyc.org

JAN

Alaska RTI Conference

Dena’ina Center, Anchorage: Invited presenters this year include Michael Horn and Heather Staker, authors of Blended; Dr. Doug Fisher and Anita Archer, who will focus on using explicit instruction and lessons from Visible Learning for Literacy; math and RTI experts Dr. Doug Clements and Dr. Karen Karp; and more. More than 1,000 educators from thirtyseven districts attended the conference last year. asdn.org/school-year-conferences-and-institutes

27-28

FEBRUARY

FEB

3-9

Alaska Statewide Special Education Conference

Hilton Anchorage Hotel: The Alaska Statewide Special Education Conference (ASSEC) is committed to providing high quality professional development relevant to the cultural, rural, and remote characteristics of Alaska. assec.org

FEB

7-10

Alaska Optometric Association CE Conference

Centennial Hall, Juneau: The mission of the AKOA is to influence the future of eye care by ensuring the welfare of Alaskans and promoting the continued development of the profession of optometry. akoa.org

FEB

12-16

Alaska Surveying & Mapping Conference

Anchorage: This is the 52nd annual conference. aksmc.org

FEB

Alaska Forum on the Environment

FEB

ASTE Annual Conference

FEB

AML Winter Legislative Meeting

Dena’ina Center, Anchorage: The Alaska Forum on the Environment is Alaska’s largest statewide gathering of environmental professionals including government agencies, nonprofit and for-profit businesses, community leaders, Alaskan youth, conservationists, biologists, and community elders. akforum.com

12-16

Hotel Captain Cook, Anchorage: This is the educational technology conference of the Alaska Society for Technology in Education. This years’ theme: Personalize Your Playlist. Share project ideas and cultivate interests through collaborating and connecting with others on similar paths. What’s on your PD Playlist? aste.org

17-20

Juneau: The Alaska Municipal League is a voluntary, nonprofit, nonpartisan, statewide organization of 162 cities, boroughs, and unified municipalities, representing more than 97 percent of Alaska’s residents. akml.org

20-22

MARCH

MAR

1-2

Alaska Forest Association Spring Meeting

Baranof Hotel, Juneau: The Alaska Forest Association can be characterized as a high profile industry trade association. Its members hold in common general business interests in the timber industry of Alaska. akforest.org

MAR

SWAMC Annual Conference

The Southwest Alaska Municipal Conference advocates for its region by “providing accurate research and information, developing regional consensus on issues, and conveying local and regional priorities to government agencies, the Southwest Alaska Legislative Delegation, and the Alaska Congressional Delegation.” swamc.org R

1-2

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Alaska Business | January 2018 www.akbizmag.com

Inside

Alaska Business January 2018

DOYON

oyon, Limited intends to drill a new oil and gas exploration well in the Nenana basin west of Fairbanks this summer. The well, to be called Totchaket #1, will be drilled on one of several promising areas identified from a 64-squaremile 3D seismic program conducted in 2017. Prior drilling by Doyon in the basin demonstrated the presence of both natural gas and oil, although those results were not commercial. According to Doyon President and CEO Aaron Schutt, “We are especially excited about the recent seismic results because for the first time in this basin we see trapped hydrocarbons. This could be a game-changer.” James Mery, Doyon senior vice president of lands and natural resources, said that the Doyon Nunivak #2 well drilled in 2013 encountered several hundred feet of propane rich, gas saturated sandstone. However, the trap holding the gas had apparently failed millions of years ago resulting in leaks that lowered saturation to levels that could not be produced economically. Had the trap not failed, the Doyon team believes that approximately 150 BCF to 180 BCF of natural gas could have been produced, which is enough to supply Fairbanks for more than twenty-five years. If Totchaket #1 is a success, Doyon estimates that similar amounts of gas could be present. doyon.com

NANA

ANA sold four Anchorage hotels, effective November 2017. The new owner, JL Properties, is an Alaska-based real estate and investment firm. NANA (60 percent owner) and Sodexo (40 percent owner) sold the jointly-owned Courtyard, Midtown Springhill Suites, and Residence

Compiled by Tasha Anderson

Inn, as well as the University Lake Springhill Suites, which was owned 100 percent by NANA. NANA Management Services managed and operated the properties since they opened their doors. The sale is designed to allow NANA to concentrate on furthering Alaska’s resource development industries, including the Red Dog Mine, and its federal and commercial group opportunities. nana.com

BENDERSON DEVELOPMENT

enderson Development closed on its $89 million purchase of four net-leased properties in Southern California, San Francisco, Seattle, and Alaska. The properties consist of approximately 220,000 square feet and operate under the Safeway, Pavilions, and Carrs supermarket flags: • Laguna Beach, CA–Pavilions on Pacific Coast Highway • Berkeley/Oakland, CA–Safeway at College Avenue • Seattle, WA–Safeway on 134th • Anchorage, AK–Carrs/Safeway at Abbott Randy Benderson commented, “This acquisition is consistent with our strategy of acquiring assets in core West Coast markets and further expanding our national footprint.” benderson.com

ALASKA AEROSPACE

he Alaska Aerospace Board of Directors approved a resolution adopting Articles of Organization and an Operating Agreement establishing Aurora Launch Services, LLC. As a

wholly-owned subsidiary of Alaska Aerospace, Aurora Launch Services is a major step toward creating a cost effective, private sector focused business capable of providing niche contract launch services to spaceports worldwide. As the emerging small launch vehicle market grows, Aurora Launch Services will be a major part of Alaska Aerospace’s efforts at creating an Alaska based sustainable aerospace business that serves a global launch market. akaerospace.com

DIVISION OF INSURANCE

laska businesses will see an average decrease of 5.4 percent for 2018 workers’ compensation insurance assigned risk rates. Workers’ compensation voluntary insurance loss costs will decrease by 7.9 percent. “We are hopeful that the downward trend in workers’ compensation rates that we’ve approved the past two years will continue,” said Lori Wing-Heier, director of the Alaska Division of Insurance. “Lower workers’ compensation costs reduce the burden on the small businesses that are helping to foster a stronger Alaska economy.” The 2018 rate reductions signify a positive continuing reduction in workers’ compensation losses. This year’s lower rates follow 2017 rates that represented a 5.1 percent reduction from the previous year. Wing-Heier approved the filing from the National Council on Compensation Insurance in early November 2017. www.commerce.alaska.gov/web

TRILOGY METALS

rilogy Metals filed a National Instrument 43101 technical report with Canadian securities regulators relating to the Arctic Project which

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January 2018 | Alaska Business

INSIDE ALASKA BUSINESS

UNIVERSITY OF ALASKA

cknowledging the University of Alaska’s important role in building the state’s economy and future workforce, the University of Alaska Board of Regents approved an FY19 operating budget that includes funding for a range of key strategic investments and tuition increases for academic years (AY) 2019 and 2020. The approved budget includes a state operating budget request of $341 million in unrestricted general funds. The request is $24 million more than the university received in FY18. Additional funding would be invested strategically to increase STEM programs, teacher and healthcare education programs, invention disclosures, research expenditures, and enrollment and degree completion rates. Regents also approved a state capital budget request of $50 million in unrestricted general funds for deferred maintenance and renewal and repurposing of the university’s facilities, as well as the university’s ten-year capital improvement plan. www.alaska.edu/alaska

AVTEC

he AVTEC Alaska Maritime Training Center received a donation of $95,000 from the refin-

ing, marketing, and logistics company Andeavor. The donation will support AVTEC’s Arctic and ice navigation readiness project, which will upgrade the school’s full mission bridge ship simulator to enhance its ice navigation capabilities. avtec.edu

US FOREST SERVICE Image courtesy of the US Forest Service

supports the resource estimate previously announced on April 25, 2017 which is of sufficient quality to support the Arctic pre-feasibility study (PFS). The Arctic Project is estimated to contain at a base case of 0.5 percent copper equivalent cut-off grade, an in-pit indicated resource of approximately 36 million tonnes of copper grading 3.07 percent that are expected to form the basis for the PFS and the company’s first reserves in the Ambler Mining District. The PFS is on target to be released in the first quarter of 2018. Rick Van Nieuwenhuyse, president and CEO of Trilogy Metals, commented, “We are excited in the progress made to date towards finalizing the pre-feasibility study for our high-grade Arctic Project in Q1 2018. Arctic is pretty special–we predict it will be one of the highest grade open pit copper projects in the world… With the Ambler Mining District Industrial Access Project now in the formal permitting process and public scoping meetings taking place, it is exciting to see the Ambler Access Road finally taking shape.” trilogymetals.com

he Tongass National Forest announced the Neva Lake Bridge over South Creek on the Juneau Ranger District is open to traffic. The bridge was replaced by a government-provided prefabricated steel truss shipped from Oregon. Final inspection of the bridge was completed in early November. The project was paid for with a combination of funds from Haines Borough, Secure Rural Schools Act, and the Forest Service Capital Improvement and Maintenance funding. The Forest Service anticipates transferring ownership of the bridge to the Haines Borough after the project is completed. www.fs.usda.gov/tongass

OFFICE OF THE GOVERNOR

overnor Bill Walker signed legislation to help increase economic and resource development opportunities in the Petersburg Borough. When it was formed in 2013, the Petersburg Borough received a significantly smaller land grant entitlement from the state than other organized boroughs; Senate Bill 28 rectifies this situation, increasing the land entitlement for Petersburg by 12,770 acres. The legislation increases the Petersburg Borough’s land entitlement level similar to that of the state’s other eighteen organized boroughs. When the borough was organized, it received a general entitlement of 1,896 acres from the state,

of which roughly 450 had already been given to the City of Petersburg. gov.alaska.gov

ALASKA CONGRESSIONAL DELEGATION

S Senators Lisa Murkowski and Dan Sullivan and Representative Don Young released the following statements after the Senate passed HR 1, the Tax Cuts and Jobs Act, which includes Murkowski’s title opening a small portion of the non-wilderness 1002 Area of the Arctic National Wildlife Refuge (ANWR) for responsible energy development. “Tonight is a critical milestone in our efforts to secure Alaska’s future,” Murkowski said. “Opening the 1002 Area and tax reform both stand on their own, but combining them into the same bill, and then successfully passing that bill, makes this a great day to be an Alaskan. I thank all of the Senators who spent time learning about our opportunities and needs, and who joined us tonight in voting for Alaska. We are grateful for their support and eager to take the next steps for this projobs, pro-growth, and pro-energy legislation.” “Today’s historic vote is yet another milestone in bringing us that much closer to realizing a decades-long dream of opening the 1002 area of ANWR,” Sullivan said. “Although there is still work to be done, I’m optimistic we will succeed on the merits of our policy and the passion of our people. Allowing development in the coastal plain, an area specifically set aside for exploration and development, is a win for Alaska and a win for the nation. It will create thousands of good paying jobs, restore faith in our economy and drive investments in our communities. It will also help protect the global environment by producing energy at home using the most stringent of environmental standards, and will help strengthen our national security and foreign policy.” “I applaud the Senate for passing this muchneeded legislation to reform our tax code and unlock more of Alaska’s energy potential,” Young said. “Alaska is home to a vast amount of natural resources, and through the development of ANWR, we will strengthen our economy by creating new jobs and generating new revenue… As we move forward, particularly through the Conference Committee process, I will work with my

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Alaska Business | January 2018 www.akbizmag.com

Compiled by ABM Staff House colleagues to ensure Alaska’s interests are protected and our energy sector continues to be a global leader. This is crucial for the economic growth of our state and nation, but also for countless families, communities, and small businesses.” alaska.gov/congressdelegation.html

insurance market provided by the reinsurance program as well as a significant reduction in the use of medical services by the health plan’s customers resulted in the state earlier this year approving an unprecedented average rate decrease of 22.4 percent on Premera’s 2018 individual metallic plans. premera.com

BLUEPRINT ALASKA

DEPARTMENT OF NATURAL RESOURCES

new public affairs and advocacy agency with deep roots and expertise in public relations, strategic communications, and public policy has launched in Alaska. Blueprint Alaska opened on January 1. Owner Jennifer Thompson hired longtime public relations professional and registered Alaska lobbyist Sarah Erkmann Ward, APR, to serve as Blueprint Alaska’s president/CEO, providing clients with years of experience in government relations, issues management, advocacy, and strategic communications counsel. Blueprint Alaska will focus on influencing public policy and opinions, building and maintaining relationships with the public, and finding common ground with stakeholders. The agency will also assist clients in navigating the challenges that occur when diverse interests of business, government, politics, and media intersect.

PREMERA

remera Blue Cross Blue Shield of Alaska will make a one-time only $25 million reimbursement to fund high-cost health insurance claims through the Alaska Reinsurance Program as part of a memorandum of understanding with the Alaska Division of Insurance, Premera announced. The agreement stipulates the state’s division of insurance direct the Alaska Comprehensive Health Insurance Association, which operates the reinsurance program, to use these funds “solely for health insurance claims in the individual market.” Premera offered to make the reimbursement after finding that health insurance claims filed by Alaska customers in 2017 were trending at a ten year low. The Alaska Reinsurance Program is a state-operated program that covers claims in the individual market for people with one or more of thirty-three identified high-cost conditions in order to help stabilize premiums for all customers. The increased stability of the state’s individual

www.akbizmag.com

he State of Alaska held a record-breaking oil and gas North Slope lease sale in early December, netting competitive bids from investors around the world. The Division of Oil and Gas received 143 bids from companies and investors seeking oil and gas leases on state lands during the division’s annual North Slope, Beaufort Sea, and North Slope Foothills areawide oil and gas lease sales. Winning bids totaled nearly $21.2 million. Ranked by dollar amount, this North Slope areawide sale is the third largest of its kind since 1998, when areawide oil and gas leasing began. By bid value, it is the largest sale since 1998, netting an average of $110 per acre. In the North Slope sale, the division received 124 bids on 103 tracts for a total of 179,680 acres, with winning bids exceeding $19.9 million. In the Beaufort Sea sale, the division received 19 bids on 16 tracts totaling 37,771 acres, with winning bids totaling nearly $1.3 million. The division did not receive any bids for lease tracts in the North Slope Foothills. dog.dnr.alaska.gov

AIDEA

he Alaska Industrial Development and Export Authority (AIDEA) Board in December approved a Resolution authorizing AIDEA to sell Pentex Alaska Natural Gas Company and its assets, including Fairbanks Natural Gas, to the Interior Gas Utility (IGU). Under terms of the sale, IGU will purchase Pentex for $54 million, the amount AIDEA paid for the company in 2015. The purchase price will be paid out of a $125 million loan AIDEA is making to IGU from funds appropriated by the Legislature for the Interior Energy Project. IGU will use the remaining loan funds to establish an investment grade utility for the Interior that will deliver natural gas at competitive prices and help

improve air quality in the region. Loan terms include no interest for the first fifteen years, with no payments due during that period, and an interest rate of 0.25 percent thereafter for thirty-five years. IGU will also have the ability to defer principle payments for an additional five years if expected natural gas demand is not achieved. Additionally, AIDEA is authorized to issue up to $150 million in bonds. aidea.org

OIL SEARCH

il Search, based in Papua New Guinea, acquired a 25.5 percent stake in the Pikka Unit, which is currently operated by Armstrong Energy, as well as a 37.5 percent interest in the Horseshoe Block, located to the south, for $400 million. Together the leases contain approximately 500 million barrels (gross) of oil. Oil Search states, “The acquisition will provide Oil Search with world class oil assets immediately adjacent to existing infrastructure. The Alaska North Slope is an established, prolific oil producing province, in the world’s largest developed economy, with an attractive fiscal regime. The assets complement the company’s existing top quartile, high returning PNG gas portfolio and, with significant growth opportunities, have the potential to become, over time, a material business for Oil Search, of a scale equivalent to its PNG assets.” Oil Search will assume operations of Pikka in June 2018 and plans to build up operating capabilities through a partnership with Armstrong. oilsearch.com R

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January 2018 | Alaska Business

ALASKA TRENDS

Alaska in the Top 10 of the Best States to Start a New Business #

Alaska

Washington

Average income of top 1%: $833,117 Average income of bottom 99%: $63,226 Number of millionaire households: 18,209 Ratio of millionaires to total households: 6.75% Number of billionaires: 0 Population in upper class: 25% Population in middle class: 53% Population in lower class: 22% Overall poverty rate: 11.2

North Dakota

Montana

Oregon

South Dakota

Idaho

Wyoming

Alaska is home to fewer millionaire households than most states, however, it also has one of the highest ratios of millionaires to total households. Additionally, the average income of the bottom 99 percent in the state is the highest in the nation, pulling it up in the GoBankingRates.com rankings.

# #

29ia

Nebraska

Nevada

Utah

rn Califo

Colorado

Kansas

Arizona

# #

New Mexico

Al as

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Oklahom

Compiled by Alaska Business Staff

laska may post the second-lowest opportunity share of new entrepreneurs and the lowest employee educational scores in the nation, but it still ranks sixth in terms of best places to start a business thanks to the state’s incredible performance in other areas, according to a recent report from GoBankingRates.com. The reports notes that Alaska has the number four GDP in the country, at $63,971, and the number three best tax situation in the country, due in part to our lack of state income or sales tax. The state also has a high rate of new entrepreneurs, which could be why Alaska remains one of the top ten most successful states in the country, according to the report. # 1

Maine

ANS Crude Oil Production 12/3/2017 05/01/2015 01/01/2014 09/01/2012 05/01/2011 01/01/2010 09/01/2008 05/01/2007 01/01/2006

Vermon

Minnesota

Michigan

Iowa

# Sou th C

Mississippi

Alabama

# Ge

a ro

org

01/01/2002 0

400,000

th C

1,200,000

ANS West Coast Crude Oil Prices 12/1/2017 09/01/2014

09/01/2010 09/01/2008 09/01/2006

ANS West Coast $ per barrel $64.01 Dec. 1, 2017

09/01/2002

a ro

800,000

SOURCE: Alaska Department of Revenue Tax Division

09/01/2004

09/01/2000

lin a

Arkansas

Nor

Tennessee

# #

17 la

Virginia

Kentucky

05/01/2003

09/01/2012

Missouri

47nd

M ar y

# New Jers

ANS Production per barrel per day 554,368 Dec. 3, 2017

09/01/2004

09/01/2000

Massachusetts # Rh od e Is l an d

West Virginia

35ia

Indiana

N ew

Connecticut

ylvan Pe n n s

Ohio

Illinois

22Hampshire #

o rk N ew Y

Wisconsin

34t

lina

$60

$80 $100 $120 $140 $160

10/01/2017 01/01/2010 03/01/2007

Louisiana

$40

Statewide Employment Figures 10/1976—10/2017 Seasonally Adjusted 11/01/2012

$20

SOURCE: Alaska Department of Revenue Tax Division

05/01/2004

4 o ri d a

07/01/2001 09/01/1998

Labor Force 363,331 Oct. 2017 Employment 337,168 Oct. 2017 Unemployment 7.2% Oct. 2017

11/01/1995 01/01/1993 03/01/1990 05/01/1987

Hawaii

07/01/1984 09/01/1981 11/01/1978 01/01/1976 0 100,000 200,000 300,000 400,000 SOURCE: Alaska Department of Labor and Workforce Development, Research & Analysis Section; and US BLS

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January 2018 | Alaska Business

ADVERTISERS INDEX ABC Motorhome Rentals..................................11 Dowland-Bach Corp.........................................52 Petrotechnical Resources Alaska (PRA)....58 Advanced Dental Solutions............................68 Doyon Limited......................................................43 Port of Alaska.......................................................... 9 Alaska SEARCH, LLC..........................................65 First National Bank Alaska................................. 5 Ravn Alaska...........................................................45 Alaska USA Federal Credit Union..................17 Focus Employer Services LLC........................... 3 RISQ Consulting...................................................21 All American Oifield Services........................ 57 Fountainhead Hotels......................................... 57 ALSCO......................................................................25 GCI.............................................................................84 Samson Tug & Barge.........................................53 American Heart Association..........................35 Jim Meinel, CPA, P.C......................................... 12 Span Alaska Transportation LLC...................31 American Marine / Penco..................... 80, 81 Judy Patrick Photography..............................82 Stellar Designs Inc.............................................. 73 Arctic Chiropractic............................................. 73 Junior Achievement..........................................29 Arctic Office Products......................................59

Lynden Inc.............................................................55

The Odom Corporation...................................30

Avis Rent-A-Car...................................................72 N C Machinery.....................................................49 T. Rowe Price........................................................ 13 Bering Straits Native Corp..............................42 NCB...........................................................................22 United Way of Anchorage............................... 19 Calista Corp...........................................................70 New Horizons Telecom, Inc...........................33 Vigor Alaska.......................................................... 10 Carlile Transportation Systems....................83 Northern Air Cargo...................................74, 75 Washington Crane & Hoist..............................51 CIRI............................................................................ 76 Pacific Pile & Marine........................77, 78, 79 Webb Chiropractic - Ideal Protein...............71 Conrad-Houston Insurance Agency.......... 12 Parker Smith & Feek...........................................23 Construction Machinery Industrial (CMI)... 2 PDC Inc. Engineers............................................64 West-Mark Service Center..............................52 Cornerstone Advisors........................................15 PenAir.......................................................................69

Westmark Hotels - HAP Alaska.....................54

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