DECEMBER 2010 by Alaska Business

Top Business Stories | Telecommunications & IT Directory

December 2010

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DECEMBER 2010 TA B L E O F C O N T E N T S

D E PA R T M E N T S From the Editor . . . . . . . . . . . . . . 7 Inside Alaska Business . . . . . . . . 8 Right Moves . . . . . . . . . . . . . . . . 32 Market Squares . . . . . . . . . . . . . 44 Alaska Trends . . . . . . . . . . . . . . 103 Ad Index . . . . . . . . . . . . . . . . . . 106 R E G U L A R F E AT U R E S

ABOUT THE COVER Alaska volcanoes provide great potential for geothermal energy. On the cover: Views of Fourpeaked volcano and area of volcanic activity on the north flank. Cover photo by Christina Neal/Courtesy of the Alaska Volcano Observatory/ U.S. Geological Survey. ARTICLES (cont’d.)

VIEW FROM THE TOP AVIATION Sam Morales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Security Aviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 CEO, Sequestered Solutions Alaska By Peg Stomierowski

Providind Alaska-style business class By Peg Stomierowski

AVIATION SIDEBAR ALASKA THIS MONTH Community Spirit Shines at Palmer Celebration . . . 40 Alaka’s Aviation Habit . . . . . . . . . . . . . . . . . . . . . . . . 27 Colony Christmas features craft fairs, parade, fireworks By Nancy Pounds.

By Peg Stomierowski

Overcoming obstacles to effective training By Andy Brown

By Jody Ellis-Knapp

Neither boom nor bust, holding steady By Heidi Bohi

By Susan Harrington

EMPLOYER PERKS HR MATTERS Employee Retreats. . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Getting Management Buy-In . . . . . . . . . . . . . . . . . . . 45 Businesses appreciate results ALTERNATIVE ENERGY TOWNS IN TRANSITION Powering Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Renewable alternatives 46 Juneau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LEADERSHIP Leaders Share Holiday Wishes . . . . . . . . . . . . . . . . . 42

REGIONAL REVIEW Matanuska-Susitna Borough . . . . . . . . . . . . . . . . . . 49 Caring, sharing, health, wealth and wisdom By Jessica Bowman

Alaska’s ‘Big Valley’ By Tracy Barbour

ARTICLES

YEAR IN REVIEW 2010 Year in Review . . . . . . . . . . . . . . . . . . . . . . . . . 52 A year to remember By Heidi Bohi

EDUCATION The Missing Link . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 OIL & GAS Logistic studies pave way to Alaska’s future ACES Oil Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 By Heidi Bohi

Good or bad for Alaska? By Jack Phelps

EDUCATION SIDEBAR Interactive Map Unlike Any Other . . . . . . . . . . . . . . . 14 OIL & GAS Time For Alarm? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Alaska Logistics Map helps business What will the governor do about State tax policies? By Mike Bradner

By Heidi Bohi

EDUCATION NATIVE BUSINESS A United Front . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 72 University of Alaska Anchorage and University of Washington join Alaska Village Corporations: Doing Well . . . . . . . . . forces to graduates PAs for work in Alaska By Heidi Bohi

Will potential revisions to the 8(a) program change that? By Julie Stricker

TOURISM CONSTRUCTION Pacific Northwest Getaways . . . . . . . . . . . . . . . . . . . 78 Contractors’ Group Names Award Winners . . . . . . . 20 Alaskans on the go AGC lists top construction projects and safety recognition

By Peg Stomierowski

(continued on page 6)

www.akbizmag.com • Alaska Business Monthly • December 2010

DECEMBER 2010 TA B L E O F C O N T E N T S

SPECIAL SECTION: TELECOMMUNICATIONS & TECHNOLOGY Facebook and Customer Acquisitions . . . . . . . . 80 Strategy and dedication needed to recruit fans By Ross Johnston

Bring Your Own Technology . . . . . . . . . . . . . . . . 82 New trend in Alaska workplaces By Tracy Barbour

Broadband, Wireless Access Expanding in Rural Alaska. . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Change is coming fast By Heather A. Resz

Expanding Technology in Telecommunications . . . 88 Companies share new product info, trends By Tracy Barbour

Green IT Practices . . . . . . . . . . . . . . . . . . . . . . . . 92 Saving money and the environment By Tracy Barbour

2010 Telecommunications Technology Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

PAGE

CORRECTION The rendering of the Fort Wainwright barracks on page 20 in the October issue is courtesy of Res3d.com.

A GROWING TR ADITION Success built on the foundation of Native values

“Sealaska maintains a state-of-the-art forest research and monitoring program. They constantly improve upon best practices to ensure healthy forests, wildlife and fish habitat.”

CAL RICHERT Eagle, Daklaweidi (Killerwhale) Sealaska shareholder and Natural Resources contractor

Like all of us at Sealaska, Cal understands the importance of the Native value Haa Aaní, which speaks to our relationship to the land. It guides us to both cherish and utilize the land and we are dedicated to upholding this value.

HAA AANÍ OUR LAND

ÍITL’ TLAGÁA

Sealaska is a growing tradition. We have strengthened business with culture since 1972, operating businesses in multiple industries in Southeast Alaska and worldwide. We are owned by more than 20,000 tribal member shareholders and are guided by our traditions of environmental stewardship, positively impacting our communities.

Learn our extraordinar y stor y at w w w.sealaska.com.

www.akbizmag.com • Alaska Business Monthly • December 2010

FR Volume 26, Number 12 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

EDITORIAL STAFF Managing Editor Associate Editor Art Director Art Production Graphic Design Photo Consultant Contributing Photographers

Debbie Cutler Susan Harrington Candy Johnson Linda Shogren Janyce Nolan Goe Graphics & Design Chris Arend Judy Patrick Azimuth Adventure Photography

BUSINESS STAFF President National Sales Mgr. Account Mgr. Account Mgr. Traffic Coordinator Accountant

Jim Martin Charles Bell Anne Campbell Bill Morris Ann Doss Mary Schreckenghost

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503 (907) 276-4373 Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial e-mail: editor@akbizmag.com Advertising e-mail: materials@akbizmag.com Pacific Northwest Advertising Sales 1-800-770-4373 ALASKA BUSINESS PUBLISHING CO., INC. ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., P.O. Box 241288, Anchorage, Alaska 99524; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2010, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues $3.95 each; $4.95 for October. Back issues $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, P.O. Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change. Manuscripts: Send query letter or manuscripts to the Editor. Alaska Business Monthly 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 Monthly is prohibited. Address requests for specific permission to the Editor, Alaska Business Monthly. Online: Alaska Business Monthly is available online from Data Courier and online from Thomson Gale. Microfilm: Alaska Business Monthly is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

THE

DITOR

International Speaker Visits Alaska Encourages Businesses to Succeed

an Francisco-based Cindy Solomon, a selfdescribed born entrepreneur, doesn’t call herself a motivational speaker. But she is motivating and has amazing energy. And she doesn’t have a degree beyond a bachelor’s in business, but she’s highly successful, learning lessons from experience and her ferocious appetite for business news, especially regarding what makes businesses tick in the areas of customer service, customer loyalty, employee retention and leadership development. This author of three books (two to be soon released) and internationally recognized speaker (18 years on the job and a member of the National Speakers Association), writer and executive coach leads a staff of more than 20 and works with companies large and small, even with multi-billiondollar legacies. Solomon was brought to Anchorage, which she dubs “magical Alaskaland,” by KeyBank for its Key4Women Forum, held last month at the Dena’ina Convention Center with more than 200 in attendance, as part of a larger tour in 18 markets across the U.S. “I popped out of the womb speaking,” she said, laughing. “I wake up every day, so excited to do what I do.” ABM had an opportunity to sit down with Solomon the eve before her keynote speech and discuss the three elements most important to business success. Here are her major points:

1. Find a way to create a partnership with customers who get from your business what they want 100 percent of the time. In turn, you get from them what you want, meaning a low-maintenance customer who is buying what your business is selling. Businesses of any size spend a lot of time and energy focussing on getting the new client she said, adding true profitability lies in creating loyalty with the current customer base you already have. “If we’re able to do that, keep that loyalty base, those fabulous customers who come back to us time and time again, they will actually drive new sales for you so you don’t have to go out reaching for the bright shiny new customer as much as you do today. Research currently shows over 80 percent who leave a product or service are actually satisfied. So if you think about that for a second that should frighten every business out there. What it means is it takes much more than satisfaction to drive true loyalty. And I think that’s where businesses make mistakes today; simply looking for satisfied customers when that

doesn’t keep them coming back time and time again. So what does keep them coming back is, No. 1, creating a clear dialogue with them, making sure you’re crystal clear about what their expectations are of you and what you in turn expect their experience to be so you can fulfill that 100 percent of the time.” 2. Use technology for good and not evil. “Find a way to ensure you are not having to work around technology to fulfill your customers’ needs,” she adds. “That they’re not having to struggle to buy something from you, to work with you, to communicate with you. And if you have technology you are working around, there’s no excuse for it. There’s a $99 package out there for just about anything you need. I think – for most of us boomers – we had to adapt to technology rather than it adapting for us. And I think we missed the boat when we aren’t forcing our technologies to work to build deeper, easier, faster, more efficient relationships with our customers. I think you have to assess it, spend a fair amount of your time putting your customer hat on and seeing what it’s like to interact with you. “Get an intern. Get somebody who is great at technology and who also has an interest in business and have them help you assess your current technology, see what works, see what doesn’t – have them help you find a way around the technology you are already working around.” 3. Companies should be as concerned about creating loyalty with employees as well as with customers. “If you have engaged and loyal employees who want to do what’s right, you don’t ever have to worry about great customer service. I think Alaska Airlines is a wonderful example…. Alaska Air has done a spectacular job … not only values customers, but values their employees. From ticket counter to baggage handlers to folks who clean planes to the flight attendants – they’ve done a magnificent job of ensuring their employees feel like they have a meaningful role in engaging customers. And they hit it out of the park when that group gets together working as a team.” Other tips: Live on the edge, create One Big Life, versus trying the impossible: work-life balance, and constantly change and grow. Solomon gives 60-70 speeches a year. For more information, visit her website at www.cindysolomon.com. ❑

www.akbizmag.com • Alaska Business Monthly • December 2010

– Debbie Cutler Managing Editor

NANA Development, Evergreen Films Partner

N Anchorage in Top 10 of BestPerforming Cities Index

nchorage moved up from No. 40 to No. 8 in the Milken Institute’s Best-Performing Cities Index. The index ranks metropolitan areas on their ability to create and sustain jobs. Researchers found that metros whose economies are heavy on service industries such as health care and on large government employers like military bases have been shielded from the job losses suffered by cities more closely tied to the housing and financial sectors. The Best-Performing Cities Index includes both long-term (five years) and short-term (one year) measurements of employment and salary growth. There are also four measurements of technology output growth, which are included because of technology’s crucial role in creating good jobs and driving regional economies. The index ranks 379 metros and categorizes them as large or small, based on whether their populations fall above or below 245,000. Population changes and modifications in how the census defines certain metropolitan areas added 55 metros to this year’s Index. Because of these changes, last year’s ranking is not available for all metros. Data for all metros is also available on our Best-Performing Cities interactive website. The report and data site are available at www.milkeninstitute.org. ■

ANA Development Corp. and Evergreen Films inked a strategic partnership agreement aimed at expanding Alaska’s film industry. “Our goal is to deliver significant benefits to our shareholders from this investment,” said Helvi Sandvik, president of NANA Development Corp. “Alaska’s new film production incentive program is already generating interest and attracting new film industry activity to the state. This is good for NANA and Evergreen but will also create jobs and economic growth in Alaska. It is so important for our state’s future to strengthen our economy through the creation of new opportunities.” “Our long-term goal is to build an industry that is larger than British Columbia’s,” said Mike Devlin, Evergreen Films chief executive, adding that in 2008, the film and television industry spent $1.2 billion in British Columbia and supported 20,000 jobs. Evergreen Films is an Anchoragebased independent film production studio. The company spent $10 million in Alaska developing a 3-D production studio to use high-tech procedures from the film, gaming and IT industries. The company also operates a production facility in Los Angeles. ■

Southcentral Foundation Pushes Pedals

outhcentral Foundation received a received a silver designation as a Bicycle Friendly Business from the

COMPILED BY NANCY POUNDS League of American Bicyclists. Southcentral Foundation was honored for its efforts encouraging employees to bike to work. Southcentral Foundation has built a locking cage at the Alaska Native Medical Center Anchorage Native Primary Care Center parking garage. Employees may access the cage with their employee badges to store their bikes during the workday. The organization encourages employees to participate in the annual City of Anchorage Bike to Work day. Also, a survey shows more than 15 percent of Southcentral Foundation employees said they used their bikes as alternative transportation in summer. ■

Crowley Building Two Barges

rowley Maritime Corp. is building two double-hulled barges to serve Western Alaska from a homeport of Nome. The vessels are due to be delivered in April and May. The double-hull barges will be used for shallow-draft operations and beach landings for the delivery of fuel and cargo to remote communities in Western Alaska. Although there is no federal or State law requiring Crowley to use double hulls for barges less than 5,000 gross tons, the company believes the change is important. “It’s just the right thing to do,” said Craig Tornga, vice president of Alaska operations. “Our reputation rests on our service to Western Alaska and along the Arctic Coast, and we’re . making the commitment to protect Alaska’s environment by choosing to build double-hull barges versus single hulls.” ■

www.akbizmag.com • Alaska Business Monthly • December 2010

INSIDE ALASKA BUSINESS Tatitlek Corp. Buys GeoNorth

he Tatitlek Corp. has purchased GeoNorth LLC, an information technology firm specializing in geographic information systems, database management, and web design and development. The Tatitlek Corp. is an Alaska Native village corporation based in Anchorage and represents Tatitlek village in Prince William Sound. The company operates subsidiaries in Alaska and nationwide that provide information technology and other services. ■

Princess Awards CIRI Cruise Operator

rincess Cruises chose Prince William Sound Glacier Cruises Wilderness Explorer Glacier Cruise as the Shore Excursion of the Season in Whittier for 2010. The award is based on positive written comments from Princess passengers and other ratings. Prince William Sound Glacier Cruises has now received the award for seven consecutive years. The CRUISE Service Award recognizes local tour operators. C.R.U.I.S.E. stands for Courtesy, Respect, Unfailing In Service Excellence. CIRI Alaska Tourism owns Prince William Sound Glacier Cruises. ■

TTT Subcontractor of the Year

TT Environmental Instruments and Supplies of Anchorage was chosen the U.S. Small Business Administration’s 2010 Region 10 Subcontractor of the Year. Deborah Tompkins owns the company. Tompkins founded

the company as a home-based business in 2002, specializing in environmental instrument rentals, sales, services and samplings supplies. Nominating prime contractor Jacobs Engineering praised TTT Environmental for its service and willingness to meet unusual project needs. Jacobs Engineering handles environmental remediation projects at remote Alaska sites, which often pose challenges. Jacobs Engineering reports that TTT Environmental has helped overcome project obstacles, including “providing equipment in a pinch and in good operating condition.” TTT Environmental supplies products, including meters and pumps, eye-wash stations, hand augers, satellite phones, global-positioning systems, handheld radios, water-level meters, calibration equipment, and groundwater-sampling filters. ■

PCL Construction Services Wins Award

n Alaska project was listed in Northwest Construction magazine’s Best of 2010 Awards. Winners from Alaska, Oregon and Washington are profiled in the December issue of Northwest Construction. The award honors construction and design excellence. PCL Construction Services Inc. led work on the Alaska projects. In the renovation/restoration category, an award honored the Ted Stevens Anchorage International Airport South Terminal Seismic And Security Retrofit Phase 2. PCL Construction Services also was honored for work on a Bellevue, Wash., residential facility and a Veterans Administration center in Tacoma, Wash. ■

GCI Upgrades Rural Wireless Service

eneral Communications Inc. completed an upgrade this fall to its wireless network in rural Alaska to allow customers to surf the Internet via cell phones. GCI customers in rural Alaska can now access the Internet, download applications and check e-mail from certain wireless devices. In 2010, GCI upgraded its cellular network by providing high-tech voice and data wireless services in 109 rural Alaska communities, including the Yukon-Kuskokwim Delta, Arctic Slope, Bristol Bay, Prince William Sound and other areas. GCI will continue to upgrade its cellular network during the next two years, aiming to provide cellular voice and data service to all communities statewide. ■

Agency Earns Design Awards

ere Donovan Creative received several awards at the American Graphic Design Awards competition. Graphic Design USA presented design awards for the Alaska SeaLife Center’s annual report, Bridgetown Printing’s 2009 and 2010 calendars, Fly Right Films’ logo and Gere Donovan Creative’s own Suck-It-Up product packaging. Web site awards recognized the agency’s work for NANA Development Corp. and USTravel, NANA Management Services Lodging’s Grande Denali Lodge and Denali Bluffs Hotel, and CIRI Alaska Tourism’s Kenai Fjords Tours, Prince William Sound Glacier Cruises and Talkeetna Alaskan Lodge. Gere

www.akbizmag.com • Alaska Business Monthly • December 2010

INSIDE ALASKA BUSINESS Donovan Creative is a design and communications firm with offices in Anchorage and Portland, Ore. ■

UAF Receives Energy Grant

he Alaska Center for Energy and Power at the University of Alaska Fairbanks received a $3 million grant from the Department of Energy. The grant funds research on refining winddiesel hybrid energy systems in rural Alaska. The project will include partnerships with the Alaska Energy Authority, the Denali Commission, the Renewable Alaska Energy Project and national laboratories. Several systems pairing wind turbines with diesel power plants operate in Alaska. However, many are not performing as designed due to Alaska’s extreme weather and remote, distributed grid systems. The wind-diesel systems are often expensive due to high gasoline prices in rural Alaska, among other factors. ■

Unalaska Harbor Contract Awarded

he U.S. Army Corps of Engineers Alaska District awarded a $12.5 million contract to Pacific Pile and Marine of Seattle for work at Unalaska Harbor. The project calls for building and installing two floating breakwaters, which would finish harbor construction begun two years ago. The American Recovery and Reinvestment Act and the City of Unalaska funded the contract.

The two concrete floating breakwaters, one 476 feet long and the other 804 feet long, will enclose the new harbor. The floating breakwaters will be constructed in Tacoma, Wash., in 98-foot-long modules, which will be towed across the Gulf of Alaska to Unalaska. ■

Highway Cleanup Ad Wins Accolade

he State Department of Transportation and Public Facilities won an American Association of State Highway Transportation Officials Public Affairs Award in the Best TV Commercial category. The TV commercial promoting Adopt-A-Highway partnerships ran in the Fairbanks area last spring. It was written by transportation department officials and was filmed and edited by Neumuth Advertising. The commercial featured active Adopt-A-Highway volunteers. Northern Region transportation department officials report the commercial helped meet a goal of increasing Adopt-AHighway participation. Volunteers are now cleaning an additional 30 miles of State-maintained highways. ■

Governor Parnell Honors Groups for International Work

ix businesses and organizations received the 2010 Governor’s North Star Awards for International Excellence earlier this year. Honorees are: Seafood Producers Cooperative,

Coastal Villages Region Fund, All Alaska Tours, China Airlines, Institute of the North and the Alaska Sudan Medical Project. Seafood Producers’ Cooperative and Coastal Villages Region Fund received the Governor’s North Star Awards for International Excellence in export award. SPC, which represents Southeast Alaska fishermen, was recognized for quality processing and its efforts to market seafood internationally. CVRF represents villages in Western Alaska and in 2009 completed work on a $40 million salmon-processing facility. CVRF, which opened an office in Japan, now handles direct international marketing. All Alaska Tours was honored for promoting the visitor industry. The company specializes in Alaska tourism for international visitors. The company currently works with more than 270 tour wholesalers in 47 countries worldwide. China Airlines was honored in the transportation sector. China Airlines is Alaska’s only year-round international passenger air service, connecting Alaska to Asia via Taipei, flying to Anchorage for more than 20 years. China Airlines is one of the largest international air carriers operating both cargo and passenger service at Ted Stevens Anchorage International Airport, annually contributing about $8 million to the airport. The nonprofit Institute of the North received an award for scientific exchange, in recognition of its efforts with the eight-nation Arctic Council, focusing on transportation and telecom❑ munications links.

www.akbizmag.com • Alaska Business Monthly • December 2010

VIEW

FROM THE

TOP

COMPILED BY PEG STOMIEROWSKI

Sam Morales CEO, Sequestered Solutions Alaska am Morales came to Alaska with the Air Force from Florida in 1976. He worked in banking for 18 years, then joined Computer Task Group, Alaska, with accountability for the Alyeska Pipeline Service Co. IT outsourcing contract. In 2001, he became vice president and chief information officer for Alaska Communications. Sequestered Solutions Alaska (SSA) was born in his living room in Eagle River that December. Morales, Joe Henri and Lara Baker founded SSA by first developing BrainyRack, a proprietary intelligent rack system. The company began offering hosted services to their first customer in 2005 in Alaska’s only enterprise-level server farm.

Becoming a Global Leader Many services provided by internal IT shops will be delivered via cloud computing, that is, computing as a utility. Today, the amount of data globally is about 0.8 zettabytes, (that’s 800 billion gigabytes!). That represents 62 percent growth since 2008. We intend to be a key player. My role is to position SSA as a global leader in data storage and infrastructure. Better IT SSA has seen a slight upward bump in business. Companies for whom IT is not a forte have realized firms like SSA can provide this more economically and securely, along with service-level guarantees for systems availability. As conditions improve and IT spending levels return to normal, this should increase. Secure Service We treat each customer as our only one. All staff have had FBI background checks. SSA hosts client equipment within its patent-pending BrainyRack enclosure; it runs proprietary software, monitoring power use, air temperature (in and out) and heartbeat monitors, all in its secure-server farm. The Emerging Cloud We see an emerging market in computing as a utility – cloud computing. Although some technological issues remain, SSA already offers this to clients in diverse regions of Alaska. While equipment resides in our secure-data center, clients remotely manage applications and data. A client in Tampa, Fla., is using SSA’s DataCenter Vault to back up data in Alaska.

Realizing Risk Another concern involves lax security – thousands of breaches occur monthly. Corporations and small businesses will need to be held accountable by regulators to minimize these. A primary obstacle is getting an organization to realize the risk. Most don’t know or don’t want to know how easy it is to breach a system. Data security does not always revolve around electronic breaches; recently an SSA sales executive walked into a medical office and had access to all patient paper files. We perform security audits to identify security weaknesses. Clients need to ask questions: Can they restore data? Do they have a business continuity plan, and has it been tested? Do they have a data-retention schedule? Anyone who has patient information will be held to these – and more – regulations of the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH).

Sam Morales

We Own IT All clients, private or government, expect systems to be available, patched, backed up and ready to deliver 24/7. SSA provides data hosting (back up and restore, laptop and desktop encrypted back ups), server hosting, security analysis and audits. All are core competencies, and we can provide better service less expensively than our clients can internally. Our service is geared to clients who don’t want to own their servers, but do want to manage them. We are like the aspirin that you take to avoid IT headaches. ❑

www.akbizmag.com • Alaska Business Monthly • December 2010

EDUCATION

The Missing Link Logistic studies pave way to Alaska’s future BY HEIDI BOHI

ou will never look at the shirt hanging in your closet quite the same way. In fact, behind every garment of clothing you own is an around-theworld journey. Beginning from the bolt of fabric it came from, to the department store it’s displayed in are teams of people, quality laboratories, and transportation providers and technologies that work in tandem with internal and external resources worldwide to get the garment to the right customer in the right market. At the right time in the right condition and for the right price. Academically speaking, it is known as the study of logistics, today more commonly referred to as supply chain management (SCM). For the consumer shopping, it is simply the science of better, faster, cheaper. As the University of Alaska Anchorage (UAA) Logistics Department celebrates its 10-year anniversary this year, there’s not a lot of time for back-patting in a day and age when this industry is quickly becoming the pivotal sector on which both the Alaska and global economy are increasingly relying as it drives the direction of economic development. In fact, keeping up is not the issue – catching up is the biggest challenge as industry focuses on increasing the efficiency of its supply chain more than anything else.

NEED FOR QUALIFIED HELP As the industry grows, so does the need for SCM professionals in Alaska. To add to the urgency, Alaska’s work force does not have the logistics expertise it needs, especially in light of the potential impacts of mega natural

resource development projects, such as the anticipated natural gas pipeline and the development of Pebble mining project. Industry leaders agree in order for the state to grow, it must have skilled people leading the way, which requires training and education in the diverse areas of SCM that will generate economic growth. As it did in its first decade, the department continues to look at ways it can prepare the state’s work force in logistics by growing the program so the discipline is introduced to more students at an earlier age, eventually resulting in professionals with a keen knowledge of what international trade and exporting encompasses and what it means for Alaska’s economy. Transportation economics, technology, finance, global economics, administering contracts, negotiation strategies, procurement, government regulations and cultural considerations are just a few of the sensitive areas setting international logistics apart from the domestic market. “It is an entirely different beast and every import is different,” says Dennis Mitchell, vice president of oil and gas for Lynden and a member of the department’s advisory board.

THE ORIGINS While visiting the University of Nevada at Reno in 1998, former Anchorage Mayor Rick Mystrom was struck by the Center for Logistics Management and the partnership it had created with logistics professionals from northern Nevada to establish warehousing and distribution points for moving material in and out of the Western Region, says Darren Prokop, a logistics professor.

Dennis Mitchell Vice President of Oil and Gas Lynden

Mystrom immediately saw that Alaska was perfectly positioned to develop a similar academic presence that would, at the same time, prepare Alaskans to grow with the state’s industries that required logistics expertise. “He got religion,” Prokop says of Mystrom’s immediate enthusiasm, and when the mayor returned to Anchorage he brought the municipality, the university and a group of corporate sponsors together to develop the idea and come up with seed money to get the program started. In addition to the Municipality of Anchorage, onetime contributing sponsors are Alaska Airlines, The UPS Foundation, Horizon Lines, FedEx, Lynden and Totem Ocean Trailer Express. Each member contributed the same amount of money

www.akbizmag.com • Alaska Business Monthly • December 2010

Photo by Janet Burton

to the $1 million pot, which continues to leverage university funding. Since 2000, when Prokop joined UAA, one of the department’s biggest successes has been establishing its advisory board, which comprises power players in logistics and other industries, many who have graduated with bachelor’s or master’s degrees from the program. The group helps build the academic reputation and is consulted on curriculum development. Many of the companies represented on the board also encourage their employees to enroll in the program. “We’ve given back to our corporate sponsors through consultation, providing student interns and turning out successful graduates who are, or became, their employees,” Prokop says. In addition to the original six sponsors, advisory board companies represented include Carlile Transportation, BP Exploration (Alaska) Inc., Pegasus Aircraft Maintenance, ConocoPhillips, Anchorage Economic Development Council, Graystar Pacific Seafood, Advanced Supply Chain International, the Alaska Railroad, Alaska Truck-

Darren Prokop, Logistics Professor, University of Alaska Anchorage

ing Association and the World Trade Center Alaska.

COMPLEX BUT IMPORTANT The diversity of the advisory board re-

flects the complexity of the industry, while also binding them together because of their dependence on the industry. “They all have one thing in common,” Prokop says. “They are all

www.akbizmag.com • Alaska Business Monthly • December 2010

dealing with issues of time, space and location. But they are all dealing with it in different ways â&#x20AC;&#x201C; whether that means different modes of transportation, different commodities, or different parts of the state and different parts of the world.â&#x20AC;? The department has also maintained a partnership with the Far East State Transportation University of Khabarovsk, Russia, resulting in about 20 students a year coming to UAA from Far East Russian cities to complete their degree in logistics. The partnership with the sister university has many parallels, Prokop says. Both Alaska and Khabarovsk are frontiers in their respective countries, each offering fresh perspectives to each other culturally and academically, and both depend heavily on the logistics industry. Recent issues the group is working on are marketing, accreditation and evaluating various programs, including adding more courses and updating the curriculum to reflect the latest changes in technology. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re giving things a check-up to make sure the program

stays current and weâ&#x20AC;&#x2122;re on the cuttingedge,â&#x20AC;? Prokop says.

DOING WELL In the meantime, the department can ride into the next decade on the heels of several accomplishments. The faculty has published extensive research in the field of logistics and supply chain management, with much of it highlighting the unique activities taking place in Alaska, especially in the area of air cargo. Home to one of the 10 largest air cargo airports in the world, the department is lauded for its series of papers in academic journals discussing the unique set of challenges that comes with this position and what needs to happen for the state to become a strategic commercial port for east-west trade. Currently, the biggest challenge facing Alaska is to continue to provide efficient transportation for the distribution of materials, allowing the state to economically develop, while ensuring diversity beyond natural resource development, Prokop says. In the future, bringing value-added manufacturing to Alaska would be a critical step toward new economic development.

MANUFACTURING IN OUR FUTURE? To make this happen requires leveraging the stateâ&#x20AC;&#x2122;s strategic location. Alaska is nine hours flying time to 95 percent of the industrialized world, but it is difficult to attract manufacturers, Prokop says. Although a lot of raw and semi-finished material is exported, or passes through the state on its way from Asia, whatâ&#x20AC;&#x2122;s missing is the manufacturing component. In the case of the shirt, what this means is that the fabric would be shipped to Anchorage from Asia, where it would then be sewn into completed garments before being shipped to various distribution points. The reason this hasnâ&#x20AC;&#x2122;t been done yet is because there is so much ignorance about the Alaska market, Prokop says, and no business wants to take a chance by being the â&#x20AC;&#x153;first moverâ&#x20AC;? in a new market segment, which presents the risk of opening an opportunity for another business if they are not able to capitalize on their advantage. Developing publicprivate partnerships will ultimately be the way around this, Prokop says. â?&#x2018;

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ December 2010

EDUCATION SIDEBAR

Interactive Map Unlike Any Other Alaska Logistics Map helps business BY HEIDI BOHI

Map courtesy of UAA Logistics Department

or the 19.3 million acres known as the Arctic National Wildlife Refuge – it’s not even a dot on the map. The 800-mile trans-Alaska oil pipeline, the state’s most important engineering feat, is typically indicated by a thin, squiggly line, if at all. And the 3,500-mile Alaska Marine Highway that stops in 33 communities, or the 600-mile Inside Passage – well, let’s just say you need to know what you’re looking for. With the release of the Alaska Logistics Map, Dr. Darren Prokop, professor of logistics at the University of Alaska Anchorage (UAA), hopes this will change.

UNIQUE AND FRESH “No other map like it exists,” he says, describing the level of detail that includes geographic boundaries of significant landmarks such as ANWR, major fishing ports, the Alaska Railroad, Pebble project, and other geographic points of interest and transportation infrastructure that logistics professionals and the business community need to understand. It also shows Alaska’s geographic relationship with Russia and Canada. Since the map’s release, Prokop has received countless words of encouragement from members of the business community who use the map for planning purposes and as a visual aid when making presentations to clients worldwide.

AN IDEA IS BORN The idea for the project came about two years ago when Prokop was working with a student who was trying to show him where ANWR is located. Other than being able to point to the general vicinity on the large Alaska map on Prokop’s office wall, even the student – a lifelong Alaskan – could find no

indication of the refuge’s impressive geographic boundaries. In a state that is one of the most diverse in terms of resources and geography, it didn’t take long for Prokop to come up with an extensive list of other key points of interest business leaders would find useful. When he tried to locate each of them on the map, again and again he came up emptyhanded. He took his list of ideas to a local marketing company whose graphic designers and cartologists added this new level of detail and also showed Alaska’s strategic locale relative to the rest of the world. “It validates the point that Alaska is not all tundra and ice, or oil and fish with a few mines,” Prokop says.

FOR ONE AND FOR ALL Currently, the map is available as a PDF, or the Logistics Department will send a copy to those interested. Since the first edition was released in 2009,

Prokop has continued to add and update information. By May 2011, an electronic version will be posted on the department’s website allowing users to click on various points on the map to be directed to a dialogue box that provides additional details. Prokop also is considering developing a related series of maps providing comprehensive detail on specific locales. Be being able to see Alaska’s strategic geographic advantage relative to the rest of the world, along with the diversity of logistics, Prokop says those thinking of doing business with Alaska will be able to clearly see where opportunities are for expansion and further diversification. “It’s a great educational tool and it makes you think,” Prokop says. “It shows why Alaska is important – is there any other state that has the range and diversity of logistics that we do?” To request a copy of the map, contact Prokop at afdjp1@cbpp.uaa.alaska.edu. ❑

www.akbizmag.com • Alaska Business Monthly • December 2010

EDUCATION

A United Front University of Alaska Anchorage and University of Washington join forces to graduate PAs for work in Alaska BY HEIDI BOHI

Photos courtesy of MEDEX NW PA Program at UAA

etting physician assistants (PAs) to work in rural Alaska is one thing. Keeping them there presents an entirely different set of challenges. Since MEDEX Northwest and the University of Alaska Anchorage (UAA) began collaborating to offer Alaska students PA training in Anchorage, this is expected to change. Although based at the University of Washington (UW) School of Medicine in Seattle, which is also the school that the program is accredited through, after completing the initial six-week quarter from July to August, Alaska students receive all training at the UAA campus and ultimately graduate from that school, too. Up to 20 students may be admitted to the Anchorage training site of the program annually. Applicants are evaluated on their previous clinical experience and their commitment to practice in Alaska, particularly in underserved areas, in addition to their overall academic performance. Students spend their junior year of the PA program at the UAA training site where they receive intense clinical and didactic instruction. Their senior year is spent in training sites primarily in Alaska with additional options throughout the WWAMI region, which includes and is an acronym for Washington, Wyoming, Alaska, Montana and Idaho. WWAMI is a collaborative medical school among universities in these five states and the University of Washington School of Medicine. The clinical placements call for 35-40 hours a week in supervised clinical training and 10-20 hours a week in self-study. After completing the MEDEX PA

Entire MEDEX PA Class 2 students (left to right) – back row: Elizabet Figueroa and Lisa Alexia; middle row: Brianna Nye, Jennifer Robison, Vincent Perino and Steven Bertrand; front row: Allison Johnson, Nanette Fulp, Evelyn James, Anna Frisby, Marie Taylor, Riley Bennett, Jennifer Decker, Jessica Anderson, Dominique Lawrence, Matthew Smith and Jeffrey Stubblefield.

program, students are eligible to sit for the National Certifying Examination for Physician Assistants. UW grants a Physician Assistant Certificate upon completion of the program and UAA awards a Bachelor of Science Degree in Health Sciences.

CLOSING THE GAP In the past, Alaskans who wanted to become PAs were unable to complete their entire training in their home state. Although MEDEX actively recruited Alaskans and used clinical training throughout Alaska, the program required students to complete their didactic year of classes at UW; leaving home

and family for a year was impossible for many potential students. At the same time, the need for PAs continues to be increasingly inadequate statewide and the shortage is only growing, in part due to the downhill effect from the lack of primary care physicians and surgeons practicing in remote communities. The problem is so severe that a State commission recommended Alaska spend considerably more money to lure more qualified doctors to the state. A bill pending in the Legislature, SB 139, mandates paying doctor, nurses and other specified health workers incentives to take certain Alaska jobs,

www.akbizmag.com • Alaska Business Monthly • December 2010

with incentives ranging from $35,000 to $47,000, depending on the position. The Alaska Health Care Commission also suggests the State develop a plan for making better use of “physician extenders” – positions such as nurse practitioners and physicians assistants who do some of the same work as a doctor. At the same time, the commission recommends establishing three new residency programs for advancing medical school graduates. Currently programs for psychiatrists and pediatricians are in the planning stages and will also be partnerships with UW.

SHORTAGE OF DOCTORS The shortage of health care providers statewide, and especially in the Bush, has been a leading concern to State officials and policymakers for decades. Trends cited in recent studies, along with accumulating anecdotal evidence, clearly show despite recent progress in training and placing health care personnel such as physicians assistants, that critical shortages persist. Key primary care occupations – family physician, general internist, nurse practitioner and physician assistant – show vacancy rates between 15 percent and 20 percent. According to the American Academy of Physician Assistants, there are currently more PAs in clinical practice per capita in Alaska than any other state in the country. The profession was also ranked as the third fastest-growing in the country by the U.S. Bureau of Labor Statistics: jobs are expected to grow by 49 percent by 2012, as PAs continue rising up the list of fastest-growing U.S. professions Alaska’s challenges in the distribution of medical services is part of the reason PAs are some of the most recognizable health care providers in remote communities. Besides the sparse distribution of doctors, the need to cut health care expenses further increases the demand for PAs because they do not demand the same salaries, or require the same education levels as physicians, though they can still make diagnoses and treat patients.

GROWING OLD Based on national statistics, this demand is only expected to increase, especially as the population ages:

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www.akbizmag.com • Alaska Business Monthly • December 2010

Dr. Rick Fradl speaking with Michelle & Don Traver (Don is Michelle’s husband) at the White Coat Ceremony.

13 percent of the total population is now age 65 or older. At the same time, 50.7 million Americans (2009) do not have health insurance and PAs are a highly cost-effective means of providing quality health care. As part of their comprehensive responsibilities, PAs conduct physical exams, diagnose and treat illnesses, order and interpret tests, counsel on preventive health care, assist in surgery and prescribe medications. Besides the convenience of going to school close to home, what health care leaders and educators know is the shortage of health care professionals is exacerbated only by the high rate of turnover. Improving retention rates for PAs and others in health care, by allowing Alaskans to get training in their home state, is another advantage of the MEDEX program promising to not only produce more graduates, but also keep them in Alaska instead of losing them to Outside job markets. For newcomers to Alaska, some of the reasons for short tenures among PAs are that they have a difficult time acclimating to the remoteness, harsh climate, rural isolation, geography and cultures. Rural facility administrators also report burnout from staffing difficulties – often the result of other shortages in the work force or inadequate facilities – adds to the challenge of retaining professionals. As they are lost to other states, this increases recruiting costs, which perpetuates the challenges of both recruiting, hiring and retaining of primary care providers in rural Alaska, expenses, which compared to the Lower 48 states, are almost four times higher.

As is the case with most of the UAA’s academic programs, the intent is to deliver education in a way that increases the chances of students staying in Alaska after they graduate. Besides increasing the ability to recruit, these students also become a role model for those in the villages. “There is very strong data that shows that where physician assistant students do their clinical rotations is where they stay,” says John Riley, the MEDEX program coordinator, which is why recruitment efforts often target those in rural communities.

60/30 MEDEX has trained 60 percent of PAs in Alaska over the past 30 years. In the

early ’90s, MEDEX launched a full PA program in Sitka, but after a year the program was cut when the price of oil fell and federal funding went away. In 2009, UAA successfully appealed to the Legislature to make funds available for the new program. Because the second-year clinical training sites had already been established in Alaska, and the existing MEDEX curriculum would be used for the program, establishing the program on the UAA campus moved forward quickly and the first class of 19 PAs entered the classroom in September. The applicant pool has already increased as a result of the all-Alaska program becoming available and Riley expects the number of applicants to double quickly for the two-year program. Students who complete the program earn a Bachelor of Science, Health Sciences degree. “I get e-mails every day from those who are interested in the program but couldn’t go to Seattle,” Riley says. The 2011 class is 15 students and will be the first batch to graduate. The 2012 class will comprise 17 students. Jenny Davis will be one of the graduates from this year’s class and Riley is her advisor. She is currently doing her rotations in Anchorage where she plans on working after graduation. “I’m so excited that I’m in the moment and doing something that is really needed ❑ here,” she says.

Pictured is the entire MEDEX PA Class 1 student body, but only the first row is discernable: (front, left to right) Laura Luebke, Cyril Joseph, Hakon Hanson, Garrett Gray, Michelle Trevor, Even Evanson, Katie Copps-Wilson, Heather Burnell. www.akbizmag.com • Alaska Business Monthly • December 2010

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AGC 2010 CONSTRUCTION AWARDS Roger Hickel Contracting Inc.

Courtesy of Roger Hickel Contracting Inc.

AGC lists top construction projects and safety recognition

Courtesy of Kiewit Building Group Inc.

Courtesy of Alcan General Inc.

Alcan General Inc.

Kiewit Building Group Inc.

he Associated General Contractors of Alaska (AGC), the state’s largest construction organization, named its top construction projects, safety programs and individuals at the association’s annual conference in Anchorage Nov. 3-6. The prestigious Hard Hat Award, given annually to an AGC member who has demonstrated exemplary service to the association, the community and the industry, was awarded to Terry Fike, AGC president in 2005 and former owner of Alcan General Inc. In the Alaska USA Insurance Brokers-sponsored Excellence in Construction Awards, the following firms won awards in “Meeting the Challenge of a Job.” 1 Buildings Under $5 Million ■ – Roger Hickel Contracting Inc. for Walgreens’ Dimond and Creekside stores 2 Buildings Between $5 Million ■ and $15 Million – Alcan General Inc. for Anchorage Museum Expansion-Planetarium and Imaginarium and reroof 3 Buildings Over $15 Million ■ – Kiewit Building Group Inc. and Cornerstone Construction Co. DBA Kiewit/Cornerstone JV for Veterans Administration Outpatient Clinic and Regional offices

www.akbizmag.com • Alaska Business Monthly • December 2010

AGC 2010 CONSTRUCTION AWARDS 5

Denali Drilling Inc.

Coldfoot Environmental Services Inc.

QAP

Courtesy of QAP

Courtesy of Coldfoot Environmental Services Inc

Courtesy of Denali Drilling Inc.

Roger Hickel Contracting Inc.

Courtesy of Roger Hickel Contracting Inc.

4 Transportation, Marine, ■ Heavy, Earthmoving – Over $3 Million – QAP, Tudor Road and Lake Otis Parkway intersection improvement 5 Transportation, Marine, ■ Heavy, Earthmoving – Under $3 Million – Roger Hickel Contracting Inc., ASD Mears Middle School site improvements 6 Transportation, Marine, ■ Heavy, Earthmoving with Specialty Contractor as Subcontractor – Denali Drilling Inc. for Port of Anchorage North Extension 7 Transportation, Marine, ■ Heavy, Earthmoving – with Specialty Contractor as Prime Contractor – Coldfoot Environmental Services Inc. – exterior abatement and painting of Alaska Command building

www.akbizmag.com • Alaska Business Monthly • December 2010

AGC 2010 CONSTRUCTION AWARDS 8

Alaska Trailblazing Inc.

8 Specialty Contractor – Vertical ■ Construction with Specialty Contractor as Subcontractor – Alaska Trailblazing Inc . for Anchorage Museum expansion 9 Sustainability in Construc■ tion – American Marine Corp. – Ship Creek Dam in-service inspection, repair and dredging

In the Marsh & McLennan-sponsored Excellence in Safety Awards the following won top honors: ● Small Contractor – PCL Construction Services Inc., Anchorage ● Medium Contractor – Kiewit Building Group, Anchorage ● Large contractor – Davis Constructors and Engineers, Anchorage ● Individual – Kirk Foster, American Marine Corp., Anchorage ● Associate Member – J.D. Steel Company Inc., Palmer

Photo by Danny Daniels

AGC also announced the following other award winners: ● Stan Smith Volunteer of the Year: Trisha Stockinger, Willis, Anchorage ● Supplier of the Year: Dave Johnson, Anchorage Sand and Gravel ● Associate of the Year: Fountainhead Development Inc., Fairbanks. ❑

Courtesy of American Marine Corp.

American Marine Corp.

The Associated General Contractors of Alaska is a 650-member statewide association for companies in the construction/contracting business, including buildings, highways/ utilities, heavy industrial and specialty areas. Construction is the thirdlargest industry in Alaska, contributing more than $7 billion to the Alaska economy and paying the second highest wages with more than 21,000 in the work force.

www.akbizmag.com • Alaska Business Monthly • December 2010

As a tugboat captain who helps escort and assist 190,000-ton oil tankers through the waters of Prince William Sound, Marcia understands the importance of safety to people, property and the environment. So does Crowley. That’s why we operate some of the world’s most powerful and technologically advanced tugs in this challenging and pristine environment. Crowley’s investment not only keeps our employees safe on the job, but also protects the people and environment of Prince William Sound. Our commitment extends to every community where we do business. For service in your area, call Crowley statewide at 1.800.977.9771.

Liner Shipping U Worldwide Logistics U Petroleum & Chemical Transportation U Alaska Fuel Sales & Distribution U Energy Support Project Management U Ship Assist & Escort U Ship Management U Ocean Towing & Transportation U Salvage & Emergency Response

AVIATION

Security Aviation Providing Alaska-style business class BY PEG STOMIEROWSKI Photos courtesy of Security Aviation

Two of Security Aviaition’s fleet of four Cessna Conquests. These pressurized, twin-engine turbo prop aircraft cruise at more than 300 mph. They are ideally suited for Alaska climate and challenging runway conditions.

laska has a substantial appetite for air charter service and corporate air charters are poised to take advantage of recovering economic conditions. “There will always be demand for corporate charter service, and that demand fluctuates with business development,” said Jason Ward, senior vice president, sales and marketing, for Security Aviation, based at Ted Stevens Anchorage International Airport. “Corporate charters are a way of doing business up here,” he says. “How busy Security Aviation is, is a litmus test of the demand for growth and development in the state of Alaska – if we’re doing a lot of site visits, businesses are doing estimates and bids are being made on construction projects.”

This year, events in the Gulf of Mexico led to adverse reactions in Washington, D.C., with unfavorable consequences to Alaska businesses. “Certainly, we would have expected more business had the current administration not shut down offshore drilling,” Ward said. “It’s had a big impact up here. Overbearing regulation on a number of levels regarding natural resource development managed to curtail what corporations had planned for Alaska this year.” Security Aviation has been in business for 25 years; its primary business consists of corporate charters and contract work for corporations and government agencies. In one of their twin-engine turbo props, Ward

said, “It takes two hours to fly to the oil fields on the North Slope.” Security’s fleet includes six aircraft: four Cessna Conquests, seating up to nine passengers; and two twin-engine Piper Navajos, seating up to eight. “Security Aviation anticipates having a light jet on their certificate by the first of the year,” Ward said. “The nine passenger jet will be a nice compliment to our existing fleet. The jet will allow us to reach out and offer true non-stop jet service to paved runways throughout Alaska, Canada and the Lower 48, including the Hawaiian Islands.” The company does fly to gravel strips and remote locations, Ward says, but fishing lodge and tourism flights are not the primary source of business.

www.akbizmag.com • Alaska Business Monthly • December 2010

“By catering to safety-sensitive companies and the corporate side of the house, we strive to set ourselves apart from Bush flying companies,” Ward says. “We’ve maintained a level of safety unprecedented in the state. All our pilots are career Alaska pilots with high flying time – high Alaska time.” To fly for Security, pilots must have a minimum of 4,000 hours – of that, 1,000 hours must be multi-engine time, 1,000 hours instrument flying, and 1,000 hours Alaska time. The company provides air charter service for several State and federal agencies, including contracts with the Defense and Interior departments and the Federal Aviation Administration. Security’s aim is to serve on-demand needs around-the-clock. “Twenty-four seven, you can call us and have an airplane in the air within an hour,” Ward says. “When mounts Spur and Redoubt were erupting we were flying the observers around the volcanoes – along with relaying status reports back to the major airlines as to ash directions and altitudes in order for them to make the decision to launch their aircraft from Seattle to Anchorage.” In addition to its attention to the highest level of safety, Security Aviation is sensitive to appearance and maintenance concerns, Ward says. Its facilities are comfortable and private, and its aircraft interiors are designed for the needs of busy executives who might want to continue working en-route to destinations. Small-group seating allows meetings to be conducted before, during and after flights. The aircraft may also be re-configured to accommodate both passengers and cargo. With the rising costs associated with commercial air travel, especially involving last-minute arrangements for groups as large as nine passengers, Alaska businesses, Ward said, are finding that charters represent a reasonable executive travel tool. In addition to the convenience factor, air charter becomes cost-effective over commercial airlines when booking several people last minute. Flying commercially also might require spending the night, adding time and other expenses such as meals and lodging. Another benefit is private air charters also allow you to www.akbizmag.com • Alaska Business Monthly • December 2010

sėĥĢ İĪĞįı ĴĞĶ ıĬ ğĲĦĩġt • Pre-engineered steel buildings • Warehouses • Shops • Hangars • Bridge cranes • Riding arenas • Insulated foam panels

ĖĲĭĭĩĶĦīĤ Ğīġ ĢįĢĠıĦīĤ İıĢĢĩ ĞĠįĬİİ ĄĩĞİĨĞ ģĬį ĶĢĞįİ

visit multiple locations in a day and the aircraft is ready to go when you are. Corporate charters provide privacy as well. Business strategies being discussed on private charters might not be able to be discussed openly on a commercial flight. Security Aviation operates from a private hangar at the Anchorage airport, thereby eliminating the time spent at the commercial terminal waiting in lines for ticketing (there are no tickets), there are also no parking fees, security lines or boarding and deplaning through numbered gates. Best of all - no lost bags. Day charters are predominant, Ward said, and longer charters might involve taking Alaska Native corporation board members to a remote community for an annual shareholder meeting, which could last two or three days. “Bringing the village to Anchorage just isn’t cost effective,” Ward said. “We never know what the next day holds,” he said, including what the weather might be and who is going to be traveling. Many flights, he said, involve last-minute meetings, sensitive materials or parts delivery for cargo flights. Many involve the unexpected or the non-routine, and are tailored to customer need. “Usually if there’s a celebrity in town,” he said, “they will get directed our way.” Security’s client roster includes defense, major oil and gas companies, oil field support companies, fishing, mining, utilities and natural resources firms, major engineering companies and Native corporations. Security Aviation also has several State and federal government agencies using charters for contract work. “While Alaska’s economic future hangs on decisions coming out of Washington, D.C., we at Security Aviation continue to look for new opportunities in which to grow our company and most importantly – provide our customers with the level of safety, service and response times they have grown to expect from Security Aviation,” said Stephen “Joe” Kapper, the ❑ company’s owner. Alaska Business Monthly staff contributed to this article.

www.akbizmag.com • Alaska Business Monthly • December 2010

AVIATION

SIDEBAR

Seating in Security Aviation’s Cessna Conquest is hardly typical for commercial air flights. Besides privacy, another amenity charter services can offer is comfortable and flexible small-group seating, so meetings can more easily be conducted before, during and after flights.

Alaska’s Aviation Habit BY PEG STOMIEROWSKI

ust to illustrate how strong the state’s aviation habit is, there are six times as many pilots and 16 times as many aircraft per capita here as in as the rest of the country, according to the Alaska Department of Transportation and Public Facilities (DOT&PF). Alaska’s 591,004 square miles, that office says, are served by three flight standards district offices, three automated flight service stations, 14 auxiliary flight service stations, 120 aviation weather camera sites, 163 automated weather monitoring systems, eight Federal Aviation Administration (FAA) control towers and four military towers, two terminal radar approach control facilities and an air route traffic control center. DOT&PF’s Division of Statewide Aviation oversees hundreds of rural airports in addition to Ted Stevens and Fairbanks international airports, which serve 5 million and 1 million passengers a year, respectively, and host 522,000 to 118,000 flight operations. There are 10,803 registered aircraft, 289 publicuse land-based airports, 42 heliports and about 730 recorded landing areas, which doesn’t begin to address the number of lakes and gravel bars where small planes set down. DOT&PF prepares policies, procedures and programs to develop, construct, operate and manage the rural public airports. In general, it figures the aviation industry contributes $3.5 billion to the state’s economy and provides 47,000 (or 10 percent) of Alaska’s jobs. Joy Journeay, executive director of the Alaska Air Carriers Association (AACA), said there are about 10,649 active pilots in the state, including more than 2,800 who fly commercially, and about 304 certified carriers providing scheduled and on-demand services. www.akbizmag.com • Alaska Business Monthly • December 2010

EMPLOYER PERKS

Photos by Jan and Jim Thurston

Stillpoint Lodge, located across from Homer in Halibut Cove, is a beautiful potential destination point for businesses wanting to give their employees a restful setting while conducting conferences or retreats. Above is a view of the Stillpoint Lodge Complex and cabins, and inset is of the Main Entrance.

Employee Retreats Businesses appreciate results BY JODY ELLIS-KNAPP

continuing education to yoga to cooking classes. All geared toward improving morale and promoting a stronger team, an individual business can easily set up a retreat or conference for employees, focusing on whatever area they deem most important. It may be set up as a yearly review of the company’s status, with a review of policies, procedures and efficiency. Conducting this type of conference in a setting outside regular work hours or in another location can often make for more frank and open discussions amongst workers and supervisors. Employers can also benefit from setting up retreats as “team building” seminars, providing employees an opportunity to become more cohesive and communicate with other workers in a positive way, as well as setting up sessions with brain-storming and input from all work groups.

www.akbizmag.com • Alaska Business Monthly • December 2010

n today’s tough economic times, businesses often cut corners in the most obvious areas. Extra training, vacation perks and employee conferences may become things of the past in order for a business to keep their people working. While it makes sense to cut back on nonessentials, one perk a business might want to consider keeping or implementing is company retreats and conferences. While it might seem wasteful or too timeconsuming, research indicates employees who participate in retreats, workshops or off-site conferences may become a more close-knit team of workers, and be more likely to generate stronger morale, focus and creativity. Bringing employees together outside of their direct work group is not a new concept. Many larger corporations conduct yearly employee retreats, offering everything from

ON-SITE One Alaska company placing a high priority on employee relations, health and wellness is Southcentral Foundation, an Alaska Native-owned nonprofit health care organization. Employing more than 1,400 people in 65 various programs, Southcentral Foundation understands the importance of making sure their employees are given as many opportunities as possible for personal growth and development. While they do not offer specific off-site retreats or conferences, their on-site programs provide educational, health and moraleboosting incentives for employees. According to Kim Marcucci, acting public relations director, Southcentral’s Health Education Department offers a variety of programs, events and services for employees, including pilates, drumming for life, tai-chi, yoga, wellness luncheons and fun

walks. The company has an Employee Recognition Program called “Living our Values, Honoring our Successes, Express our Thanks” providing annual awards to exceptional employee contributions. The company also offers a five-day relationship and communication workshop. The “Core Concepts” workshop is held on-site and attended by every employee. The Southcentral Foundation’s Health and Wellness Center is staffed by health educators, exercise specialists and a certified diabetes educator, catering not just to owners, but employees and their family members. The Wellness Center features an exercise studio and a variety of health-centric classes, counseling and educational demonstrations, all available to staff, family members and customer owners. Marcucci says Southcentral also focuses on team sports such as volleyball, soccer and basketball. “This helps build strong relationships between employees and departments,” she says. “In fact, our basketball team was so popular with employees, we have our own league instead of just a team!” Southcentral Foundation also hosts an annual Fun Run and Family Wellness Festival, offering free admission to the general public and employees. The company’s Development Center coordinates an annual “All Staff” event where operations are shut down and the entire work force participates. This year’s program is Nov. 16 through 19. Learning objectives include creating an engaging work environment, celebrating Southcentral Foundation’s recent successes and improvements, and providing connection and communication with other employees in a meaningful way. “We continually monitor customerowner and employee satisfaction in the workplace through surveys,” Marcucci says.

employees a restful setting while conducting conferences or retreats. The lodge provides 12 cabins and can accommodate up to 22 guests, has an onsite chef preparing healthy gourmet meals, and offers a meeting center with a drop-down 100-inch screen, surroundsound and Wi-Fi Internet access. “We don’t do a lot of business conferences or retreats, but we would love to do more,” says Jan Thurston, Stillpoint owner. “We’ve had local chefs here conducting cooking classes, and they were very impressed with our facilities. We

are set up perfectly for employee conferences and seminars.” Jan and her husband, Jim, have run the lodge seven years, bringing guests over from Homer in their 32foot catamaran. They keep a full staff on hand and are open all summer, with limited openings for special events in the winter. “The great thing about our lodge is that employees could bring family members, who could enjoy some of our activities while the employee is busy with meetings,” Thurston says.

OFF-SITE While Southcentral Foundation provides on-site programs for employees, there are opportunities within Alaska for off-site employee seminars and retreats. Stillpoint Lodge, located across from Homer in Kachemak Bay, is a beautiful potential destination point for businesses wanting to give their www.akbizmag.com • Alaska Business Monthly • December 2010

Guests of Stillpoint Lodge enjoy fine dining with a scenic view.

Activities offered at the lodge include kayaking, hiking the nearby Grewingk glacier, fishing and flight-seeing. For those businesses that might want to explore setting up health and wellness retreats for their employees, a yoga retreat would be an excellent choice. Lynne Minton, former owner and founder of Inner Dance Yoga Studio in Anchorage, has been organizing and operating yoga retreats for many years. Minton started as an instructor back in the early 1980s, purchasing Inner Dance in 1982. She sold the studio in 2008 and now conducts retreats and seminars at locations all over the country, including Hawaii and Thailand.

Minton says she has seen a direct benefit to yoga retreats, and while she has not run company-sponsored retreats, she has provided retreats for smaller groups of people who work together and go on their own. “I see the retreats as really bonding a group of people. You see a different side of each other outside of the workplace,” she says. Minton suggests businesses seek-

ing to organize a retreat find an allinclusive, resort-type space to keep everyone in one spot. “Its more restful if the retreats can be held in a place where people aren’t getting in cars or going on long tours. If everything they need is right there, they are more likely to stay and relax,” she says. Touting a five- to seven-day stay as perfect, Minton says she sees people leaving the retreats fully relaxed and refreshed. “When you’re relaxed,” she says “You are more creative. It opens up a new level of inspiration. I believe it also helps create more harmonious relationships in the workplace, which makes it well worth it for business owners to consider.” Setting up retreats and conferences for employees might seem like an expensive, unnecessary venture for business owners. But the benefits of providing such perks can far outweigh the cost. Employers can conduct something as simple or as complicated as they want and as fits in their budget, from exotic locales such as Thailand to a simple afternoon seminar outside the office. In the end, it may result in employees who are refreshed, rejuvenated and loving their job – something any business owner can appreciate. ❑

NEED MORE INFORMATION? Southcentral Foundation 4501 Diplomacy Drive Anchorage AK 99508 907-729-4955 www.southcentralfoundation.com Stillpoint Lodge Box 6448 Halibut Cove, AK 99603 907-296-2283 www.stillpointlodge.com Lynne Minton Yoga 907-248-1965 LynneMinton@gmail.com www.lynneminton.com

300

The Stillpoint Lodge main activity area.

www.akbizmag.com www akbizmag c • Alaska Business Monthly • December 2010

RIGHT MOVES SOUTHCENTRAL FOUNDATION

James Segura was one of 12 honorees to receive the National Indian Health Board Area/Regional Award in Washington, D.C. Segura is chairman of the Southcentral Foundation board of directors and was honored for 30 years of service to Southcentral Foundation. Ileen Sylvester received the Enduring Spirit Award from the Native Action Network. The award recognizes four Native women who have served their community. Sylvester has worked as Southcentral Foundation’s vice president of executive and tribal services since 1998.

COMPILED BY NANCY POUNDS – a population who often struggle to find primary care physicians accepting Medicaid. Neubauer was in private practice in Anchorage from 1982 to 2007, and then served as chief of service for the Internal Medicine Department of the Alaska Native Medical Center for the past three years.

UNIVERSITY OF ALASKA ANCHORAGE

BRADLEY REID + ASSOCIATES

Stabenow

Guse Hayes . Amy Guse was promoted to management supervisor at Bradley Reid + Associates. Guse has worked at the advertising and public relations agency since 2003. Jeremy Hayes was promoted to management supervisor. Hayes has worked for the firm since 2008, handling Alaska and national client projects, from print and television to online advertising.

DOYON EMERALD

Troy Johnson was appointed president and general manager of Emerald Consulting Group LLC dba Doyon Emerald. The engineering and professional services firm has offices in Anchorage and Alexandria, Va. Johnson most recently served as chief executive of the Aleut Corp.

PROVIDENCE HEALTH & SERVICES ALASKA

Dr. Richard Neubauer joined Providence Health & Services Alaska to lead a new primary care clinic for patients older than 55. The clinic is schedule to open in January. The clinic aims to serve older Alaskans receiving Medicaid federal health care assistance

O’Neill

Leary

The University of Alaska Alumni Association honored three Alumni of Distinction in October. Author Dana Stabenow received the UAA Alumni of Achievement Award. Stabenow has penned science fiction, mystery and suspense/thriller works, often set in her home state of Alaska. She earned a Master of Fine Arts from UAA in 1985. Her 27th novel, “Though Not Dead,” is due out in February. Gloria O’Neill received the UAA Alumni Humanitarian Award. O’Neill has served as president and chief executive of Cook Inlet Tribal Council since 1998. Under her leadership, CITC’s budget has increased from $8 million to $46 million, and its staff has expanded from 70 to 300 employees. She earned a bachelor’s degree in sociology from UAA in 1996. Linda Leary received the UAA Alumni Emerging Leader Award. Leary is president of Carlile Transportation Systems. She received a master’s degree in global supply chain management from UAA in 2004.

NANA REGIONAL CORP. INC.

Michael Tickett was appointed to the NANA Regional Corp. Inc. board of directors. Tickett is a current member of the Shungnak Indian Reorganization Act Council Executive Committee and the NANA Regional Council of Elders.

CALISTA CORP.

The Board of Directors of Calista Corp., the ANCSA Regional Corporation for the Yukon/Kuskokwim Delta Region, appointed Andrew Guy, Calista’s executive vice president and general counsel, as the new president and Guy G CEO. Guy is a 1985 graduate of the University of Alaska Fairbanks with a degree in business administration, a 1995 graduate of the University of Colorado Law School, and a member of the Alaska Bar Association. He is a shareholder of Calista and Napaskiak Inc.

STATE GOVERNMENT

Gov. Sean Parnell appointed Thomas Nave to the Juneau District Court. Nave previously worked as a private lawyer in Juneau with an emphasis on criminal defense, personal injury and legal malpractice.

PDC INC. ENGINEERS

Colin Fay earned the Leadership in Energy and Environmental Design-Green Associates certification. Fay works in PDC Inc. Engineers’ mechanical engineering department in Anchorage.

Fay

FIRST NATIONAL BANK ALASKA

Mike Scott joined First National Bank Alaska as a mortgage loan originator. Scott previously worked in the bank’s special credits section. He has four years of banking experience, including a year as a management associate at First National.

www.akbizmag.com • Alaska Business Monthly • December 2010

S Scott

RIGHT MOVES

NORTHWEST STRATEGIES

Saba Adley was hired as media director at Northwest Strategies. Adley most recently served as the lead in-house media planner/buyer at the Nerland Agency.

RESOURCE DATA INC.

B Berry Miller Mill Ally Berry was hired at Thompson & Co. as account coordinator. Berry works out of the firm’s New York City office. She is responsible for creating travel itineraries for media, coordinating press trips and developing story ideas to promote Alaska tourism. Suki Miller also was chosen as an account coordinator for the Anchorage office. Miller has worked as a pension administrator at Alaska Pension Services.

AMERICAN ACADEMY OF FAMILY PHYSICIANS

Tasha Newell joined Resource Data Inc. as a geographic information systems programmer/analyst. Newell earned a bachelor’s degree in geography, environmental resource management from Western Washington University. Nicole Rogers was hired as a project manager/senior analyst. Rogers has managed 30 technology projects in the past eight years. Jeff Ober and Ursula Sfraga were hired as a project managers/senior analysts in Juneau. Ober has 22 years experience as a software development professional. Sfraga has five years experience as a senior interactive project manager at an international retailer.

ALYESKA RESORT

G Gregersen

Fleetwood

Julaine Fleetwood was hired at RIDOLFI Inc. to support client services and business development. Fleetwood has 20 years of experience in organizational management and marketing for the engineering industry in Alaska and Washington.

UNIVERSITY OF ALASKA FAIRBANKS

History Professor Carol Gold has been appointed the Arthur T. Fathauer Chairwoman in History at the University of Alaska Fairbanks. She has worked in the UAF history department since 1980.

EHS-ALASKA INC.

Stephen Littlejohn was promoted to project manager at EHS-Alaska Inc. in Eagle River. He joined the firm in 2006 and handles design of demolition and restoration phases of buildings and surveys for hazardous materials.

ALASKA STATE CHAMBER OF COMMERCE

RIDOLFI INC.

Dr. Barbara Doty was elected to a three-year term with the American Academy of Family Physicians board of directors. Doty is a practicing family physician in Wasilla and senior partner at Providence Matanuska Health Care. Tysen Gregersen was promoted to director of facilities and grounds at Alyeska Resort where he has worked since 2002. He has more than 15 years of construction experience. Gregersen helped lead the recent $8 million renovation at the resort.

of Atkinson, Conway and Gagnon; Doug Smith, president of LRS Corp.; and Scott Stewart, president and co-founder of Arctic Controls. Re-elected board members were: Dave Matthews, Price Gregory Inc.; Dallas Rhodes, M-I Swaco; and Denette Romano, Wells Fargo Advisors. Maynard Tapp of Hawk Consultants was elected emeritus director. Tapp served four three-year terms on the Alliance board.

Frank Flavin/Flavin Photography

THOMPSON & CO. PUBLIC RELATIONS

SPONSORED BY NORTHERN AIR CARGO

ALASKA SUPPORT INDUSTRY ALLIANCE The Alaska Support Industry Alliance elected new directors: Reed Christensen, general manager of Dowland-Bach Corp.; Bob Dickson, member

(L-R) Alaska State Chamber Past Chair Wendy Lindskoog presents Helvi Sandvik with William A. Egan Outstanding Alaskan of the Year Award. The Alaska State Chamber of Commerce honored several Alaskans and organizations at its 51st Annual Conference and Trade Show. Ann Ringstad received the 2010 North Star Award, honoring her work developing the Alaska Business Week program to stress the importance of business to Alaska students. Helvi Sandvik received the William A. Egan Outstanding Alaskan of the Year award. Sandvik is president of NANA Development Corp. The Greater Soldotna Chamber of Commerce was honored as Chamber of the Year. Microcom was chosen to receive the Bill Bivin Small Business of the Year Award. Microcom, owned by Sandra Blinstrubas and Chuck Schumann, has more than 60 employees with offices in Anchorage, Wasilla, Fairbanks and Juneau, and has expanded its opera❑ tions to Hawaii.

www.akbizmag.com • Alaska Business Monthly • December 2010

ALTERNATIVE ENERGY

Powering Alaska Renewable alternatives BY SUSAN HARRINGTON ASSOCIATE EDITOR

Photo by K.L. Wallace/Courtesy of the Alaska Volcano Observatory U.S. Geological Survey

Geothermal energy is an abundant undeveloped renewable alternative for Alaska. Summit craters on the north-facing edifice of Fourpeaked volcano emit steam. View is looking from west to east.

aste not, want not. When looking at the possibilities for alternative energy in Alaska, the most viable immediate solution is to conserve – in fact it’s a State goal to increase energy efficiency 20 percent by 2020. Weatherization, heat recovery and energy efficiency are all on the conservation menu. The State remains committed to a statewide goal of generating 50 percent of electric needs from renewable and alternative energy sources by 2025 – twice the current amount. This infrastructure development desire is expensive and coupled with transmission hurdles. Communities and organizations look to federal and State grants and tax credits for renewable energy dollars in efforts to beat the high cost of generating rural electricity and overcome the fear of natural gas shortages.

GENERATING ELECTRICITY The Alaska Energy Authority, in the “Renewable Energy Atlas of Alaska,” cites gas, oil and petroleum residuals as

accounting for 73 percent of statewide electrical generation, with hydro at 24 percent and coal at 3 percent. Wind, solar and biomass generate just 0.2 percent of electricity in Alaska. Eighty percent of the electricity generated in Alaska (1,340 megawatts) is along the Railbelt from Fairbanks to the Kenai Peninsula – 70 percent of that is from natural gas generators, with Bradley Lake and Eklutna providing some hydro power. Half a dozen separate utilities each connect to the Railbelt Intertie to generate electricity up and down the grid. Some sort of consolidation of these utilities is seen as necessary in the long-term. With its remote, isolated and farflung communities, Rural Alaska lacks a unified power grid, using diesel generators in each community. Although wind and hybrid wind-diesel generation is increasing, AEA maintains diesel will continue to account for the majority of power generation for these roadless areas isolated by terrain and distance. Southeast relies on hydroelectric power

for the majority of its electrical generation with diesel generator supplementation and backup. AEA has identified 227 non-Railbelt communities and outlined least-cost scenarios for power generation. AEA’s “Alaska Railbelt Regional Integrated Resource Plan (RIRP) Study,” prepared by Black & Veatch Corp., analyzed the current electrical generation situation and identified $7.2 billion dollars worth of transmission infrastructure upgrades over 20 years to develop large hydroelectric, geothermal and wind projects for the Railbelt as the most cost-efficient methods to cut fossil fuel use. In “Alaska Energy Pathway: A guide for Alaskan communities to utilize local energy resources,” the AEA sets out a plan of guidance and encourages communities to explore least-cost ways of generating power. AEA has amassed a large body of work over the last few years quantifying and qualifying Alaska energy benchmarks, projections and potential. The information is available in various formats

www.akbizmag.com • Alaska Business Monthly • December 2010

and accessible at www.aidea.org/aea/ and www.akenergyauthorty.org. Brief overviews of the possibilities for development of wind, geothermal, tidal, hydro and biomass technologies follow, with much of the information gleaned from AEA literature.

WIND Wind turbines are cropping up all over the state, many successfully displacing some of the diesel used to generate electricity. In Kodiak, three wind turbines generate 4.5 megawatts, displacing half the diesel used to generate electricity on the island, which is 80 percent hydroelectric powered. A Cook Inlet Region Inc. subsidiary wants to generate about 50 MW of electricity with about three dozen wind turbines on Fire Island west of Anchorage, which the company reports will power 17,000 homes. If the CIRI subsidiary can get a power-purchase agreement with a Railbelt utility before the end of the year, it can qualify for $70 million in State and federal grants for the project, which, with transmission and integration costs could reach $180 million. So far, utilities have been reluctant to sign, citing transmission and integration issues. It’s not so much “getting off the grid” any more as it is figuring out ways to “get on the grid” when deploying alternatives. In Anchorage, Partusch Plumbing and Heating became the first business in Anchorage to successfully deploy wind turbines to power its business and connect to Chugach Electric Association to sell excess power to the utility. In January, the Regulatory Commission of Alaska (RCA) adopted a statewide Net Metering tariff regulation allowing net metered connections on the Railbelt utilities and any other utilities with more than 5 million kilowatt hours of annual sales. The rules became effective in June and limit individual customer system size to 25 kilowatts, allow credit for excess power at the retail rate with monthly billing, and limit the total capacity of net metered systems to 1.5 percent of the utility’s annual retail demand.

GEOTHERMAL Naknek Electrical Association wants to develop a $200 million 25 MW geothermal project with 450 miles of www.akbizmag.com • Alaska Business Monthly • December 2010

TIDAL

companies have applied for Federal Energy Regulatory Commission permits.

HYDRO Alaska has about 423 MW of installed hydroelectric capacity, and where it is the primary resource, diesel is the usual backup. TDX Power Inc. wants to study the possibility of developing the $1.6 billion 330 MW Chakachamna Hydroelectric Project near the base of Mount Spurr 42 miles west of the Beluga power station across Cook Inlet from Anchorage. Instead of damming up the lake, a 10-mile, 25-foot diameter tunnel could divert water from the Chakachatna River to a powerhouse on the McArthur River for distribution and transmission. A larger dam-based hydro project on the Susitna River is not a possibility at this time.

Cook Inlet has the second highest tides in North America and with that ebb and flow comes the potential to create an Shaded relief map of Akutan Island. enormous amount of electricity with transmission lines to bring power to ocean current and tidal power. Little 25 communities in the region by tap- Susitna Construction Co. and Blue Enping into the source of the Valley of ergy Canada have a plan for a tidal Ten Thousand Smokes beneath Katmai. The cooperative filed for Chapter 11 bankruptcy in September to protect itself from creditors when, after a successful well was drilled to more than 10,400 feet, compliance with Statemandated oil and gas regulations created cost overruns and drilling mud problems, which have temporarily halted the project, pending cash flow. If the cooperative is able to secure funding, in addition to generating electricity, the utility also could provide hot water heating, develop spas, greenhouse projects and other related businesses, creating a new era of selfsufficient sustainability to the region. North of Fairbanks, on a much smaller scale, Chena Hot Springs operates the only geothermal power plant in Alaska. Other possibilities for Looking northwest at Chakachatna River cutting into Spurr debris-avalanche geothermal power generation include deposit, with Crater Peak in the background. Pilgrim Hot Springs, 50 miles from Nome; Makushin near Dutch Harbor BIOMASS – WOOD AND WASTE on Unalaska; Hot Springs Bay, 10 miles fence or tidal bridge across Turnagain from Akutan; Manley Hot Springs Arm in Cook Inlet, using the Davis tur- CH P technology, combined heat on the Tanana River in the Interior; bine model to generate electricity with and power generation, is another aland Mount Spurr, west of Anchorage distribution to Homer Electric Associa- ternative with wood as the fuel most about 50 miles across Cook Inlet. Of tion at Point Possession and Chugach often cited. Biomass power generathese, Mount Spurr has the greatest Electric Association at Raspberry Road. tion also uses paper, fish processing potential for commercial-scale power The $2.5 billion, 1,200 MW project byproducts and municipal waste. generation. The State held a geother- could require a total transformation of Waste to energy (WtE) generation mal lease sale in September 2008 and the Railbelt Intertie to get on the grid. is emerging and gaining interest. As Ocean Renewable Power Co. with other renewable and alternative Ormat Nevada won the competitive bid, purchasing all but one lease sec- LLC hopes to install its Tidal OC- resources, infrastructure develoption. The company accelerated geo- Gen Modules in 2011 in a Knik Arm ment requires considerable capital thermal exploration work this summer pilot project. The company also has investment and a highly trained after Gov. Parnell signed Senate Bill a River/Shallow Tidal TGU proj- work force for ongoing operations ❑ 243, reducing geothermal royalty rates ect for the Nenana River. Both and maintenance.

www.akbizmag.com • Alaska Business Monthly • December 2010

Photo by M.L. Coombs/Courtesy of the Alaska Volcano Observatory U.S. Geological Survey

Map by Game McGimsey/Courtesy of the Alaska Volcano Observatory/U.S. Geological Survey

on State land. The company drilled two core holes and plans to continue exploration activities in 2011.

Smith & “ Parker, Feek understands the complexity of our company and excels, in coordination with our employee benefits team, at providing outstanding service to our employees.

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ALASKA THIS MONTH

BY NANCY POUNDS

Community Spirit Shines at Palmer Celebration

Photos courtesy Greater Palmer Chamber of Commerce

CColony Christmas C i ffeatures craft f ffairs, i parade, fireworks fi

Colony Christmas features free horse-drawn sleigh rides in downtown Palmer while Santa visits with children to check lists during Colony Christmas. Lower right, Girl Scouts wrap packages at he Palmer Depot Craft Fair. Upper right, Colony Christmas offers five craft fairs with more than 200 vendors. The craft fairs are at the Palmer Depot, the Matanuska-Susitna Borough gym, Palmer Senior Center, Matanuska Christian School and Alaska Job Corps Center.

oliday joy springs from one’s heart, especially in kindness and service to others. For one special weekend in December in Palmer, many residents spurn a commute to large, crowded shopping malls for the small-town community festival called Colony Christmas. Participants volunteer at activities, vie for first-place in cookie and gingerbread-house contests, shop Palmer businesses and cherish time to connect with friends. This year’s festival runs Dec. 10-12 at venues around Palmer. Many activities take place downtown, including the Parade of Lights, which is Saturday at 5 p.m. with a fireworks show at 6:30 p.m. The Colony Christmas Triathlon is conducted on Sunday, starting at Peak Fitness and ending at the Palmer High School pool. It features a 10-kilometer bike ride, 5K run and a 500-meter swim. A handful of craft fairs featuring nearly 200 vendors run throughout the weekend, with the largest craft fair at the Palmer Depot.

FAMILY FEEL Other activities include the Holiday Ball at Raven Hall, a tree-lighting ceremony, reindeer visitors for photos and horse-drawn wagon rides. The Greater Palmer Chamber of Commerce organizes Colony Christmas. This year’s theme is “Mistletoe and Holly.” Sara Jansen, deputy city manager for Palmer, has been a longtime Chamber committee member for Colony Christmas and other events. “Colony Christmas is definitely my favorite event,” Jansen said. She recalled one memorable holiday visit to the Colony House Museum with her husband. They departed the historic home as a horse-drawn sleigh glided nearby. The scene evokes the nostalgia and community atmosphere that Colony Christmas recreates each year, she said.

www.akbizmag.com • Alaska Business Monthly • December 2010

The Gingerbread House Contest contenders are displayed at the Palmer Pioneer Home.

“The event is really built around families. It showcases what’s best about Palmer,” Jansen said.

THE VOLUNTEER SPIRIT For example, Palmer residents show their volunteer spirit to help run activities like the triathlon, a photos-with-Santa booth and outdoor kids’ games. Jansen pitches in at the ever-busy Santa photography station as streams of children and parents line up for images. Longtime volunteers make Colony Christmas special, said Jillyan Webb, executive director of the Greater Palmer Chamber of Commerce. Colony Christmas began about 20 years ago, and has expanded since, Jansen said. The parade, featuring floats decorated with holiday lights, originated in 1996. One year, snow was fickle as winter weather produced no snow for the parade. An eager volunteer scurried to Hatcher Pass and brought snow for a small area of the parade, Jansen said. “It is really something to see,” she added. “It’s the quintessential small-town parade.” The triathlon started 11 years ago. In recent years, organizers have planned activities to involve other areas of town. This year planners aim to boost the fireworks display, Jansen said.

NEW ACTIVITIES BROUGHT NORTH Chamber officials are planning several new activities for 2010. Webb listed snowball target practice, a snowshoe obstacle race, and the smoosh race, which features four-person teams whose feet are strapped to eight-foot-long two-by-fours. The teams march in a coordinated out-and-back trek. The idea comes from other winter festivals in Minnesota and elsewhere in the nation, Webb said. Colony Christmas boosts the Palmer economy, not just residents’ spirits. “It really helps the merchants in Palmer,” Jansen said. “We really believe in shopping locally, especially for Christmas.” For a schedule of events, visit www.palmerchamber.org. ❑ www.akbizmag.com • Alaska Business Monthly • December 2010

LEADERSHIP

Leaders Share Holiday Wishes Caring, sharing, health, wealth and wisdom

BY JESSICA BOWMAN

s 2010 draws to a close, Anchorage’s local businesses are recovering from a recent recession that affected all aspects of life – housing, revenue, strategic plans, fiscal year forecasts and more. Anchorage has fared relatively well through the recent global financial crisis, according to the Anchorage Economic Development Corp.’s (AEDC) “Three-Year Economic Outlook.” For example, Anchorage will likely see additional years of stronger population growth before leveling out to normal rates. In addition, employment growth is forecasted to resume in 2011 and continue through 2013, and personal income is expected to grow from 2011 through 2013. Visitor volume is anticipated to recover based on advance bookings for conventions in 2011 and 2012, and the

Energy Information Authority (EIA) expects to see steady price increases in oil in years to come. And notably, housing is forecasted to remain stable as Alaska was named one of the “Top 10 Housing Markets of the Future” by Bloomberg Businessweek. To delve into more business-based and locally specific forecasts, Alaska Business Monthly polled some of the local leaders in finance, the arts, health care, economic development and telecommunications to find out what businesses are hoping for and looking toward in the coming year. Each leader was asked two key questions:

1 2

What is your No. 1 “Holiday Wish” for the coming year? Why do you think your wish is an important one?

LLeslie li EEllis, llllii PPresident id t andd CE CEO CEO, O Credit Union 1 Credit Union 1’s “Holiday Wish” is for our fellow Alaskans to be empowered through compassion and cooperation in the upcoming year. As a not-for-profit

www.akbizmag.com • Alaska Business Monthly • December 2010

organization, our credit union employees devote more than 1,000 hours of volunteer service annually across Alaska. However, our efforts have the most impact when communities also band together to help one another. Together, we can inspire positive change and social progress in our friends’ and neighbors’ lives. Alaska families deserve the confidence and support of their communities to live happy, prosperous lives. These needs embody one of our credit union’s most sacred values: citizenship. By committing ourselves to true social service in the upcoming year, all businesses and residents of our state can build a healthier and more successful future.

Don Kashevaroff, CEO Alaska Native Tribal Health Consortium My New Year’s wish is that Alaska people become the healthiest people in the union. As splendid as life is in Alaska, we are not very healthy. We could enjoy this state so much more if we were healthy.

Billll PPopp, Bi opp PPresident resid identt aand ndd CCEO EO Anchorage Economic Development Corp.

Al PParrish, i h CE CEO CEO, O PProvidence id H Health lth & Services Alaska

JJames PPepper H Henry, Director and CEO, Anchorage Museum Alaska is near the bottom of the spectrum out of all 50 states in philanthropy. My wish for the New Year is to see growth in corporate and individual giving as government support of arts and cultural institutions retracts. When we lose our arts and cultural institutions, programs and services, our quality of life suffers and our world perspectives narrow.

I wish all Alaskans could enjoy full, healthy lives in the coming year. Good health and good health care mean we should all have access to appropriate care while making healthy choices in our personal lives. We see too many people in the hospital for reasons that could have been prevented. In fact, the vast majority of health care costs are related to lifestyle choices, specifically smoking and obesity. Access to good health care is also critical. At Providence, our mission calls us to serve the poor and vulnerable. One of the ways we fulfill this mission is by providing access to care, regardless of one’s ability to pay. For 2011, I hope all Alaskans have access to good health care and support their own personal health by making the healthy choices today that will keep them out of the hospital in the future.

My number one holiday wish is that Alaska establishes a comprehensive strategic vision to develop our economy in the next 20 years. This is important to me because if we don’t develop unified vision and strategy for developing Alaska’s resources and industries, and then aggressively act on those strategies, Alaska’s economy is at serious risk of losing momentum. We cannot allow our state gross product to go flat, or worse, begin to decline in the coming years. In the longterm, flat is not good, especially when it comes to the future we all want for our children and grandchildren.

Mike Felix, President, AT&T Alascom Alaska is a large and diverse state with a population that is spread from small villages to larger communities. It is my wish Alaskans work together in the coming year to address the social and economic challenges that face us – that urban and rural Alaska work hand-inhand to ensure the needs of all are met and that we continue to improve the quality of life for those less fortunate. There is a role for every Alaskan in this process – whether it’s by lending a hand through a community volunteer project, or contributing to a worthwhile charity – we can all make 2011 a year where we make a difference in the lives of our friends and neighbors. ❑

www.akbizmag.com • Alaska Business Monthly • December 2010

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ December 2010

H R M AT T E R S

BY ANDY BROWN

Getting Management Buy-In Overcoming obstacles to effective training

1. Involve management from the start. Let’s be honest, we all know managers who, for one reason or another, were less than ideal. Involving them from the start can reduce the impact of poor managers and demonstrates to good supervisors you are thinking about the team as a whole. 2. Prepare your pitch. Present two good ideas to management and get their opinions on which they would prefer to use. This is a doublewhammy; it gets their buy-in by letting management be the decision-maker while presenting them with variance. 3. Be prepared for feedback. Your manager may spot problems you haven’t considered and this is your chance to show you are able to accept suggestions professionally. If a manager has an opinion, remember it is just an opinion. Give it consideration, but do not simply discount it or blindly accept it as mandatory. Remember, you should be playing the role of advisor and subject-matter expert; be prepared to support whatever decision you make with a sound rationale about how it will benefit the organization.

4. Find out the underlying reason why management doesn’t support training. This can require what might seem to be “difficult conversations.” If handled properly, however, both management and HR can come out of this with a sound understanding of their priorities. Many supervisors are unable to articulate why they do not support training. They simply do not see value in it. This can stem from never having seen past results. They might see training as merely something that takes employees away from contributing to the bottom line. One manager I knew made a point of telling me that at his previous job, the HR team never took his suggestions so he always opposes suggestions from HR. While this seems petty, the point is without an accurate understanding of why any member of management disapproves of a suggestion, you will be unable to address the concern effectively. 5. Learn to speak their language. I don’t mean terms like paradigm shift, total quality management or lean. I’m talking about speaking to your supervisor in a way that he or she will understand. This requires you to learn what type of person they are and what he or she values. Different managers place different values on people, the bottom line, efficiency, safety, etc. Learning what each manager considers important and framing training in those terms can greatly increase your ability to drum up management support. 6. Don’t lose track of your focus. Remember, the end goal is to build skills in your employees so they can contribute more to the organization. Nothing increases ability better than effective training, followed by experience. There is no fail-safe method that always creates management buy-in,

ast month, I wrote about how training affects the bottom line for good or ill. I outlined three main obstacles businesses face when creating an effective training program. This month, I am writing about the first of those three obstacles, getting management buy-in. Of all the challenges to training, getting management support is by far the most important. The best training program in the world can be easily torpedoed if management is unsupportive. With this in mind, the following are some of the more effective ways to increase the likelihood of getting management support.

Andy Brown

but these techniques greatly improve your chances. Focusing your efforts on increasing management buy-in saves time and effort, ignoring or failing to get their support can destroy any training program. ❑ About the Author Andy Brown, J.D., SPHR, a labor and employment attorney who grew up in Alaska, left his law practice in the Lower 48 to return to Alaska as a senior consultant with The Growth Company Inc. Brown has more than 16 years of broad-based human resource experience, including legal compliance, compensation, salary surveys and collective bargaining agreements. Brown has extensive investigative experience and worked as an investigator for both the U.S. Army and the State of Utah Department of Workforce Services.

www.akbizmag.com • Alaska Business Monthly • December 2010

TOWNS

TRANSITION

BY HEIDI BOHI

JUNEAU Neither boom nor bust, holding steady

Photos courtesy of Juneau Convention and Visitors Bureau

t has been a busy couple years for the City of Juneau. There are major airport improvements, the hospital expansion, the completion of Kensington Mine, a new high school, swimming pool and the downtown transportation center. Add to the top of the pile ongoing road construction and maintenance, community-wide beautification efforts, and public construction projects – and it has meant solid work for hundreds of locals. And that’s one thing that worries Rod Swope, Juneau’s city and borough manager. As most of these projects wrap up, it means the work that has

Juneau relies heavily on tourism tourism, and flightseeing across Juneau’s icefield is just one of many activities available to tourists who arrive by plane or boat.

been sustaining the economy is also going away. While Juneau puts the finishing touches on these recent accomplishments, Swope and his colleagues are filling in the calendar with new developments that will again mean some new employment for locals, along with improved quality of life for 31,000 residents. Although the high cost of living continues to be a factor, Juneau-ites are committed to the community and

customarily vote to assess themselves new local taxes if it means investing in an improved quality of life. After years of struggling with the issue of inadequate parking in the area surrounding the State Capitol, this month the city will complete the three-story Downtown Transportation Center, which includes the 240-spot parking garage – some of which will be reserved for legislators when the Legislature convenes – a police sub-station, and protected areas for locals to wait for mass transit. In this same area, the Seward and Main streets revitalization projects resulted in landscaping, brick sidewalks and pocket parks that improve the look of the downtown area.

WATERFRONT IMPROVEMENTS To avoid ending up with a waterfront area that is a hodge-podge of happenstance developments, the city and borough has adopted The Long Range Waterfront Plan that proposes a series of improvements taking place in phases over the next several years, focusing primarily on the seawalk area that runs the length of downtown. Ultimately there will be two new cruise ship docks to accommodate newer, larger ships that will make summer stops in Juneau. The docks are expected to be completed by 2013 and will be constructed

The State Capitol, located in Juneau, is only accessible by boat and plane. Having the Legislature there creates economic growth to this otherwise small community. www.akbizmag.com • Alaska Business Monthly • December 2010 46

around the summer visitor season. The cruise ship industry continues to be Juneau’s largest and steadiest area of growth, which is the largest privatesector employer and draws more than half of the total Alaska visitor market. When the economic crisis took its toll on the statewide industry, compounded by the cruise ship industry’s decision to pull some sailings from this market, local businesses felt the significant hit, as did the city that relies on taxes from the seasonal boon Although the numbers aren’t expected to rebound to the 2008 levels when 1.3 million visitors disembarked annually, Lorene Palmer, president and CEO of the Juneau Convention and Visitors Bureau, says that heading into the 2011 season the community has gotten word that three ships – one large and two smaller – will add Juneau as a port of call next summer, meaning a net increase of about 12,000 new passengers. Tour operators and businesses braced themselves for the decline in 2010 by cutting back on operations and postponing expansions and improvements, allowing them to survive the market slump, Palmer says. Although the slight projected increase for 2011 is not enough of a dynamic to bring back lost jobs and make up for lost revenues, in 2012, a Princess ship will re-enter the market and bring 45,000 passengers back to Alaska. The addition of that ship will mean businesses should be able to rehire some of the local college students and teachers who rely on the industry for summer employment. In the meantime, several smaller components are also being realized. A 1.5-mile seawalk that runs from the bridge to the sub-port is being planned, and a 1,000-foot new seawalk on the southside of town is nearly complete. There also will be two new facilities on the waterfront: a port and customs office, and a visitor information center managed by the Juneau Convention and Visitors Bureau.

AIRPORTS AND HOTELS The most recent phase of the $10 million airport terminal expansion, which employed 15 laborers and was completed in October, included remodeling the existing terminal and constructing a 14,000-square-foot energy-efficient

meeting market stay about four days on average and the estimated economic impact is $1,311 per person, which is higher than what individual cruise ship passengers bring, though the economy of scale realized from the sailings cruise passenger spending far outweighs the impact from conventions and meetings. As is the case with many communities, Palmer says Juneau’s visitor industry is looking forward to consumer confidence returning to a higher level.

HOSPITALS, TOO

Located within walking distance of the cruise ship docking area, visitors travel by tram to the top of Mount Roberts to get a breathtaking view of Juneau and Douglas Island.

expansion. A ground-source heatpump system also will be installed once other outstanding projects associated with the airport have been completed. The multi-phase project also includes extending the runway next year to meet FAA requirements. Hotel occupancy came up slightly this year between May and August, which Palmer takes as an indicator that “We are holding our own, or slightly increasing independent travel.” Last year the average hotel daily rate was $117 per night and this year it increased to $121, though part of this also reflects the whatgoes-down-must-come-up theory, and this adjustment also indicates efforts to recoup lost revenues from room rates that were deeply discounted last year. At the same time, the conventions and meetings market had a very promising year, Palmer says, and she expects this sector of the visitor market to continue to hold steady. In June, Celebration 2010, a biennial festival of Tlingit, Haida and Tsimshian tribal members organized every two years by Sealaska Heritage Institute, brought about 5,000 attendees from all over the country. Some of the larger groups with 2010 reservations on the books that held meetings included the Republican State Convention, the Mountain Rescue Association and the EPA Region 10 Tribal Leaders Summit. Visitors from the convention and

Five years after the Bartlett Regional Hospital board of directors committed to renovating the existing facility into a true regional medical center for Southeast, the complex modernization was completed in July 2009. The ambitious project required two separate design and construction phases, the first adding about 56,000 square feet of new space and the second renovating about 34,000 square feet of existing space, at a total project cost of $65 million. Diagnostic imaging, a critical care unit, obstetrics and mental health are some of the additions included in the new space. Renovated spaces include patient admissions services, 20 patient rooms, the pharmacy, histology and pathology, respiratory therapy, microbiology, physical therapy and the gift shop. Other services that were new or

One notable tourist attraction is St St. Nicholas Russian Orthodox Church, located in Juneau.

www.akbizmag.com • Alaska Business Monthly • December 2010

moved to the hospital as part of Project 2005 are the sleep lab, meditation room, family rooms for the critical care unit, cardiac rehabilitation, infusion therapy, health education resource center and in-patient rehabilitation gym.

RESIDENTIAL MARKET DOWN The residential construction industry, though substantially down, is starting to make a modest comeback, most likely explained by 200 new, permanent employees moving to the community as a result of Kensington Mine coming online, says Dale Pernula, community development director for Juneau. This year, there were $8.9 million in residential permits issued, up from $3.5 million last year. As locals continue to feel the pinch of the recession, the number of additions and remodels is where most activity can be seen as they choose to remodel and expand instead of building new homes. On the commercial side, Pernula says that the most significant development is a new three-story 44,736-square-foot, 78-room Aspen Hotel located near the airport in the Mendenhall Valley, which employs about 40 construction workers. The $5 million property is in phase one of a two-phase project and is forecast to be completed in 2011. The second phase, the Aspen Restaurant, will break ground in 2012.

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NEW FACE IN TOWN Sure to be the envy of any Alaska community is the Dimond Park Aquatic Center. Scheduled to open in March 2011, the $21.8 million indoor public facility is 34,000 square feet and includes an eightlane lap pool, as well as a “lazy river” feature and a whirlpool Jacuzzi. There also is a large slide and other built-in play equipment. The facility is adjacent to the Dimond Park Field House, which was built in 2007, and includes an indoor turf field, three-lane running track, batting cages, concession office and a variety of equipment. The facility accommodates several sports and activities, including soccer, flag football, baseball, softball, walking and running. Quality-of-life improvements such as the new aquatic center and field house give Swope an extra sense of pride, he says. “These improvement are what really makes Juneau a special ❑ place to live.”

Juneau Convention & Visitors Bureau • 1-800-587-2201 • www.traveljuneau.com www.akbizmag.com • Alaska Business Monthly • December 2010 48

REGIONAL REVIEW

Matanuska-Susitna Borough

Alaska’s ‘Big Valley’ Photos by Tom Bol/Courtesy of Mat-Su CVB

Matanuska Glacier is Alaska’s largest road-accessible glacier. Visitors can take a guided trek on the glacier, or navigate the ice on their own through Glacier Park, located at Mile 102 Glenn Hwy.

BY TRACY BARBOUR

he Matanuska-Susitna Borough represents one of Alaska’s most popular and distinctive regions, providing Alaskans and tourists with beautiful scenery, wide-open spaces and ample outdoor recreation. Encompassing the valleys of the Matanuska and Susitna rivers, the borough spans 23,000 miles and is about the size of West Virginia. Located half an hour north of Anchorage, the borough offers massive mountains, glistening glacier valleys and fish-laden rivers and lakes, and is home to the majestic Chugach and Alaska ranges. It’s also within easy access to Denali National Park and Preserve with breathtaking views of Mount McKinley, North America’s highest peak. “We’re perfectly situated to be a good base camp for people’s Alaska vacations,” said Casey Ressler,

marketing and communications manager for the Mat-Su Convention and Visitors Bureau. Talkeetna, on the borough’s northern edge, serves as a convenient starting point for visitors to Denali, and is a favorite visitor destination within the borough. A mecca for outdoor enthusiasts, Talkeetna is well-known as the international gathering place for mountain climbers. Many others flock there for flight seeing, rafting, hiking, fishing, camping, wildlife viewing and a host of other outdoor activities “The Mat-Su Valley offers a quality of life that’s a bit more than living in the city,” Ressler said. The Mat-Su Borough is home to slightly more than 84,300 people, according to 2009 estimates by the Alaska Department of Labor and Workforce Development. Many of its residents

are concentrated in the Knik-Fairview Census Designated Place (13,824), Wasilla (7,245) and Palmer (5,532).

TOURISM RANKS HIGH Each year, thousands of people from within Alaska and outside the state take recreational trips to the Mat-Su Valley. According to the borough’s June 2008 Tourism Infrastructure Needs Study, the Valley had 780,000 visitors in 2006/2007. Of those, 446,000 were from Alaska. Visitors spent a total of $201 million in the borough, mainly on food and beverages, accommodations, fuel and transportation, and tours and entertainment. The Mat-Su borough’s annual visitation is expected to grow to 1.2 million visitors in 2017, according to the study. “I think everybody sees it as a great playground for outdoor recreation,” Ressler said.

www.akbizmag.com • Alaska Business Monthly • December 2010

The borough’s tourism industry has faired considerably better than other places within Alaska. Last year, Ressler said, tourism was down as much as 20 percent in some places around the state. In the Mat-Su Borough, however, tourism dipped just under 9 percent.

GROWTH TREND CONTINUES With its proximity to Anchorage, expansive landscape and quality of life, the Mat-Su Borough continues to be the fastest-growing area in the state, in terms of its population. The Anchorage/ Mat-Su region (with 374,902 people) accounted for 54.2 percent of Alaska’s population in 2009, up from 51.0 percent in 2000. That’s according to 2009 population estimates released earlier this year by the Alaska Department of Labor and Workforce Development. Based on population change from the April 1, 2000, U.S. Census, the Department of Labor estimates that between 2000 and 2009, the Mat-Su Borough grew at an average annual rate of 3.8 percent, the same annual growth rate during the 1990s. However, its growth slowed to 2.3 percent between 2008 and 2009. Between the 2000 Census and 2009, the borough’s population grew by 24,992 people. Of that number, 18,571 or 74.3 percent was attributed to net in-migration (more people moving in than out). The Mat-Su Borough was the only area in the state where growth came primarily from net in-migration, and 10 of the top 14 places that experienced the most rapid growth between 2000 and 2008 are located within the Mat-Su Borough. Four of the borough’s communities have seen such growth that if they were to incorporate, they would be larger than the city of Wasilla. For instance, Knik-Fairview, which had a positive annual growth rate of 6 percent, would become the fourth-largest city in the state if it were to incorporate. “Outside the Anchorage/Mat-Su region, a majority of communities have flat or declining population growth,” said State Demographer Greg Williams in a press statement explaining the estimates.

ECONOMY TIED TO REST OF STATE Neal Fried, an economist with the Alaska Department of Labor, attributes

the Mat-Su Borough’s ongoing growth, in part, to its open spaces and more affordable housing. While buildable land is scarce in Anchorage, there’s plenty of terrain available in the borough – not to mention a slower pace of living. “I think a very competitive housing market is an extremely powerful force,” he said. The borough’s expanding population translates into an abundant work force. A large number of Valley residents hold jobs somewhere else. Many of them commute long distances to work in Red Dog Mine, Prudhoe Bay or Kodiak. “In many ways, it’s a place where many people live and a lot choose to work elsewhere,” Fried said. “About 45 percent of the Mat-Su residents who work have jobs outside the boundaries of the Mat-Su Borough.” Employment in the Mat-Su Valley is also growing. It grew in 2009, while employment dropped statewide. The Valley’s employment is expected to continue to grow in 2010. Fried says most of that employment growth is tied to providing services to the local population. As the Valley’s population grows, there is a growing demand for services. In addition, health care and other industries are growing in the Valley. Consequently, Mat-Su residents are spending more consumable dollars locally. “Sales tax collections are growing much faster than the population,” Fried said. “The only explanation I have is the average Valley resident is spending more money closer to home.” Because of its positive employment and population growth, the Mat-Su Borough’s is a standout in Alaska, Fried says. The borough’s economy, which is driven by tourism, services, government, health care and retail, is distinctly tied to Anchorage. In fact, he added, the close connection between the two places makes them logically one economic entity. The Matanuska-Susitna Borough is part of the Anchorage Metropolitan Statistical Area.

THE CITY OF WASILLA With about 8,000 residents, Wasilla sits off the northern point of Cook Inlet. Historically, it was named after Chief Wasilla, a well-known local Dena’ina

leader. The city gained international fame when its former mayor and Alaska’s former governor, Sarah Palin, ran as John McCain’s vice-presidential running mate in the 2008 U.S. presidential election. The city’s current mayor, Verne Rupright, sees Wasilla as a place with breathtaking natural surroundings and inspirational people. “They have a stick-to-it attitude and are honest and hard-working,” he said. “They want to see things made better for the next generation, and that is a noble thing.” Wasilla is the retail hub for many Valley residents, as well as home to many commuters who drive to Anchorage every day. The city welcomes business and provides infrastructure for retailers, and that draws them to Wasilla, Rupright says. As a result, the economy of Wasilla is growing. Sales tax revenue for the first two months of the fiscal year exceeded revenue from the same period last year. A number of construction projects are under way in Wasilla, including a new 12-plex theater and a new prison that will house more than 1,000 inmates and generate hundreds of high-paying jobs. Next year, Rupright says, Southcentral Foundation is planning to construct a large facility that will hire an estimated 250 employees, and Usibelli Coal Mine is working on a plan to mine coal and hire 100 workers. One of the city’s prime concerns is to improve infrastructure, such as roads and utilities, according to Rupright. Top priorities include a connection between the George Parks Highway and Knik-Goose Bay Road, plus adding more land to the sewage treatment system to ensure its viability for the next 20 years. Another major area of concern involves enhancing wages for Valley residents. Approximately 60 percent of the people who work in the Valley hold retail jobs and earn an average $20,000 per year, Rupright says. “This means that most families need two wage earners to survive,” he added. “The city needs more professional and manufacturing jobs.” Wasilla also is working on addressing the availability of low-cost electricity. The city’s economic development could be hampered by a lack of

www.akbizmag.com • Alaska Business Monthly • December 2010

adequate power within the next five years. “The borough needs to encourage access to the Valley’s natural resources,” Rupright said. “A plan to use a natural resource that is sustainable will provide high-paying jobs into the future.” Rupright sees a bright future for the city of Wasilla and the Mat-Su Valley. “We may disagree with each other as to our approach, with some at one extreme wanting to preserve everything the way it is and the other end wanting to develop everything in sight,” he said. “There is a natural balance in nature, and the same is true with human nature. The answers to that balance are out there if we only seek to find them.”

THE CITY OF PALMER Palmer is a quaint Midwestern-style community with about 6,000 residents living on slightly more than 5 square miles. This gives Palmer the distinction of being the most densely populated city in the state, according to Mayor John Combs. With its fertile farmland and unique climate, Palmer is widely known for growing gigantic vegetables. The city holds a number of world records for the largest rutabagas, turnips and cabbages. “There’s no place else you can find a 110-pound cabbage,” Combs said. “And it’s just as tasty as a 10-pound cabbage.” Each year, thousands of people visit the Alaska State Fair to see Palmer’s giant-sized produce and other exhibits. The event draws 400,000 to 500,000 people a year over a 10-day period, Combs says. “It gets bigger and better every year,” he said. Palmer is a pedestrian-friendly city that offers a variety of attractions for visitors and residents year-/round. They can enjoy live music at the popular Vagabond Blues coffee shop, sample the cuisine at local restaurants or view historic-looking buildings that hearken back to the time of its early settlers. Visitors can also cruise the 50-mile scenic loop between the George Parks and Glenn highways to explore Hatcher Pass and the Independence Mine State Historical Park. “It’s an excellent place to visit and really enjoy yourself,” Combs said. “It’s less hectic than a large city like Anchorage or Fairbanks. It has a real hometown feel to it.”

The perfect base camp for Alaska vacations, the Mat-Su Valley is located just north of Anchorage, and south of Denali National Park, offering varied activities and attractions.

Combs – who has lived in Palmer for 45 years – describes the city as the kind of place where people pull together to help others who are in need or trouble. “I wouldn’t trade living here for anything,” he said. “It’s the kind of place where people hold the door for you at the post office. It’s a little old-fashioned, but it’s a good kind of old-fashioned.” Like Wasilla, Palmer also has been focusing on strengthening its infrastructure to make it a welcoming place to live and do business. For instance, Palmer is currently completing a multimillion-dollar pipe replacement project for the entire city. And through the revitalization program, there’s also been a tremendous change in the community’s appearance.

“It’s never looked better,” Combs said. Palmer also offers plenty of recreational opportunities, including a world-class, 18-hole golf course and a skateboard park for middle- and highschool kids. The community raised $425,000 and leased 55,000 square feet of land from the Alaska Railroad to establish the skateboard facility. Now, young people have their own place to hang out in the city. The skateboard park has been a popular addition to the community. “There are 20 to 30 kids there all the time,” Combs said. He encourages people to spend a few days in Palmer to really get to know the town. “You’re going to be surprised what is here and what the potential is for your business ❑ and family.”

www.akbizmag.com • Alaska Business Monthly • December 2010

YEAR IN REVIEW

2010 Year in Review Photo courtesy of Laura Ganis

A year to remember BY HEIDI BOHI

rom Pebble to Hickel, from Stimulus funds to a movie shot in Anchorage, from Stevens to Pebblefrom to Hickel, windrom farms, OCSfrom to Stimulus funds to a movie shot Open Season –from andStevens not to in Anchorage, to wind farms, from OCS to Open Season mention elections – 2010 was – and not to mention elections – 2010 was a highnews news year Alaska. a high yearinin Alaska.

OPEN SEASON Hold the drum roll. It could be months until the results of open season – when bids were solicited from customers of the estimated $40 billion natural gas pipeline – are announced to the public, as two competing developers test the market. Calgary-based TransCanada Corp., which is developing the Alaska Pipeline Project with Exxon Mobil Corp.

Alaska cinematographer Steve Rychetnik on the set of “Everybody Loves Whales.”

and in conjunction with the State under the Alaska Gasline Inducement Act (AGIA), is one of the companies that concluded its open season this summer. Based on this proposal, there are two options. The first is a pipeline from the North Slope, through Alaska, the Yukon Territory and British Columbia, to Alberta, Canada, where the gas is delivered on existing pipeline systems serving major North American markets. The second option transports natural gas from the North Slope to Valdez, where it is converted to liquefied natural gas in a facility to be built by others, then shipped to domestic and international markets. Only one of the options will advance and it is likely

that the results of the open season will determine the successful option. Denali – The Alaska Gas Pipeline, a collaborative effort between ConocoPhillips and BP, concluded its submission in October. It includes a gas-treatment plant (GTP) on the North Slope, transmission lines from Prudhoe Bay and Point Thomson fields to the GTP, an Alaska mainline that runs from the Slope to the Alaska-Yukon border, and a Canada mainline that transports gas from the Alaska-Yukon border to Alberta. Access points along the route also will help meet natural gas demand in Alaska and Canada communities. For both, information was provided to potential shippers in Alaska and Canada

www.akbizmag.com • Alaska Business Monthly • December 2010

on anticipated engineering design, commercial terms, estimated costs and timelines. Shippers assess this information and decide if they want to commit to long-term, contractual commitments to reserve capacity on the pipeline. ■

WALLY HICKEL PASSES Just the name feels like pie and coffee on a December day, or the neighbor who’s just always been there. Wally Hickel – athlete, businessman, statesman, futurist, antagonist, author, advocate, frontiersman, family man and leading character in the story of Alaska. He died May 7, 2010, but he leaves a legacy that will keep him in our conversations for generations. In his 90 years as one of the state’s most important – some will say the most important – political personalities and entrepreneurs, whether perceived as the good guy or the bad guy, everyone agrees his influence on the development of Alaska is what makes it a state and not a refueling point. He had only had four bosses of any consequence: his father, himself, the United States of America, and the State of Alaska. Originally from Kansas, he arrived in Alaska in 1940 and before the end of the decade formed Hickel Construction Co., building hundreds of homes, shopping centers, motels and the Hotel Captain Cook in downtown Anchorage. About this same time, he became a leading voice in the efforts to advance statehood and used his political clout in Congress and the Eisenhower administration to get the Alaska Statehood Act passed in 1958. His first term as governor was from 1966 to 1969 and ended when he resigned to become Interior Secretary in the Nixon administration. He was fired after 22 months “for a mutual lack of respect,” and returned to his beloved Alaska. As the state’s eighth governor, from 1990-1994, he continued to advance the grand plans he was known for, ranging among building a gas pipeline – today one of the state’s most promising potential developments – to an undersea railroad to Siberia and building a 2,000-mile pipeline down the Pacific Coast to carry fresh water from Alaska to areas in Southern California that typically suffer from water shortages. Although it was never built, along

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with several other unconventional ideas never realized, he will most be remembered for those that were accomplished such as helping open North Slope oil to development and getting the State’s huge tax and royalty settlements with the petroleum industry, resulting in $4 billion for the Constitutional Budget Reserve fund. “Sure, I’m a dreamer – that’s what Wally Hickel is all about,” he once said. In keeping with his final wishes, on May 18 Hickel was buried standing up at Anchorage Memorial Cemetery. “I want to be buried standing up, so when I get to heaven, I can come out fighting,” he once told a friend. ■

ACES Maybe there’s some truth to the old adage that we treat the ones we love the worst. And 2010 certainly felt that way to Alaska’s largest producers in the oil and gas industry, as they continued to feel pangs from the State’s current production tax, Alaska’s Clear and Equitable Share (ACES). They say it is unfair because the tax increases with rising oil prices – there is a 25 percent baseline tax on all revenue from Alaska oil, which may increase to up to 50 percent as the price of a barrel of oil increases. This undermines incentives to develop new oil resources and adds to the risk high taxes may drive business to other areas of the world where the business environment is friendlier and the profits more promising. And the major players are not just posturing. ConocoPhillips cited ACES for the reason it scrapped a $300 million refinery project and why for the first time in more than 40 years, it is not exploring. BP Alaska delayed the development in the western region of the North Slope as a result of ACES and said its in-field drilling this year will be less than half of what it was in 2007. Last year, the number of exploratory and development wells fell to the lowest levels in a decade. The number of new in-field wells drilled dropped from 166 in 2007 to 155 in 2008 and 147 last year, the Alaska Oil and Gas Association (AOGA) states. Well completions were also down 14 percent from 2007 through 2009 and more than $2 billion in projects have been deferred since

ACES was passed, including Prudhoe and West Sak work, says Brian Wenzel, ConocoPhillips Alaska vice president of finance. While 450 million barrels of oil equivalent of reserves have been added on the North Slope in the last five years, only 35 million have been added since ACES was passed, a result, Wenzel says, of less investment in core fields. With 90 percent of the remaining barrels in core fields, Alaska should be structuring its fiscal system to encourage investment in the state. ■

WHALE MOVIE FILMED Drew Barrymore is a lot smaller in person – just ask the hundreds of Alaskans who have seen her up close and personal on the street, in restaurants and shops, at the airport, and of course while working with her on the set of “Everyone Loves Whales,” the first major movie about Alaska – to actually be filmed in Alaska – in many years, the result of the new tax-incentive program for the film industry. The Universal Pictures movie is based on the true story of the 1988 rescue of three California gray whales that became trapped by ice near Barrow in the Arctic Ocean on their winter migratory journey to Mexico. Within only a few days, the national media, environmentalists and rescue teams from the United States and the Soviet Union – then in the middle of a Cold War – descended on the tiny village to escort the whales to open water. But it’s the behind-the-scenes story where it really gets good. The Alaska Film Production Incentive Program is an economic development initiative encouraging growth of the film industry in Alaska. Applicants spending at least $100,000 to film in Alaska can qualify for up to 44 percent in a transferable tax credit on qualified production expenditures in Alaska. Prior to this legislation passing, most movies and productions set in Alaska were filmed elsewhere, says Dave Worrell, Alaska Film Office development specialist. The most recent example was Sandra Bullock’s 2009 blockbuster The Proposal, which was set in Sitka, but filmed in Massachusetts. Multi-million-dollar feature films often mean hundreds – sometimes thousands

– of jobs for everyone from local grips and gaffers to cinematographers and walk-on extras. For small Alaska towns it can mean a nice boost for government coffers, small businesses and tourism destinations. The new film tax credits, combined with Alaska’s scenery and statewide resources make Alaska a big draw for filming. As a result there are about 25 productions waiting in line to be filmed in Alaska. ■

SEN. TED STEVENS KILLED IN PLANE CRASH When Uncle Ted left Washington, D.C., head held high and as righteous as ever, Alaskans took some solace knowing that wherever he was, they could still rest assured that he would always have their backs. Even at 86, when most have long since transitioned from full-time livelihoods to lifestyles, having lost his Senate seat, Ted Stevens still had a mission to accomplish, an event where he was the featured guest, and a case to make – all for the sake of Alaska. When word got out that he died in a plane crash in Southwest Alaska Aug. 9, while en route to a Bristol Bay lodge, disbelief and sadness spread from town to town, and a silence blanketed the state like the season’s first snowfall. Whether they knew him personally, or he was simply the man in the headlines, as the longest-serving Republican senator in U.S. history, serving for 40 years, at one time or another he directly benefited every Alaskan with his political clout and commitment to one simple belief: “To hell with politics, just do what’s right for Alaska.” Hundreds of Alaskans and dignitaries turned out for his memorial service in Anchorage and those who could not attend lined the streets waving flags as his motorcade passed by. Vice President Joe Biden, Alaska Sen. Lisa Murkowski, Senate Minority Leader Mitch McConnell and Hawaii Sen. Daniel Inouye shared touching memories and funny stories from the decades they had been both allies and foes during his Congressional tenure. “Ted was Alaska and he will be remembered for all that he built in this state,” Murkowski said. “His legacy rests not just with the infrastructure and the programs that he has created, that

www.akbizmag.com • Alaska Business Monthly • December 2010

he built, but really that legacy rests with the lives he touched.” On Sept. 28, Stevens was buried with full military honors at Arlington National Cemetery in Washington, D.C. That same day, the Senate passed legislation sponsored by Murkowski and Sen. Mark Begich, naming a mountain and part of an ice field in Denali National Park and Preserve for Stevens. The House followed suit and passed a companion bill sponsored by Rep. Don Young. The mountain, to be named Stevens Peak, is commonly known as South Hunter Peak, and currently is the tallest unnamed mountain in Alaska.

LEADING BUSINESSES INCREASE OVERALL REVENUES Alaska is simply different. Whether it’s the climate, culture, or political environment, for anyone who has spent anytime here, this needs no explanation, just a knowing wink. And the same holds true with the economy. For the past two years, as Outside states face uncertainty at best, Alaska’s momentum seems to be unstoppable and its bubble unpopable. It is one of the two

strongest economies in the nation along with Washington, D.C. “In every national recession since statehood, we didn’t follow the national trend – we’ve had our own recession, but we have not followed the rest of the country. In fact, during other national recessions, we just kept growing,” Neal Fried, a labor economist for the State says. “A lot of people think Alaska is counter cyclical, but that is not true. What’s good for us may not be what’s good for the rest of the country.” The top 49 Alaskan-owned and -operated companies, a list known as the Top 49ers, tell the story. Just a year ago, to make it onto this elite list a company had to have $50.5 million in gross revenues, and this year it bumped to $55 million, and five Alaska Native corporations topped the $1 billion mark: Arctic Slope Regional Corp., Bristol Bay Native Corp., NANA Regional Corp., Chugach Alaska Corp., and Chenega Corp. From 2008 to 2009, top revenues for all 49 grew from $13.8 billion to $14.5 billion and only 12 had revenues of less than $100 million.

Along with this, the state’s unemployment rate is one of the lowest in the country, though the national recession is likely keeping it from falling even lower because Alaskans who lose their jobs are less likely to leave the state, while those from weaker Outside economies head north looking for work. Although businesses in oil, fishing and mining have managed to be among those industries that hold strong, Fried says the visitor and cargo industries are strongly correlated to the health of the national economy, so reported more measurable declines in revenues. ■

GULF OF MEXICO BLOWOUT: EFFECT ON OCS When President Obama lifted the moratorium on deepwater oil and gas drilling imposed this summer in response to BP’s Deepwater Horizon oil spill in the Gulf of Mexico, it cleared the way for 33 oil rigs down south to resume drilling operations. At press time this still meant little good news for Alaska: the moratorium puts the 2011 drilling season in jeopardy, at a time when now more than

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ever the industry needs certainty and predictability. “Without certainty, it is very difficult for the industry to plan or invest, to the detriment of Alaska and the nation,” Alaska Gov. Sean Parnell said in an interview. The state filed a lawsuit against the Obama administration to overturn the federal moratorium on deepwater drilling in the Gulf of Mexico because, Parnell argues, it has resulted in a de facto moratorium on drilling off the coast of Alaska. Obama’s announcement offers no clear guidelines for Alaska, though, and the governor’s office announced the lawsuit against Ken Salazar, United States Secretary of the Interior, would proceed. “Alaska is arguing the Department of the Interior acted arbitrarily and capriciously and violated federal law by (1) failing to consult with state officials; (2) neglecting to properly consider the significant economic impact of a drilling moratorium; and (3) failing to issue a written decision explaining the basis for the moratorium,” according to a statement from Parnell’s office on the lawsuit, which was filed in U.S. District Court in Alaska. “If Secretary Salazar can lift the moratorium for wells in 5,000 feet of water, he should be able to do so for a shallow water well in the Beaufort Sea,” Parnell said. Sen. Mark Begich agrees with the governor, saying an overreaching ban does not reflect Alaska’s unique conditions and fails to consider the impact on Alaska jobs and the Alaska economy. ■

RED DOG DEVELOPMENT As mining within the main deposit of Red Dog Mine’s ore body projected to end by 2012, Teck Resources Ltd. began development of the Aqqaluk Deposit in May, marking a production schedule well ahead of initial projections. One of the world’s largest zinc deposits, it holds 51.6 million tons of reserves, containing 16.7 percent zinc and 4.4 percent lead, and representing an estimated 20 years of additional mining for the NANA region. Adjacent to the main deposit, these continued operations are expected to extend through 2031, states Teck Alaska Incorporated and NANA Regional Corp.. If development of Aqqaluk did not

www.akbizmag.com • Alaska Business Monthly • December 2010

Photo courtesy of NANA Development Corp.

begin by May, Red Dog would have run out of ore, forcing Teck to shut down operations for at least a year and threatening long-term economic benefits for the region. The development faced some uncertainty when Trustees for Alaska and the Center on Race, Poverty and the Environment appealed the waterdischarge permit issued for the Aqqaluk development by the U.S. Environment Protection Agency. Red Dog Mine directly benefits the shareholders of NANA Regional Corp., representing more than 12,000 Inupiat of Northwest Alaska, and employing more than 300 shareholders. In addition to royalties, NANA benefits from creating service companies to support Red Dog. Red Dog Mine, located in the Delong Mountain Range, is owned by NANA Regional Corp. and operated by Teck Alaska. Red Dog is an economic engine for Northwest Alaska and the mine’s new Aqqaluk Deposit, situated next to the Main Deposit, will add 20 years to the mine’s life.

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Benefits from the mine also are felt statewide. From 1990-2008, Red Dog provided $1.3 billion in benefits, including wages to shareholders, jointventure contracts and payments in lieu of taxes and direct royalty payments to NANA. In 2009 alone, the mine provided $116 million in federal and State taxes and invested $217 million in the local and state economy through the purchase of goods and services from Alaska suppliers. ■

CIRI WINDFARM PROJECT Fire Island Wind (FIW), a subsidiary of CIRI, is developing Alaska’s first commercial-scale wind power-generation project on its land on Fire Island in Cook Inlet, just west of Anchorage. If the project reaches fruition, it is expected to include 36 turbines capable of producing 54 megawatts of electricity, enough to power more than 18,000 homes.

Photo courtesy of CIRI /Jim Jager

KENSINGTON GOLD MINE ONLINE Kensington Gold Mine celebrated its grand opening in July, a take-note event to let the world know that it is officially open for business. For the Southeast Region and the state, the mine means millions of dollars being injected into the economy, resulting in substantial direct and indirect benefits. In an area the size of the City and Borough of Juneau, when 200 full-time, permanent employees being paid some of the highest wages in the state move in, it means new residential and commercial construction, more money for pubic coffers, and an increased quality of life as the availability of services expands with the growth. There were also 300 construction jobs and 150 additional indirect positions created, generating $18 million in payroll. After litigation brought on by environmental groups delayed construction of the mine, a positive ruling regarding the project’s tailing facility resulted in the developer Coeur Alaska to start production. Working with environmental groups and agency officials, Coeur developed an alternative plan for tailings placement using paste technology for the tailings facility, which was approved, says Tony Ebersole, director of corporate communications. Proven and probable gold mineral reserves indicate that the mine will produce about 125,000 ounces of gold per year, Coeur officials say. Gold was almost $1,400 per ounce last month. Multiply that times a production cost of $490 per ounce and the mine’s benefit adds up to one of the most critical natural resource developments there in decades. Despite the legal controversy, there is strong support from Juneau residents and Alaska Native groups. “The feeling is that people are really, really supportive of this project,” Ebersole says. ■

critical to help off-set the wind farm and further reduce the cost of wind power to rate payers. Southcentral Alaska uses natural gas to generate more than 90 percent of its electricity. Cook Inlet gas reserves are running out, though, and clean, renewable wind energy could diversify Railbelt power resources, which would increase reliability and decrease ratepayer vulnerability to gas shortages and price increases. The project would charge an estimated 12.5 cents per kilowatt-hour, compared with 7 cents per kwh for power generated from natural gas and 4.5 cents per kwh for hydropower. Projected numbers, based on preliminary discussions with potential local utility customers, indicate the project would cost twice as much as natural gas power, but it may be one of the region’s few remaining energy solutions, Suzanne Gibson, CIRI’s senior director of energy development says, as it is the most immediately feasible and least expensive large-scale renewable energy project in Alaska and would provide stablepriced power for 25-30 years, helping alleviate a possible Southcentral energy crisis. ■

STIMULUS FUNDS IMPACT

The Kodiak Electric Association Pillar Mountain Wind Project on Kodiak Island is operating three GE SLE 1.5 MW wind turbines (two shown above), which are similar to CIRI’s anticipated Fire Island units.

Site preparation started this summer and CIRI officials are hoping it receives regulatory clearance by March before going through financial closures the following month. None of this can happen, though until power purchase agreements with local utilities such as Chugach Electric Association and Municipal Light and Power are made so the project can be financed and constructed before $44 million in available federal grant funding expires. Budgeted at $163 million, the federal support is

When $1.6 billion in American Recovery and Reinvestment Act (ARRA) money – also known as “stimulus funds” – was paid out to Alaska this year, the money could not have come at a better time. While other states were sinking deeper and deeper into the recession, the money helped Alaska hold on by funding important projects that also created good paying, long-term jobs. Congress passed the ARRA at the urging of Pres. Obama as a direct response to the economic crisis. Of the total pot, about 30 percent went to stimulus construction projects for highways, airports and defense, with the remainder to tax relief and small business incentives. Alaska fared well, ranking 36th in terms of most absolute dollars, and for overall transportation and infrastructure spending, the state came in 42nd. Per capita comparisons are difficult with the stimulus money because it specifically directs much of the money to some of the hardest-hit

www.akbizmag.com • Alaska Business Monthly • December 2010

states and large urban areas, according to the Center for American Progress. The resulting projects are critical for both the quality of life of people and future development of communities statewide. Alaska’s military bases alone received $250 million through the Department of Defense for making the upgrades that will allow them to restore and modernize facilities and continue their mission in Alaska and the Pacific Rim, reaffirming Alaska as strategically valuable from a military perspective. In transportation, there was about $170 million in highway construction and $80 million in aviation stimulus projects, says John MacKinnon, executive director of Associated General Contractors (AGC) Alaska. “There is no question the ARRA projects have been a boost to the construction economy, especially those projects on the civil or horizontal side of the business,” he says. “The building, or vertical, sector of construction was down 15 percent in 2009 and this year we’re starting to see some of the building projects that were part of the stimulus.” ARRA has three goals: to create new jobs and save existing ones, spur economic activity and invest in longterm growth, and foster unprecedented levels of accountability and transparency in government spending. To do this, nationally ARRA provides $288 billion in tax cuts and benefits for millions of working families and businesses; increases federal funds for education and health care as well as entitlement programs (such as extending unemployment benefits) by $224 billion; makes $275 billion available for federal contracts, grants and loans; and requires recipients of ARRA funds to report quarterly on how they are using the money. Construction and repair of airports, roads and bridges, as well as scientific research and the expansion of broadband and wireless service, are also included among the many projects in the recovery act. While many of these projects focus more immediately on jumpstarting the economy, others – especially those involving infrastructure improvements – are expected to contribute to economic growth for many years. ■

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www.akbizmag.com • Alaska Business Monthly • December 2010

ELECTIONS UPDATE As is typically the case with Alaska elections, it was anybody’s guess which way the football would bounce when voters went to the polls to cast their ballots in local and statewide elections Nov. 2. The race for governor typically holds everyone’s attention, especially considering that several in the past rank as some of the most expensive and bitter races in the state’s history. This year, the race between Gov. Sean Parnell and former legislator Ethan Berkowitz never got its share of the limelight, as Parnell handily won with 59 percent of the vote. Instead, the most closely followed race was for Sen. Lisa Murkowski’s congressional seat. After losing the primary Republican nomination to Joe Miller from Fairbanks, she launched an innovative and well-funded write-in campaign. Miller was unknown until the Tea Party Express backed him financially and former Gov. Sarah Palin endorsed him. At the same time, the Democratic party got behind former Sitka Mayor Scott McAdams – who few had even

not to win. Miller trailed 34.3 percent and McAdams made a decent showing with 23.7 percent of the vote. If Murkowski holds onto her seat, it would be the first successful write-in campaign for the Senate since 1954, and the first by a woman. Though Murkowski said she was poised to make history, alluding to a win, Miller campaign was adamant about not conceding. Counting the 83,201 write in ballots began Nov. 10, with the State Division of Elections expected to certify a winner Nov. 29. ■ Photo courtesy the Lisa Murkowski Campaign Office

Sen. Lisa Murkowski at Eklutna Lake.

heard of until August – with hopes he would capture party line votes along with those from disgruntled voters who did not want to get caught in the Murkowski-Miller fray. At press time, with 100 percent of the precincts reporting in the three-way race, write-in ballots had gained 41 percent of the vote, an indication pollsters say would be hard for Murkowski

PEBBLE MINE BATTLE Zero harm. That’s the message on the safety vests worn by workers on the Pebble Mine Site in Bristol Bay. This is just a small part of attempts by the Pebble Partnership to let Alaskans know that it is committed to its core value: to invest in responsible mining technologies that actively support a healthy, respectful and sustainable coexistence with the environment and Southwest Alaska culture. But for every step it takes to move forward and educate about the mine,

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www.akbizmag.com • Alaska Business Monthly • December 2010

those against the development are waiting with their own multi-million dollar war chest and a list of individuals and organizations enlisted worldwide in an attempt to stop the Bristol Bay project. And things havenâ&#x20AC;&#x2122;t even really gotten started. The Pebble project is currently in a pre-feasibility and pre-permitting research stage, conducting extensive environmental studies. As it works toward the beginning of the permitting process, it will begin asking for statewide support and the negative media campaign directed at the development is sure to intensify as it attempts to convince residents of the region the proposed mine will not irreparably harm the Bristol Bay Watershed, home to the worldâ&#x20AC;&#x2122;s largest sockeye salmon run that generates more than $400 million annually and 1,600 jobs. Bob Gillam, a wealthy Anchorage business owner and Lake Clark homeowner, has helped bankroll the antiPebble efforts since 2007, including a statewide media buy that features print and electronic ads that use a shock value strategy.

Photo courtesy of the Pebble Partnership

A scientist counts fish as part of the Pebble Partnershipâ&#x20AC;&#x2122;s intensive environmental research at the project site â&#x20AC;&#x201C; the most extensive data gathering ever undertaken for a mining project in the state of Alaska.

â&#x20AC;&#x153;When all the copper and gold is gone, we will be left with the largest earthen dam in the world holding back perhaps the largest toxic dump on Earth,â&#x20AC;? Gillam wrote in a newspaper editorial. â&#x20AC;&#x153;The mine developers will take our copper and gold, make their money and be gone. Alaska will be left with a devastated river drainage system, a toxic dump and no jobs.â&#x20AC;?

In the meantime, Pebble relies on its mantra, saying it is investing more than $400 million in work programs, research and comparative analysis, including more than $100 million in environmental studies so it can develop the mine to safely co-exist with the environment. If at any point, it is determined that is not feasible, it will not continue to advance the project. Let objective, scientific data speak for itself, Pebble officials say. â&#x20AC;&#x153;Pebbleâ&#x20AC;&#x2122;s perspective on the media campaign is that Alaskans are not well served when an important issue such as Pebble is carved into 30-second sound bites, many of which are cast in a negative, emotive tone,â&#x20AC;? says Mike Heatwole, vice president of public affairs for Pebble. â&#x20AC;&#x153;Pebble focuses its effort on using facts to educate Alaskans about the economic challenges faced in Southwest Alaska, how the Pebble opportunity could help improve them, and how their vast environmental studies will guide a world-class mine plan that will meet the strict environmental standards of the State and federal government.â&#x20AC;? â?&#x2018;

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OIL & GAS

Editor’s Note: Commissioner Pat Galvin was interviewed for this story prior to his resignation at Gov. Parnell’s request.

Alaska Revenue Commissioner Pat Galvin at his office in downtown Anchorage.

Good or bad for Alaska? BY JACK E. PHELPS

the 1970s was still in place. Known as the Economic Limit Factor (or ELF), it levied taxes against the producers based on the gross value of hydrocarbons produced. Tax stability was considered important at the time because there was a strong and growing sentiment it was

www.akbizmag.com • Alaska Business Monthly • December 2010

n 2003, then-Gov. Frank Murkowski announced his intention to work with the “Big Three” oil companies operating on Alaska’s North Slope to achieve “oil tax stability” over the longer term. The basic tax system that had been established when the Prudhoe Bay field was first developed in

time to find a way to take the stranded North Slope natural gas to market. Gas prices were on the rise, and demand in the Lower 48 was expected to continue growing. For the first time, the producers were talking seriously about building a pipeline to transport gas from Prudhoe. To do so, however, would

require a very substantial investment on the part of the companies who owned the rights to the gas. The projected cost ran to several billion dollars; not exactly chump change.

NEW NET APPROACH The Murkowski administration introduced a new and different approach to taxing the North Slope oil fields. Instead of a tax based upon gross value, it proposed a tax based on the net value of oil and gas production, known as the Petroleum Profits Tax

(PPT). After significant legislative review, many hearings and much discussion, the PPT was passed into law in August 2006. It established a 22.5 percent base tax rate. It also included a progressivity element under which, when per barrel net oil value surpasses $40 per barrel, the rate increases by 0.25 percent per dollar. This represented a net increase in tax revenue to the State of Alaska, but the intention was for it to be a long-term agreement which would provide a stable tax regime for oil

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production. The proposed next step was to reach agreement with the producers on a gas pipeline to be built under the existing Stranded Gas Act. Gas was to be taxed separately from oil under this proposal. The gas tax rate would be negotiated with the producers as part of an agreement for them to construct a gas pipeline from Prudhoe to Alberta, where it would tie in to the existing North American gas pipeline network, which already ties western Canada to major markets in the Lower 48 states. This approach increased the tax burden on the oil industry. The oil companies, however, understood that ELF had outlived its acceptability by the State and, according to company officials, the industry was willing to work with the PPT and begin to move toward building a gas pipeline.

GAME CHANGERS At this point, two events occurred that would change the game entirely. One was a change in administrations. The second factor was a corruption scandal that broke upon the Alaska political landscape, revealing that bribery had tainted the process under which the PPT had been enacted. The new governor announced she would reopen the issue of oil field taxes and subsequently introduced amendments to the PPT in what became known as Alaska’s Clear and Equitable Share (ACES). “ACES made a real difference in Alaska,” said Steve Rinehart, spokesman for BP Exploration (Alaska) Inc. “It made it harder to put new dollars here. Today’s oil costs more than yesterday’s.” Additionally, the progressivity element of ACES set the threshold for an increased levy at $30 per barrel net value and established the rate increase at 0.40 percent per dollar, compared to 0.25 percent per dollar at $40 net value, as it was under the PPT. This was a major hit and, according to the oil companies, one that began to make new investment in Alaska oil exploration and recovery untenable. According to Revenue Commissioner Pat Galvin, ACES would “increase the State’s ability to implement a net-based tax” on oil production. It

www.akbizmag.com • Alaska Business Monthly • December 2010

also greatly enhanced the State’s ability to provide reports to the legislature and the public about the oil and gas industry’s activities and spending in Alaska. On the other hand, ACES significantly increased the tax burden beyond what had already been done under the PPT. Instead of a 22.5 percent base rate, ACES featured a 25 percent base rate. The base rate applies to the value of oil after all exploration, development, production, operating and transportation costs are deducted. The amount of these deductions is determined by the State, under the provisions of ACES.

says Crockett. “They do provide some value, especially to exploration companies. But when you look at the big picture, the rate of return is still reduced too much.” It is also self-evident that a significant percentage of the exploration dollars being committed to Alaska by major oil companies is going toward work in the Outer Continental Shelf (OCS), where ACES does not apply. This doubly affects the situation on shore not only because it may be diverting capital spending away from activities

that contribute to State revenue flow, but also because contributions to the trans-Alaska oil pipeline throughput from many offshore projects is a decade away, at least.

IN-FIELD WORK One factor pointed to by State officials, which they say indicates the present tax scheme is not counterproductive to oil company investments in Alaska, is the steady growth in employment numbers. But that claim is countered by the industry. Crockett says a lot of the

INVESTMENT TAX CREDITS An important feature of the new oil tax approach under ACES is its provision for tax credits that can be applied directly to producers’ net tax liability. According to Galvin, the credits represent “an incentive that goes primarily to tax savings for further investments.” Approved credits are “deducted immediately from the per barrel production tax liability,” Galvin says. This advantage is somewhat diminished, according to industry officials, by the fact that many of the credits are earned by exploration companies who do not have taxes they can use the credits against. Their options are to sell the credits at a discount to the production companies or sell them to the State for full value. There is no incentive for the producers to purchase them at full value. “The producers are not buying the credits in any volume,” says Marilyn Crockett of the Alaska Oil and Gas Association (AOGA). Galvin says the State has extensive modeling on how (ACES) affected investment economics. “What we don’t know is what analysis companies are using to say that it has resulted in projects no longer being economically attractive.” The industry responds that part of the capital presently flowing into Alaska is directed at maintaining and replacing existing infrastructure and continuing production at existing facilities. Its view is that ACES doesn’t do enough to encourage new investment of the type needed to offset the increased tax burden. “The capital credits are positive,” www.akbizmag.com • Alaska Business Monthly • December 2010

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increase in employment can be attributed to the current development of two new fields by relatively minor players on the North Slope, Eni Petroleum and Pioneer Natural Resources. “Small fields do have a lot of value,” Crockett says. “But in-field work should be the barometer for determining the investment that will produce more barrels (of oil) in TAPS.” Galvin agrees in-field work is a critical factor in the future health of oil production from the North Slope. A key goal of the current administration, Galvin says, is “increased spending that relates to increased production” and results in higher volume moving down the pipeline to Valdez. During the last legislative session, Gov. Sean Parnell’s administration proposed new tax incentives encouraging investment in existing fields, including new in-field drilling. The Legislature did not take it up. Another problem indirectly related to taxes, but reflecting the same issues, is the difficulty in exploring and developing promising new areas in the general vicinity of the large fields surrounding Prudhoe Bay. Galvin says development in the National Petroleum Reserve - Alaska (NPR-A) would be subject to ACES, whereas the OCS is not. Both the industry and the State agree more NPR-A leases should be offered by the U.S. Department of the Interior. Failure by the federal government to do this could be a significant factor in oil company decisions whether to invest more in Alaska, thus affecting the very matters at issue in the discussion over ACES.

HIGH TAX RATE Crockett insists changes need to be made to Alaska’s current high rate of taxation. In passing ACES, Crockett said: “The State of Alaska sent a message that they want the tax rate (on oil) as high as they can get it – a signal that the tax on natural gas will also be high, rather than reasonable or low,” should a natural gas pipeline actually be built. Under ACES, gas is valued on a per barrel of oil equivalency basis and is linked with oil in the tax structure, Galvin said. Clearly there is a difference of opinion over whether this is a good thing. While the State acknowledges there

www.akbizmag.com • Alaska Business Monthly • December 2010

For its part, AOGA has a pretty clear vision of what is needed. In its view, the State wants to fix ACES, if at all, without changing the progressivity provisions. Yet this is precisely what the industry believes needs to be done. may need to be some adjustments to ACES, particularly to further encourage investment in enhancing existing fields, it remains skeptical about industry claims that ACES is a significant barrier to new investment and new activity in Alaska by the oil industry. “They are saying it discourages investment and they don’t like it,” Galvin says, “but we need information we can analyze. We need data to validate their claims. We need to have something to ground a decision” that the tax structure must be modified.

One problem with the need for the kind of demonstration Galvin wants is the issue of confidentiality. “Each company would have to go to the State one at a time and reveal proprietary information,” Crockett says. Even then, if the State uses any of that data to make taxing decisions, some of it could make its way into the public record, creating a huge disincentive for the oil companies to cooperate. For its part, AOGA has a pretty clear vision of what is needed. In its view, the State wants to fix ACES, if at all, without changing the progressivity provisions. Yet this is precisely what the industry believes needs to be done. Crockett agrees there can be some value in changing the tax credit provisions to more directly address the need for new development drilling in older, producing fields. But, she says, “that doesn’t address the overall problem that we face. It’s just applying band aids.” What must happen to revitalize the oil industry, according to AOGA, is to revisit and adjust the progressive element in ACES.

“Clearly progressivity must be addressed,” Crockett says. “It is the simplest to fix and it is the feature of ACES that has the most impact on the upside.” Galvin says the effect of the progressive tax provision “depends on where you are in the price range.” One fact all agree on is the health of the oil and gas industry in Alaska is vital to the State’s economy and the tax structure plays a critical role in the well-being of both the industry and the government. That being the case, ACES and its various provisions will likely be a major topic of discussion during the 2011 legislative session. ❑ About the Author Jack. E. Phelps is a retired natural resources adviser for the State of Alaska. He is a former executive director of the Alaska Forest Association and has served as professional staff for the U.S. Senate Committee on Energy and Natural Resources. He owns ExecuSwift Consulting in Palmer.

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www.akbizmag.com • Alaska Business Monthly • December 2010

OIL & GAS

Editor’s Note: Commissioner Pat Galvin was interviewed for this story prior to his resignation at Gov. Parnell’s request.

The flow of oil has been greatly reduced since the trans-Alaska oil pipeline was built, creating some alarm in the industry. There is controversy over what factors are stopping producers from further exploration and development, which, if done, might once again make oil flow at a generous pace.

BY MIKE BRADNER

ov. Sean Parnell, now elected to his own first four-year term, will be asked to make good on his pledge during the campaign to reexamine the State production tax on oil. Many in industry complain that the State’s high rate of taxes is discouraging new investment, and blame the tax policy, which Parnell inherited from former Gov. Sarah Palin, for a broad decline in industry activity on the North Slope. Having stepped in to be governor after Palin resigned, Parnell, the former lieutenant governor, maintained he could see no reason to change the tax, but also expressed a willingness

to consider “new ideas” if they could be justified. In general, though, he maintained the status quo and left tax policy to Revenue Commissioner Pat Galvin, who Palin appointed. Last year, Parnell asked Galvin to review the tax last year as to whether it was “working as intended.” Galvin reported late in the year that major changes were not needed, but did recommend what amounted to tinkering, an expansion of tax credits for in-field well work. Parnell proposed that change, but the Legislature did not adopt it except in Cook Inlet. The governor changed his position in the closing weeks of the general elec-

tion campaign, however. In a speech to the Resource Development Council, an Anchorage-based business group, Parnell proposed a change in the basic production tax, to “cap” the tax rate in an escalator formula in the production tax law to ease its effects at higher oil prices. The governor also suggested a new incentive for “technically challenged” oil developments, an example being the large heavy oil deposits on the North Slope. In the heat of the campaign the governor was vague on details of his proposals would work. Industry officials were guarded in their reactions. Parnell’s revenue commissioner,

www.akbizmag.com • Alaska Business Monthly • December 2010

Galvin, later said no decisions have been made as to what point the cap on the tax would be effective. The Democratic opponent in the race, Ethan Berkowitz, immediately criticized Parnell’s proposal as a late-campaign election ploy.

IS SILENCE GOOD? For most of the campaign Parnell had been silent on any plan to change the State tax. However, now that the proposal is on the table there is an expectation he will follow through with one more bill, submitted to the Legislature in 2011. Whether just “capping” the tax in the escalator formula will be a significant enough change to ease the negative effects of the overall tax remains to be seen. Industry is also awaiting details of his other proposal, on incentives for heavy oil or other challenged oil projects. The State production tax on oil (there is a separate tax on gas) imposes one of the world’s highest tax rates on “marginal” new oil investments and also places a high rate of tax on all oil production. In this context, a marginal investment is an investment in a new project, as a new set of wells or new field development where the State tax is considered on that specific project. Alaska’s net profits-type production tax tends to treat each new investment differently because of differences in costs of the projects. Project-by-project evaluations are always done, but now the tax is part of the evaluation.

END RESULT The bottom line is if the tax is too high and to the point that a project is uneconomic, the investment is not made. Something like this appears to be happening on the North Slope, where the companies argue there are projects in existing fields that have not been done because of the State tax. Over the past two years ConocoPhillips has blamed its failure to proceed on a new ultralow sulfur diesel plant in the Kuparuk field on the State tax, as did BP on its delay of a series of well pads and new production facilities on the west side of Prudhoe Bay. Roger Marks, a retired state economist, had done a paper showing the top tax rate on new projects – the investments at the margin – can exceed

80 percent of net profits. Independent studies done for the Department of Revenue have found the total “government take” of the share of net revenues from Alaska’s oil production is among the highest in the world. It is also true industry activity has fallen off, although revenue commissioner Galvin argues about this. According to statistics from the Alaska Oil and Gas Conservation Commission, an independent State regulatory agency, drilling activity has dropped steadily since 2006, the year Alaska’s production tax was changed to a netprofits tax, although the major change in the tax came in 2007, under Palin. This year will see a record low in exploration drilling in the state. Galvin’s argument about industry investment stems from data the Revenue Department receives from the companies on their future investment plans, one requirement in the tax changes made in 2007. That information shows money being spent by the producing companies has not declined over the past three years but in fact has increased. The industry’s response is that much of this is money being spent on accelerated maintenance and the rebuilding of field pipelines in the large Prudhoe Bay field since corrosion problems came to light in 2006. What is important is there is less money being spent on new drilling and projects that will produce more oil. The broad decline in drilling substantiated in the oil and gas conservation commission data tends to support this, since the drilling of new wells is a fundamental strategy by companies in replacing oil that has been produced and easing the decline of the aging North Slope fields.

STATE SPEAKS In response, however, State officials maintain the decline in drilling may be temporary because the large producing companies have been putting so much of their budget in the pipeline remediation and maintenance effort since 2006. Kevin Banks, the State oil and gas director, told an energy conference in Anchorage in September that much of this work is being completed this year, and he expects the companies’ budget to shift more toward new drilling next year.

www.akbizmag.com • Alaska Business Monthly • December 2010

As an example, Banks said it appears new drilling planned in the large Kuparuk River field in 2011 will be at about the same level as in 2010, according to development plans the Kuparuk field owners submit to the division. Although the companies and State officials like Galvin and Banks have differing interpretations of the investment climate for industry on the Slope, it is clear the governor has concluded that some changes need to be made. The scope of those has yet to be determined, and it is also uncertain whether the Legislature will adopt what Parnell proposes and whether lawmakers will make their own changes to a tax bill, which they usually do.

VIEWS DIFFER Surprisingly, one element of uncertainty in any change to the petroleum tax is whether industry itself will be able to be unified in support of a specific proposal. While there is general support for the idea of lowering taxes, there are differing views as to what needs to be done. In the last two years, in fact, Gov. Parnell mentioned he has gotten mixed signals from the industry. One major producer, ConocoPhillips, was quite clear about the need for changes, but other companies told Parnell – he did not identify the firms – they preferred no changes at the time. It’s likely there was agreement within the industry that changes were needed, but there are differing views on a legislative strategy and timing. Having watched the Legislature make substantial changes, and to increase taxes, when Palin brought in relatively modest proposals in 2007 (her original proposal), many companies were ambivalent about another legislative push without a clear assurance from the governor he would seek to control changes to a bill in the Legislature or veto it if lawmakers produce a bill that is counter to what was intended. However, Parnell has said he is not only looking for assurances of general industry support for any proposal he might make but also industry will actually invest if the taxes are changed. With a change in the general petroleum tax this may be difficult. Taxpayer response is easy to measure in

the case of an investment tax credit, where the credit is not given unless the investment is made, and this is the main reason why Parnell has, to date, backed tax-credit approaches.

THINKING HARD Whether incentives actually result in more investment is very much on the minds of State officials, in fact. The State has a generous set of exploration incentives, for example, but the low level of exploration activity is a real puzzle. Alaska’s petroleum tax laws contain incentives for exploration wells that are arguably the most generous in the nation. For several years Alaska has allowed up to 40 percent of the cost of certain exploration expenses to be credited against State taxes on a dollarfor-dollar basis, and all industry capital investments, including for production, are eligible for a 20 percent tax credit. In addition, for Cook Inlet exploration involving deeper waters, the Legislature approved in 2010 an incentive for the State to flat pay the bulk of expenses related to bringing a “jack-up” rig to Cook Inlet, a floating drill unit capable of drilling test wells in deeper waters. There are likely many explanations for the lack of exploration activity, but on a broad level what may be happening is the benefit of the incentives are being overshadowed by the overall negative effect of the high tax on production if an explorer gets lucky and makes a big find. Other factors in the equation, however, are the high costs the industry pays for construction and support work in Alaska relative to other places, the relatively modest sizes of the exploration prospects (in lands open to exploration, geologists believe the really big discoveries have been made), and a regulatory environment not friendly to industry, compared to other states.

HISTORY LESSON By way of background, for years Alaska had a fairly orthodox State petroleum production tax modeled on those of other U.S. producing states. The original tax, adopted before statehood with the tax rate as a kind of “placeholder,” was 1 percent of the wellhead value of the oil or gas production. After statehood and the discoveries in Cook Inlet

www.akbizmag.com • Alaska Business Monthly • December 2010

and the North Slope the percentage was increased, at first to 5 percent and then to a formula with an approximate average of 10 percent. The State also adopted other State taxes on oil, including a State oil and gas property tax, the only State property tax, on field production and transportation (pipeline) facilities, and a special corporate income tax on oil producers that is different than the corporate income tax non-oil corporations pay in Alaska. Separately from taxes, the State also receives a royalty on oil and gas production from State-owned lands, which include most Cook Inlet, Kenai Peninsula and North Slope producing fields. An important difference between taxes and royalties is the royalty is set out when the leases are issued and because this is a contract the royalty cannot be changed unless both parties agree, which happens from time to time. Taxes, in contrast, can be changed any time by the Legislature. The percent-of-wellhead-value approach adopted in the production tax was also adopted for the royalty in the State lease, and again, the approach is typical in what is used in other states, by the federal government on federal lands, and by most private landowners in other states. An important difference for Alaska is value is determined in other states mostly by actual sales of oil or gas in the producing fields (i.e., at the “wellhead”). In Alaska, however, very little, if any, oil is sold in the fields. Typically the producers transport the oil by pipeline and tanker out of state to where they can sell to refineries, now mostly on the U.S. West Coast. Thus, the value for most of Alaska’s oil is determined by subtracting tanker and pipeline transportation costs from the market sales prices, thus arriving at a value for the oil in the producing field. The calculation is similar for the production tax and the royalty. The Alaska royalty is 12.5 percent or 16.6 percent on most leases, except that with royalty the State also has the option to take its royalty “in kind,” or in the form of physical oil or gas. This has been done for years for most of Alaska’s oil royalty to supply refineries in the state.

CHANGE HAPPENS Using this method to tax the oil based on the value calculated on the North Slope has been called a “gross revenues” tax because before 2006 the tax did not allow deduction of drilling or field development costs. This changed in 2006 when the Legislature adopted, at the urging of former Gov. Frank Murkowski, a net-profits tax approach. This was a significant change on its own, but Murkowski coupled it with another innovation, a tax credit for capital investment to encourage oil producers to invest their profits in Alaska. Murkowski’s proposal was adopted in 2006 but the Legislature added changes, most important a “progressivity” formula that escalates the net profits tax rate as oil prices rise. When Palin came into office, she reviewed Murkowski’s new tax and proposed what were at first relatively minor changes, reducing the tax-raising effect of the progressivity formula (she called her proposal Alaska’s Clear and Equitable Share, or ACES). However, the Legislature again added its changes, substantially increasing the effect of the tax. When crude oil prices spiked in 2008 these features of the tax, mainly the progressivity formula, brought substantial revenues into the State treasury. The net effect of this is the increased State production tax substantially increased revenues just as the nation tipped into the sharp national recession, and the financial cushion Alaska has enjoyed largely because of budget surpluses has allowed large capital budgets which helped the state’s economy stay on an even keel and escape some of the worst effects of recession. The downside effect of the tax, however, is it appears to have discouraged industry investment at a critical time when the large oil fields of the Slope are in decline, and more drilling and exploration is urgently needed. Most of the criticism of the State tax has been on the progressivity formula and its effect, and this is the main focus of Parnell’s proposed review of the tax. In considering revisions to the tax the governor and Legislature will consider these tradeoffs, of the short-term financial security for State government against a broad benefit of a tax reduction in stimulating the state’s main revenue❑ generating industry, oil and gas.

www.akbizmag.com • Alaska Business Monthly • December 2010

NATIVE BUSINESS

Alaska Village Corporations: Doing Well

Will potential revisions to the 8(a) program change that? Photos courtesy of Cape Fox Corporation

Cape Fox Lodge, a subsidiary of Cape Fox Corp., is situated on a hillside above Ketchikan’s Creek Street with sweeping views of the Tongass Narrows, downtown Ketchikan and the Ketchikan Marina.

BY JULIE STRICKER

rom a distance, a corporation with only a few hundred shareholders and a tiny resource base located in a region known outside Alaska mainly for its proximity to a long-distance sled dog race doesn’t look like a good business bet. But McGrath-based MTNT Ltd. is healthy, growing and planning for a bright future. 2010 will be the biggest year in the Alaska Native village corporation’s history, says Tom Devine, vice president of business development. MTNT Ltd. is the village corporation for McGrath, Takotna, Nikolai and Telida. Although hundreds of people descend on the region 220 miles northeast of Anchorage every March because the Iditarod Trail passes through three of the four villages, total year-round population is less than 500. Consolidating the villages – Telinda has a population of three – gave them a longer reach, but the corporation’s relatively small size is one reason for its success. “That allows us to get all our decisionmakers in one room quickly and get things done,” Devine says.

HISTORY LESSON The Alaska Native village corporations were created under the 1971 Alaska Native Claims Settlement Act. Under ANCSA, 44 million acres and $962.5 million was divided among 12 Alaska-based regional corporations and about 220 village corporations to settle aboriginal land claims. The corporations have a dual mandate to provide for shareholders financially, and to support their social, cultural and educational needs. The regional corporations, with their larger land base and funding, have generally had more financial success overall, although a handful of village corporations in resource-rich areas also fared well. It wasn’t until the corporations began to enter the governmentcontracting field in the late 1990s that success became more widespread and villages became less dependent on resources, although many villages are still lagging economically.

THE SHAREHOLDER CONNECTION The village corporations enjoy strong ties with shareholders and understand

their needs and the challenges of living in rural Alaska. Devine says one of the key reasons MTNT is successful and growing is that the board of directors, management and 363 shareholders are in harmony about the future of the corporation. “In my 20 years of work, I’ve never had a group of people who have this kind of harmony,” he says. “We have a board of directors that wants to make this work. “We’re in the same boat and wanting to row the same way and are accountable to the same agenda. That alone gets dividends.” The management team and the board of directors are working on a 10-year plan for MTNT, which Devine says will propel the company to even greater success.

INVESTMENTS MTNT owns and operates the power plant in McGrath and branched out into the energy sector through government contracting. The corporation owns energy, construction and property-management companies

www.akbizmag.com • Alaska Business Monthly • December 2010

with operations in Alaska, Washington, California, Florida, Wisconsin and Virginia, and recently started working in Afghanistan. MTNT has fewer than 60 employees and five subsidiaries. Two subsidiaries were accepted into the Small Business Administration’s 8(a) program, which grants certain preferences to help small, disadvantaged businesses compete in the marketplace and access government contracting. Devine says recent efforts to limit Alaska Native companies’ access to the The Multi-Use Technology Training SBA 8(a) program are misguided. Center, back left, was recently com“This affects a tremendous amount pleted in Saxman. It is owned by the of people, and these people have a nonprofit Cape Fox Heritage Foundation. voice,” he says. “It’s collectively pulling In the foreground is the Joseph the Native American people together C. Williams Sr. building, the and other minority and disadvantaged headquarters for Cape Fox Corp. businesses and contractors, they’re all in alliance with us. We’re doing busi- ranking of Alaska businesses, Alaska Native businesses filled nine of the top ness with all of them.” 10 spots. They also were responsible for providing 15,000 jobs in Alaska and POWER HOUSES In fiscal year 2009, Alaska Native 57,000 around the world. businesses brought in more than Although they are much, much $10.8 billion in revenue, the bulk of smaller, in terms of shareholders and it from government contracting. In land holdings than the regional corAlaska Business Monthly’s annual porations, some village corporations

are heavyweights in terms of economic clout. The most successful is Chenega Corp., which holds more than 70 federal contracts through a combination of sole-source and competitive contracts. It had $1.08 billion in revenue in 2009. “Truly the benchmark for success is Chenega,” Devine says. “They really take care of their shareholders and have grown a very successful and solid company.” Other village corporations in the top 20 Alaska businesses include Afognak Native Corp., which reported $766 million in 2009 revenue; The Eyak Corp. pulled in $423 million; Ukpeagvik Inupiat Corp., with $317 million; Cape Fox Corp., with $255 million and Tyonek Native Corp., with $171 million. Their success hasn’t escaped scrutiny.

THE 8(a) CONFLICT Alaska Native businesses have special considerations when it comes to operating in the federal marketplace. They can win sole-source contracts without caps, while others are

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www.akbizmag.com • Alaska Business Monthly • December 2010

capped at $3.5 million for services and $5.5 million for manufacturing. They can have multiple companies operating under the program, as long as they are in different sectors, while others are limited to one. Those provisions are under attack. In 2006, amid allegations that the corporations were abusing the 8(a) program, the General Accounting Office said the SBA had insufficient oversight of the program. Missouri Sen. Claire McCaskill is heading an effort to strip Alaska Native corporations of their contracting advantages. and planned to introduce legislation after press run. The corporations would still be able to participate in the program, but would have to abide by the same rules as other entities, be designated as socially disadvantaged enterprises managed by equally disadvantaged people and meet size requirements. Mike Brown, CEO of Cape Fox, like the other Alaska Native corporations, is keeping a close eye on legislation that would affect SBA 8(a). Cape Fox, which is based in Saxman,

near Ketchikan, has subsidiaries in the program as well as some that have graduated. The corporation’s businesses focus on information technology, professional services, hospitality and title and escrow services. The corporation diversified into government contracting in 2003 as the timber industry slowed and the pulp mills pulled out of Southeast Alaska. Revenues jumped from $8 million in 2003 to $60.4 million in 2007, then tripled to $224.19 million in 2008 and rose again to $255 million in 2009. Besides timber, Cape Fox also runs several tourism-related businesses in Saxman, known for its totem pole park and vibrant Tlingit culture. Tourism, however, is a seasonal business and the corporation needed to find year-round sources of income. When asked what advice he would give other corporations that are still struggling, Brown listed two key points: a) hire the right managers, and b) strong marketing and business development. “You’ve got to have people looking for opportunities,” he says. “It takes money and it takes time.

“Sometimes, you’ve got to think outside Alaska.”

NATURAL RESOURCE RICH That approach worked for Afognak Native Corp. Like Cape Fox, Afognak is located in an area that’s rich in natural resources. The company, centered in the northern Kodiak Island region, built its financial base on timber, says Jana Turvey, vice president of corporate affairs. In the late 1990s, the board of directors had the foresight to realize the resource was finite and started researching government contracting, Turvey says. The company today has businesses in construction services, logistics support, information technology and oilfield technology. Afognak also provide operations services and security services. Like other successful Native corporations, Afognak not only has paid dividends to its approximately 780 shareholders, but also provides scholarships for college and vocational training and mentoring opportunities. The corporation supports groups that are working to preserve and

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www.akbizmag.com • Alaska Business Monthly • December 2010

revitalize the Alutiiq culture, such as the Alutiiq Museum and Archaeological Repository and the Dig Afognak Culture Camps. It set up a Shareholders’ Permanent Investment Fund and Shareholders Trust Fund, similar to the State of Alaska’s Permanent Fund, to provide long-term economic benefits for future generations. On the business side, Afognak is focusing on building on its core competencies and is looking to continue to diversify its holdings outside the 8(a) realm. It’s a strategy other corporations are following, in their own ways.

REACHING THOSE IN NEED The Kuskokwim Corp. was formed in 1977 by a merger of 10 village corporations located along the middle Kuskokwim River, in one of Alaska’s most economically depressed regions. The corporation, with businesses involved in government services, construction, aerospace and real estate, saw a 182 percent jump in revenues in 2009 over the previous year, pulling in $87 million. Its goal is to reach the $100 million mark in five years. It has 3,100 shareholders of

Athabascan and Yup’ik heritage. While its recent success is due to government contracting, the corporation also holds rich resources, which brings the possibility of more jobs and infrastructure to the remote area. The Donlin Creek prospect, one of the largest known undeveloped gold deposits in the world, is located on land owned by TKC and Calista Corp. Based on a current estimate of 33.6 million ounces of gold reserves, the project, owned and operated by Donlin Creek LLC., which is owned equally by NovaGold and Barrick Gold U.S., could have a life of 25 years and employ hundreds of workers if developed into a mine. Cape Fox’s Brown has worked for several Alaska Native corporations over the years. He says comparing them with each other is difficult because they are all different. “The relationships were all productive,” he says. “They have different approaches to the same problem.” A common issue is the recent focus on SBA 8(a) practices and the threat of stripping Alaska Native corporations’ priorities. Brown helped develop the first Alaska Native business under 8(a) in the 1980s when he worked for Arctic Slope Native Corp. In the 1990s, he moved to Chugach Alaska Corp. and started “a bunch” more. Those successes, and federal regulatory changes that benefited Alaska Native businesses, ushered in the past decade of explosive growth. Brown laments the death of former Alaska Sen. Ted Stevens, who died in a plane crash in August. Stevens was a strong supporter of the Alaska Native corporations and proposed much of the legislation that benefited them. “Stevens and (Alaska Rep.) Don Young were there, every step of the way,” Brown says. He is angry that McCaskill is targeting the Alaska Native community when the corporations have finally found a business model that works for them. “There’s no balance, there’s no fairness in what she’s trying to do,” he says. “She has an agenda and the agenda is to kill the Alaska Native participation in the 8(a) program. “Now that it’s a success, they want ❑ to take it away.”

www.akbizmag.com • Alaska Business Monthly • December 2010

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TOURISM

Pacific Northwest Getaways Alaskans on the go BY PEG STOMIEROWSKI

Portrait de Dora Maar (Portrait of Dora Maar), 1937 Oil on canvas, 92 x 65 cm Pablo Picasso, Spanish, worked in France, 1881-1973

www.akbizmag.com om • Alaska Business Monthly y • December 2010

Courtesy Musée National Picasso, Paris © 2010 Estate of Pablo Picasso / Artists Rights Society (ARS), New York. Photo Credit: Jean-Gilles Berizzi /Réunion des Musées Nationaux / Art Resource, New York.

he Pacific Northwest offers Alaskans a quick getaway with many places to go, including fine food and drink, specialty coffee havens and plenty of shopping. Museums, aquariums and science centers appeal to many Alaskans, as does the theatre. At the Seattle Art Museum, a highprofile exhibit of Picasso’s works, from the Musee National Picasso Paris, is on display through Jan. 17, a rare treat if you’re not likely to see it in France. Normally these works do not tour, but their home museum faced renovation. The exhibit includes more than 150 works, with paintings, sculptures, prints, drawings and photographs. The museum is closed on Mondays during the Picasso exhibit. “Weekend getaways to the Pacific Northwest are very popular,” says Mary Gasperlin, senior vice president of sales and marketing for

USTravel, the largest travel management company in the Pacific Northwest. “We offer packages that allow Alaskans the opportunity to enjoy all of the cultural activities of a major city, and still get you back to Alaska Sunday evening. This time of year, clients are particularly interested in weekend shopping for the holidays.” USTravel partnered with Inn at the Market, a Seattle boutique hotel, to offer a package, Gasperlin said, which includes the guest room rate, two VIP Tickets to see Picasso masterpieces, complimentary valet parking and an entry into a drawing for a $2,500 credit gift card to be drawn at the conclusion of the exhibit. Many visitors from Alaska enjoy sporting events involving Seattle Seahawks football, Mariners baseball or Sounders soccer. Others go for musical events at the Seattle Center. Still others enjoy sight-seeing cruises from Alaska to Vancouver, British Columbia, Canada, with attractive parks and markets and a notable Southeast Asian influence, or to Victoria, with its mild climate, historic buildings, museums and flower gardens. Tacoma, with its beautiful waterfront, draws golf aficionados and has the renowned Museum of Glass, featuring works of Dale Chihuly. Visitors can watch artwork being made from molten glass right before their eyes. Some favor heading to the Pacific Northwest coast to rent a beach cottage and watch the storms roll in. Some come seeking to set up a second home, or scout for a potential retirement haven. Alaska tourists drive or take Amtrak from Seattle to Portland to enjoy shopping, fine cuisine and another perspective. The trip takes about three hours by car, four by train. Tours of breweries and wine districts are also popular. Once Alaskans fly down to Seattle or Portland, many can be accessed in two or three hours, some in six.

VISITING WINE COUNTRY Touring wine country is one of the top reasons Alaskans choose to visit the Washington-Oregon corridor, which

is what one Alaskan couple did. Kay and Dale Pittman of Anchorage purchased the opportunity to tour a vineyard through a local fundraiser. Kay is still basking in fond memories of their September visit. In just a few days, she said, you can pack in quite a bit of relaxation and pleasure. In Alaska, the Pittmans might still be regarded as cheechakos. Dale’s work in the oil and gas industry takes them far and wide. Native Texans, they came to Anchorage a year ago from Sakhalin, Russia, and one of the things they love most here is the outdoors. “Certainly it was cold in Russia,” she says. On the weekend of Sept. 10, for a modest getaway, they used air miles to partially pay for a red-eye flight to Portland, Ore., where they spent four days in the Willamette and Columbia river valleys, examining vineyard operations and visiting several wineries. While they are wine lovers, they are not really connoisseurs, she says, and they had a lot to learn. Chancy Croft, their host, proved a gracious teacher at Croft Vineyards, which has been growing organic grapes more than 20 years. And while the weather can be rainy at this time of year, it was high and dry during their stay. “It was great,” Kay said. “It was warm and beautiful and always real positive.” After sleeping in, the Pittmans toured a couple of wineries a day, tasting the fruits of the vine. They met with Chancy and Toni Croft and toured the fields of Croft Vineyards with them, looking at the grape vines, their various textures and how they were planted and trimmed. “We were quite intrigued with the wine styles,” Kay said. While the Willamette Valley runs north-south out of Portland down to Salem, the Columbia River runs east-west and is much more arid, so this makes for some interesting contrasts, she said. The first night they stayed at a quaintly beautiful bed-and-breakfast in the heart of the Dundee Hills, Dundee Manor. Saturday they stayed at the Marriott Courtyard in Portland City Center, and that night, Chancy hosted them at a vineyard appreciation

dinner, where they learned even more from the vineyard manager and several people who had helped out with the previous year’s harvest. They also spent a night at the Hood River Inn, which Kay described as an affordable bed-and-breakfast along the banks of the Columbia River. They enjoyed leisurely walking along the river where it narrows and watched wind surfers participate in what’s a popular sport there. It was sunny and the temperature was closing in on 80 degrees. Besides its pears, cherries, peaches and other fruit, and view of Mount Hood, the town of Hood River has become an international gathering spot for wind surfers. Mid-day winds from the Columbia River Gorge are a siren song for these sports lovers. The Pittmans may have lucked out with the weather. Portland’s summer, like Alaska’s, had been damp and cool, she said, so vineyard harvests were running two weeks late. They enjoyed the cuisine, which focused on local and natural foods, including salmon, duck and fresh local greens. A favorite food establishment of Kay’s was Tina’s in Dundee. The Pittmans were looking for the right match of wine for their dinner, and, she said, Tina’s staff delivered. In hindsight, Kay has these tips for any other Alaska residents headed to the Pacific Northwest for a wine tour: bring shorts in case the weather shines on you, and rain gear in case it doesn’t, and if you’re renting a car, as they did, realize that driving limits how much tasting you can safely do on your vineyard tour. While they brought some wine back home, she regrets not having had time to sample Portland’s shopping scene. “Everyone says we should have made it to the coast,” she said, “but we didn’t go that way. We had never been in the Pacific Northwest at all,” she said, “but we’ll go back.” Back in Anchorage, they again attended the fundraiser that led them to Portland’s wine country. Once again, it featured the trip to Croft Vineyards. “They made us feel like we got a bargain,” she said, “because it went for quite a bit more.” ❑

www.akbizmag.com • Alaska Business Monthly • December 2010

TELECOMMUNICATIONS & TECHNOLOGY SPECIAL SECTION

Facebook and Customer Acquisitions Strategy and dedication needed to recruit fans BY ROSS JOHNSTON

ost companies, when wanting to use Facebook, use it for one reason and one reason only: new client acquisition. They feel Facebook is another channel to raise awareness and bring in potential customers. When asked why a company starts a Facebook page, they simply reply: “That’s where the people are.” They think by creating a page, they will suddenly have access to the billions of eyes that peruse it every day. Unfortunately, for most businesses, Facebook does not naturally work as a new customer recruiting tool. It is not a soapbox about the latest and greatest product offerings, but rather a coffee den where thoughts are shared. It is an opt-in program where a person has to “like” your page to gain access. Ultimately, Facebook works better as a forum for loyal customers and a customer service tool. Oftentimes, the two merge and customers who are treated well display their loyalty. Customers advocate your business to friends and family. Word-of-mouth is the best form of advertising, and the greater the number of loyal customers, the more word-of-mouth you generate. Most businesses, however, insist on using their Facebook page to promote their products and services and think by getting fans (the term “likers” hasn’t quite caught on), they are using Facebook effectively. But once a company has fans, what does it say to them? Facebook is a real-time conversation. Once a fan joins the conversation, they need to be cajoled into action. An action on Facebook can reinforce action in real life. Let’s imagine a mythical bakery to illustrate two types of posts. “Cinnamon bread on sale now – only $4.99.” “We just took a fresh batch of cinnamon bread out of the oven. It’s amazing how

fresh-baked bread with a little bit of butter melts like heaven in your mouth.” Now imagine the latter posting with a photo of one of the bakers taking the bread out of the oven. Which posting do you think will get more responses? A good Facebook page is more than a mouthpiece for an organization. It’s the personification of the company. When people become a fan, they want to talk to that company like they talk to their other friends on Facebook. With that in mind, you would never post: “Cinnamon bread on sale now – only $4.99.” When creating a post, always ask yourself: “Would I post this as a real person?” Ross Johnston

REAL TIME When people post on Facebook, it is about things that are relevant to them now. People like to watch the news from today, not from a week ago. Don’t post a generic message – post in real time. Share the news and thoughts of the moment. Instead of posting: “Live band tonight at the Avenue Bar,” try: “Setting up the sound system, so the live band tonight blows away our customers. This may get insane.”

ers and sisters were all sold quickly, 50 percent off with today’s sale. We will only let it go to a loving home.” Speak to the interests and backgrounds of your fans. Most people have a home. Most people have a family. If a furniture store makes a proper posting, someone may soon be enjoying a new end table. People comment on or like posts that they identify with.

BE RELEVANT

ELICIT A RESPONSE

It is more than simply saying what is going on right now at your location. Don’t post: “Furniture sale going on right now – 50 percent off selected items.” It is important to make an observation that makes the sale relevant to the fans. Most postings by your friends on Facebook are already relevant because they come from people you care about. They most likely won’t feel the same way about your brand. You need to make it relevant by telling a story that grabs their attention. “Lonely end table needs a home. Last of its kind at the store. Its broth-

This is not to say that you are trying to get people to like or comment on your post. A post eliciting a response is one that strikes a chord with its readers. People will respond if you make a post appealing to the senses or emotions. In the furniture store example, a lonely end table was talked about like a puppy. Most people have an emotional response to puppies, not end tables. By pairing the two, you are creating an emotional response. Remember the posting about a bakery that evoked the sense of smell, taste and touch? Most fans familiar with the bakery would

www.akbizmag.com • Alaska Business Monthly • December 2010

almost be able to taste that fresh-baked bread. Creating sensory or emotional involvement will help people connect deeper with your brand.

BE CONVERSATIONAL Facebook is a two-way conversation – both parties can ask questions and provide feedback. When someone has a complaint or a suggestion, respond back. When someone posts a negative comment or a problem, your advocates will sometimes be the first to defend you or offer advice. This one-on-one communication does volumes in creating advocates for your brand, and gives you an opportunity to correct a customer’s problem that may have otherwise gone unresolved. And above all, when someone gives you a compliment, say thank you. These people may turn into your super advocates, especially if they feel you care. When writing a post, don’t be afraid to solicit feedback. Your fans are your most powerful allies and will tell you how to improve your business. The Anchorage Concert Association asked its fan base which acts it should bring to Anchorage. The response was overwhelming. Fans felt they played a part in the decision-making process and the Anchorage Concert Association was better able to gauge which acts would be the most profitable.

and right at their fingertips. It doesn’t take a whole lot of capital investment or advertising. There are the traditional means of measurement such as sales and marketshare increases, but more importantly, there is an active dialogue between customers/followers and the company. All of this takes strategy and dedication. “Success isn’t putting a Facebook page out there,” Johnston says, “but actively keeping it fresh, finding ways to recruit new fans and keeping the ❑ postings relevant.”

About the Author Ross Johnston is the director of client services at AadlandFlint, a full-service marketing firm specializing in online and digital. Prior to joining the Flint team, Ross worked as a creative director for a global marketing firm in Sydney, Australia, where he also received his MBA. He has lived overseas for over five years but is happy to return home to Alaska.

STRATEGY AND DEDICATION Once a fan makes a comment or clicks the like button, it appears on all of their friends’ pages. They are broadcasting their preferences to their circle. If a fan base is active, you are not only encouraging word-of-mouth advertising, but also word-of-Facebook advertising, which can have a multiplying effect. The secret is not to be like a business on Facebook, but a person. People trust their friends when making decisions about new products, and it is up to you as a business owner and a brand manager to have them interact with your company like a friend. Grant Johnston, MSI creative director, says social media is the exchange where customers and companies can meet 24/7, engage one another and develop a relationship. From a company’s standpoint, it is cost effective. From a consumer’s perspective, it is quick, easy www.akbizmag.com • Alaska Business Monthly • December 2010

TELECOMMUNICATIONS & TECHNOLOGY SPECIAL SECTION

New trend in Alaska workplaces BY TRACY BARBOUR

s technology becomes an increasing part of people’s lives, more and more companies are allowing employees to bring their own technology to work. The trend toward “bring your own technology” (BYOT) began with instant messaging and expanded from there. Today, employees in organizations large and small are providing their own cell phones, personal digital assistants, laptop computers and a host of other devices. And now with the advent of Google Voice, employees can even bring their own phone number and voice mail. The BYOT practice is a natural evolution, as the boundaries between work and personal technologies continue to blur. In addition, today’s new generation of workers tends to be more technology-savvy. Many of them grew up using laptops, mobile phones and iPods, and they’re extremely adept at social networking. Their high-tech expectations are helping to reshape corporate IT policies all across the nation. Alaska is no exception.

THE BYOT TREND IN ALASKA In Alaska, BYOT is playing out in a variety of ways. Organizations that are just initiating BYOT programs typically focus on cell phones. Others with more established and extensive programs allow employees to bring everything from PDAs to laptops to tablet PCs. Regardless of the devices involved, BYOT represents considerable benefits and challenges for Alaska businesses and nonprofits. GCI is a prime example of a large company with a comprehensive approach to BYOT. With 1,600 employees spread across 18 different states, Alaska-based GCI has created a simple architecture that workers can use with a wide range of devices. “As long as their device can establish a VPN (virtual private network) connection into our network, employees can use whatever they want,” says John Fleming, GCI’s director of technology architecture. While GCI doesn’t exactly encourage the idea of employees supplying their own devices, it maintains a very open BYOT policy. GCI employees

are free to use their own smartphones, laptops and even home computers to access the company’s network. However, GCI issues a substantial number of laptops to its employees and tries to accommodate those with special needs or requests. “We want to make sure that everyone who needs a computer has a GCI asset to conduct their business,” Fleming says. For the most part, GCI employees are using their own devices for basic tasks like checking their e-mail and calendar. To do that, they simply have to be on the GCI network. “That will cover about 80 percent of their devices,” Fleming says. GCI provides its employees with a discounted wireless plan. Within that plan, 30 percent to 50 percent of the employees have some type of “smart” device. Many of them are using BlackBerry smartphones, which require a special type of connection to access GCI’s computer system. “We host a BlackBerry server that talks to BlackBerry phones and enables

www.akbizmag.com • Alaska Business Monthly • December 2010

Photos courtesy of GCI

John Fleming, GCI Director of Technology and Architecture

them to communicate with the GCI network,” Fleming says. Alaska Communications also allows employees to bring their own technology to work. The employees who provide their own equipment are generally technology enthusiasts and people with highly specialized needs, according to Russell Girten, Alaska Communications vice president, process transformation and information technology. “It’s by no means a majority of employees, but the people who do are vocal, passionate and enthusiastic users of technology,” Girten says. Smartphones are the most prevalent personal devices being brought in by Alaska Communications workers, with BlackBerry and Android phones topping the list. Girten says these types of devices have integrated well with the company’s infrastructure. “Because of the capacity of our data network, we haven’t seen a significant impact of increased load for our team, and they appreciate the convenience and mobility that their devices give them,” he says. Employees of Alaska Communications are also providing their own personal computers – both Macintoshes and Windows PCs – as well as Apple iPads. “We encourage our team to use the device that is right for them,” Girten says. Nonprofit organizations are also engaging in BYOT practices. Take, for example, the Prince William Sound Regional Citizens’ Advisory Council (PWSRCAC). Anchorage-based

PWSRCAC is an independent nonprofit corporation that promotes the environmentally safe operation of the Alyeska Pipeline marine terminal in Valdez and the oil tankers that use it. Recently, the council decided to require select employees to carry smart phones with Internet access, e-mail and other PC-like capabilities. “We realized that to be connected the way we want, everybody who might be involved in oil spill prevention and response had to have a smart phone,” said Director of External Affairs Stan Jones. The council is implementing a plan to furnish these employees with smart phones and pay their monthly cell phone bill. Or employees can purchase their own smart phone and have PWSRCAC pay them a monthly stipend that equals 75 percent of the cost of their bill and device. Some of the council’s 18 employees already have smart phones, which should make implementing a BYOT policy easier. PWSRCAC will identify the cell phone plan for employees to use, such as unlimited talk and text and a fairly large allowance for data. As another stipulation, employees must use a smart phone that is compatible with Microsoft Outlook e-mail. Otherwise, they can use their phones however they please. The new BYOT plan allows the council to require the use of smart phones without employees having to carry around two different phones: one for work and another for personal use. It also presents a flexible, no-stringsattached way to compensate employees for the costs involved. “We want a plan where if someone leaves PWSRCAC, it’s easy for them to walk away,” Jones says.

screen BlackBerry Storm or multi-functional iPhone or Android. Or they may opt to carry a lightweight netbook or iPad instead of a standard laptop. “We have a lot of folks out there using iPads today,” says Susannah Scholl, GCI’s director of IT business operations. Sometimes BYOT is simply a matter of employees preferring to work with a Mac instead of a PC. While GCI doesn’t formally issue Mac laptops, its employees can receive basic help with Mac issues from the IT department. “The service desk operates under a best-effort approach,” Scholl says. “We try to help them out with what they need, but at the end of the day we provide them with basic support.” The best-effort policy for IT support isn’t just for Mac computers. It applies to all outside technology that GCI employees bring into work. All in all, employees manage to make the situation work. Mac users, especially, often rally together to help solve each other’s technical issues. Scholl explains: “It’s like a self-organizing group; it’s kind of an organic process.” Alaska Communications maintains a hands-off policy when it comes to supporting workers’ personal devices, according to Girten. The company’s position is: If you bring it, you have to support it yourself. This stance draws mixed feelings among employees. “Early adopters appreciate the flexibility, but our teammates who are less technology-savvy can be frustrated by the lack of support,” Girten says.

CONSUMERS DRIVING BYOT Consumer demand and preferences for technology are rapidly changing, often driving the need for new practices that enable BYOT. Businesses typically offer a limited selection of laptops and cell phones to employees. While these company-issued devices might be perfectly functional, they may not represent the latest and greatest technology. Employees who desire the most stylish equipment may prefer using touch

Susannah Scholl, GCI Director of IT Business Operations

www.akbizmag.com • Alaska Business Monthly • December 2010

Alaska Communications is also fairly liberal on employees installing software. But if there are complications, IT will intervene to resolve the problem. “We advise our staff that if what they install breaks functionality, we will wipe their machines and they will lose their data.” Allowing workers to bring their own technology into the office can be beneficial in a number of ways. An active BYOT program can lower training costs and IT support calls, since the employees are already familiar with their own devices. A BYOT policy can also create a more comfortable workplace, empowering employees to be more creative, efficient and productive. That’s one of the reasons Alaska Communications maintains a flexible approach to BYOT. “We believe employees are more productive when they have an environment they’re comfortable working in, and for some, that means providing some of the technology they use themselves,” Girten says. For GCI, having a broad BYOT policy speaks to the core of the company’s existence: communications.

“We want to be on the leading edge of technology,” Scholl says. “Fostering that attitude among employees is positive.” Ultimately, BYOT can boost morale and produce happier employees.

ADDRESSING SECURITY While BYOT has obvious benefits, there are also security issues to be considered – employees are using personal devices to access company networks and sensitive information. Alaska Communications, for instance, has built-in safety measures. It has limited methods for phones to connect to those applications that users need the most – mail access and access to a virtual desktop with a standard set of applications for its employees to use. The company also requires staff members who use their own computers to have up-to-date virus protection installed. GCI also has inherent safety features as part of its VPN intrusiondetection system. Whenever someone logs in, the system runs a basic script to determine if the user has virus

protection. The company also advises employees to maintain malware software on their computers and issues virus warnings to make employees aware of potential threats. Scholl points out that when GCI employees bring their own technology, there are some limitations. Employees can’t do everything they could on the company’s equipment. For example, point-of-sale transactions must be completed on a GCI machine. However, GCI doesn’t fixate on the issue of security. The company never scrutinizes what its employees do online with their personal devices. “We trust our employees,” Scholl explains. “Keeping track of what employees do online on their equipment goes against the nature of trust. We say that we don’t monitor, and we don’t monitor.” Having a secure and successful BYOT policy is a matter of maintaining balance, Fleming says. “We don’t require a high level of rigidness,” he adds. “Instead of having a single choice, we try to have a level of selection. Our ❑ policy works for us.”

www.akbizmag.com • Alaska Business Monthly • December 2010

TELECOMMUNICATIONS & TECHNOLOGY SPECIAL SECTION

Map courtesy of GCI

Map shows how United Utilities Inc.’s $88 million “Terrestrial Broadband in Southwestern Alaska” will expand broadband access in Bristol Bay and the Yukon-Kuskokwim Delta.

Broadband, Wireless Access Expanding in Rural Alaska Change is coming fast BY HEATHER A. RESZ

ave you tried reading the paper online in Barrow, or tried making a call on your iPhone in Bethel? Then you may have noticed the difference in wireless and broadband service available between rural and urban Alaska. Never mind that you can’t drive to Nome, the information super highway goes there, said Bob Poe, former candidate for Alaska Governor and a past executive director of the Anchorage Economic Development Corp. It’s not the same broadband information super highway urban Alaskan’s are used to, but telecommunication is essential to every day life, he said. If you’re a fisherman with a haul of chum from Kotzebue Sound, how do you get the word out about your fresh ocean caught salmon?

“Telecommunications,” Poe said. “To be effective, businesses need a way to show the goods they have and market them. The Internet is a vehicle for people to market their products and complete business transactions.”

PAST IS PAST Compare that to three decades ago when communication in rural Alaska was accomplished via high frequency radio, or carried word-of-mouth by people travelling by Bush plane, boat or dog team. Back then, the goal was for every community to get at least one telephone, Poe said. Now, Internet and phone service make it possible to deliver wild Alaska salmon harvested in remote fisheries fresh to markets thousands of miles away, Poe said.

Still, last year when three cabinetlevel secretaries visited Bethel, they were surprised when they tried to check their phones. “Their phones were paperweights out there,” Poe said, because only GCI Alaska offers service in Bethel, he said. Rural Alaska communities will see a significant expansion of their broadband and wireless networks, thanks to $1.6 billion in federal funding from the American Recovery and Reinvestment Act (ARRA). Total, the act invests $7.2 billion nationwide in broadband projects. The improvements are part of a National Broadband Plan the U.S. Congress directed the Federal Communications Commission to develop to ensure that every American has “access to broadband capability,”

www.akbizmag.com • Alaska Business Monthly • December 2010

according to broadband.gov. The website is maintained by the FCC to communicate details of the National Broadband Plan to the public. The plan’s goal is to maximize use of broadband to advance “consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, employee training, private-sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes,” according to the executive xummary of the broadband plan posted on the site.

ROUND AND ROUND U.S. Sen. Mark Begich and FCC Commissioner Mignon Clyburn sponsored a roundtable discussion with representatives from Alaska’s telecommunications industry July 6 at the University of Alaska Anchorage-Alaska Pacific University Consortium Library to discuss part of the National Broadband Plan. “There’s a new highway coming though,” Sen. Begich said. “And I want to make sure people in Alaska aren’t bypassed.” Over the July 4 recess, Sen. Begich visited Cordova, Kodiak, Kotzebue and Kiana with Commissioner Mignon Clyburn. “We’re very happy that the broadband plan is out there,” he said. “But we have concerns.” Clyburn said she recognizes the need to take into consideration the unique characteristics of each community. New University of Alaska President Patrick K. Gamble – whether it’s for distance delivery of classes or University of Alaska Fairbanks researchers – said education requires the movement of content. “I don’t think you’ll find any educational system worth its salt that doesn’t need to move content,” he testified at the Anchorage hearing. “Access is the operative word – whether you are talking about roads or broadband.”

B2 WIRELESS When Tom Bohn of B2 Networks moved to Nome in 1994, UAF’s Nome campus was the only place in the city with Internet service. Back then, he worked for the Nome Nugget and remembers when the newspaper

switched to desktop publishing and would send the finished paper over the Internet to have it printed in Anchorage and flown back to Nome. The Nugget sold its extra bandwidth as a consumer ISP, he said. Bohn also started one of the first commercial ISP’s in rural Alaska, nome.net. “There just was no such thing back then. Now projects are being undertaken that people only dreamed of 15 years ago,” he said. The National Broadband Plan includes a proposal to revamp the $8 billion Universal Services Fund “to support expansion of broadband to underserved populations and create a sustainable fund,” according to a press release about the event from Sen. Begich’s office. At a June hearing of the Senate Commerce Committee he chaired, Federal Communications Commission Commissioners Mignon Clyburn and Meredith Baker acknowledged the Universal Services Fund’s unique role in Alaska, especially rural Alaska. Sen. Begich said he’s concerned about the part of the broadband plan that proposes overhauling the $8 billion Universal Services Fund to support expansion of broadband to underserved populations and create a sustainable fund. Bohn said Alaska telecommunications companies receive millions in federal support — $168 million in 2009 and $1.3 billion over the life of the High Cost Fund — through the Universal Services Fund.

LUCKY CHARM Without the Universal Service Fund, there would be no access in rural Alaska, he said, because telecommunication companies in rural Alaska serve large geographic areas with small customer bases to share the costs. A project by GCI subsidiary United Utilities Inc. is one of the largest single broadband expansion projects under way in Alaska as part of the $1.6 billion in federal funding from the ARRA coming here to expand broadband and wireless service. The $88 million “Terrestrial Broadband in Southwestern Alaska” project will expand access for 9,000 households, 748 businesses, 72 schools, 65 communities, 63 clinics and two hospitals

in the Y-K Delta and Bristol Bay regions, according to Ron Duncan, GCI president and chief executive officer. It will be the first time true broadband service is available in the Bristol Bay and Yukon-Kuskokwim Delta areas, he said The project – funded through a $44.2 million loan and a $44 million grant included ARRA – will be complete in 2013. GCI completed an instate wireless network in 2010. Sen. Begich said the investment will provide 80 construction jobs, improve telemedicine and improve distance learning. It will also allow Alaska small businesses to grow and expand. “The continued focus of investing in broadband infrastructure in more rural parts of Alaska means the ability to attract new business, provide jobs, and improve health care delivery and educational opportunities,” he said. Part of the ARRA also requires the National Telecommunications and Information Association to create a national map of broadband coverage by February 2011. In Alaska, Connected Alaska received a $1.9 million grant to work with the State’s Department of Commerce, Community and Economic Development to map broadband coverage in Alaska. Within 10 years, many rural areas could have full broadband terrestrial infrastructure connecting their communities to the rest of the world, Poe said. “There’s no getting around the fact that the way we do business and conduct our personal lives has changed and will continue to change as broadband services, technology and networks evolve,” he said.

JOINING THE MODERN WORLD Once the DEW Line and then White Alice were the height of modern technology, but now, Poe says, the satellite system – which essentially sends radio signals back and forth – is outdated and slow. “Service for residential, government, and business users is constrained by satellite and limits their ability to make full use of the Internet,” he said. Upgrading broadband and wireless service will allow rural Alaska residents to participate in the modern knowledge economy and access global information

www.akbizmag.com • Alaska Business Monthly • December 2010

resources, Poe said. Right now, he said broadband isnâ&#x20AC;&#x2122;t available in rural Alaska and the Internet service that is available is cost-prohibitive for individual families. Modern tools like telemedicine and distance-delivered education were pioneered here, he said, adding broadband access also will allow these long-standing programs to expand. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s important that we offer these options other people take for granted in defining their future,â&#x20AC;? Poe said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a tool they need.â&#x20AC;? Other broadband awards for Alaska that have come through ARRA include: â&#x2013; Copper Valley Wireless Inc. received a $1.7 million grant and a $1.7 million loan for the Cordova Microwave Project. Funding will extend middle-mile connectivity from Naked Island to Cordova. It will provide broadband access to more than 800 households, Cordova schools, Prince William Sound Community College, the Coast Guard, a medical center, the Native Village of Eyak, the police department, State Troopers, and to the public health nurse. â&#x2013; Copper Valley Telephone Cooperative received a $5.2 million ARRA grant/loan from the federal government to add terrestrial wireless broadband service in McCarthy. Funding also comes from private investments. About 20 McCarthy businesses will benefit from the new service. â&#x2013; United Utilities Inc. received $88 million to provide middlemile broadband services to 65 communities â&#x2013; Rivada Sea Lion LLC received $25.3 million for 4G high-speed broadband Internet service covering 29,000 rural residents in 53 villages, which Alaska Communications will design and engineer. â&#x2013; The Denali Commission received $1.9 million for broadband mapping and planning. â&#x2013; And, a $4.45 million State Broadband Data and Development grant to Connect Alaska to facilitate the integration of broadband and information technology into state and local economies. â?&#x2018;

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ December 2010

TELECOMMUNICATIONS & TECHNOLOGY SPECIAL SECTION

Expanding Technology in Telecommunications Companies share new product info, trends

elecommunications, the transmission of messages over significant distances for the purpose of communication, has come a long way. It has evolved from relaying of messages by Morse code, telegraph and telephone to communicating over the worldwide network of computers known as the Internet. Modern telecommunications involves the transfer of voice, data and, increasingly, video over a variety of devices. While the objective remains the same – communications – the delivery mechanisms are steadily expanding. Companies like Alaska Communications, AT&T Inc. and GCI offer a variety of new products and services to meet the growing demand of businesses. This article synopsizes some of the latest offerings from each provider, as well as interesting trends that are at work in the industry.

Solutions From Alaska Communications Alaska Communications has a long history as a provider of wireless services in Alaska. Recently, the Anchoragebased company changed its brand name (from Alaska Communications Systems) and expanded its operations

to help businesses manage their data. Alaska Communications invested $2 million to acquire 49 percent of TekMate, the state’s largest privately owned information-technology company. The strategic partnership combines the strength of both companies. Alaska Communications continues to supply the underlying infrastructure, including a recently installed undersea cable system connecting Alaska to its data-hosting center and other Lower 48 networks. TekMate offers personalized network solutions and a range of managed IT services, such as desktop support, desktop and server hardware, operating systems management, LAN monitoring and security services. “We’ve come together to manage technology in business, to manage the data that companies use every day,” says Alaska Communications COO Anand Vadapalli. Through its partnership with TekMate, Alaska Communications offers a variety of managed IT solutions and services. It’s a good niche, considering the phenomenal amount of data that businesses post, manage and move around. That data can involve e-mail, video or other communications being transferred from desktop PCs, laptops or mobile handheld devices. Regardless of the type of data and devices involved, Alaska Communications and

Photos courtesy AT&T

BY TRACY BARBOUR

TerreStar Genus cellular/satellite smartphone

TekMate handle the management side. “We are able to host, secure and move the data, making it available when and where they need it,” Vadapalli says. Companies can use Alaska Communications as their solution provider,

www.akbizmag.com • Alaska Business Monthly • December 2010

instead of maintaining their own server to house data. The company houses customers’ data remotely, providing the computers, servers and other technology to support the process. It’s a cost-effective option that allows customers to have centralized management of their data.

VIRTUALIZED STORAGE AND HOSTING Virtualized storage from Alaska Communications also allows organizations to reduce their technology costs. The service, launched around the middle of this year, allows to remote-storage capacity on an as-needed basis. The company also offers a disaster recovery/business continuity solution that makes it easier for customers to remain operational when facing a business disruption or natural disaster. “If anything happens to their information, it will be backed up at another location,” Vadapalli says. Disaster recovery is particularly critical for Alaska businesses, which often deal with rough terrain, severe weather and great distances between cities. Alaska Communications’ disaster recovery/business continuity solution provides extra protection. The company offers a variety of data-hosting products designed to help customers prepare for disaster recovery and serves as consultative partner in the businesscontinuity planning efforts.

MANAGED IT SERVICES Alaska Communications’ also offers Constantly On IT through its partnership with TekMate. With this service, TekMate manages customers’ IT infrastructure remotely, allowing them to avoid the financial and technical risks of investing in large servers. Customers can purchase the managed maintenance services under a flat-rate, monthly-fee plan. “We will upgrade their technology every three or four years,” Vadapalli says. “Not only do we mange the technology for you, but we are able to provide the same technology as a hosted service.” Constantly On IT is designed to enable customers to reduce costs, increase profits and lessen business risks. Under the service, TekMate works closely with businesses as a virtual CIO and

IT department. It evaluates customers’ current state of technology – including infrastructure, hardware and lineof-business applications and vendors – and identifies critical business processes, pain points and vulnerabilities. Ultimately, the company customizes a technology plan according to the customer’s long-term business goals. Under a similar solution, Alaska Communications through TekMate offers technology as a service. It allows businesses to purchase a hosted e-mail solution rather than invest in and manage their own e-mail infrastructure. “It becomes an easy way to set up an e-mail infrastructure and all the backend work,” Vadapalli says. “We take care of all that for you.” Vadapalli says hosted e-mail and other cloud services are appealing to Alaska businesses because they’re more cost-effective than managing data internally. Smaller companies typically can’t afford to maintain a full-time IT staff. He adds, “Instead of upgrading software every year and keeping up with compliance, it makes a lot of sense for them to find a partner.” Alaska Communications also recently added video conferencing to satisfy the growing demands of Alaska organizations. The company provides everything businesses need, including installing the equipment, managing the technology and providing support services. It also handles upgrading the equipment to ensure customers remain current with their technology. As technology in the telecommunications industry continues to expand, businesses will see the convergence of computing and communications into user-friendly solutions, as well as the increased proliferation of mobile technology, Vadapalli says. “At the end of the day, it’s all about the content that we use every day,” he says. “Alaska Communications is creating a path for customers to support that convergence, so you don’t have to go to one company for wireless and another company for business data.”

AT&T Offerings AT&T Inc. recently added satelliteaugmented phone services to its

Patrick Fraser Director of Sales AT&T Mobility Alaska

growing roster of wireless solutions. In September, the communications holding company began offering the TerreStar Genus cellular/satellite smartphone for enterprise, government and small-business customers. AT&T’s new service merges primary cellular wireless connectivity with the ability to connect to TerreStar’s satellite network as a backup. With just one phone number and one device, customers with a straight line of sight to the satellite can access expanded voice and data roaming coverage in the United States, Puerto Rico, the U.S. Virgin Islands and in territorial waters. The AT&T integrated cellular-satellite solution makes it easier and more convenient to have mobile coverage throughout Alaska or when the cellular network is unavailable, according to Fraser, director of sales, AT&T Mobility Alaska. “The TerreStar Genus provides wireless communications in remote areas where you wouldn’t traditionally see wireless coverage,” Fraser says. “It’s perfect for government, utility, transportation and maritime users, as well as public-safety agencies, first responders, and emergency services and disasterrecovery groups with a critical need for backup communication.” The dual-mode TerreStar Genus is a feature-rich smartphone with expanded capabilities, thanks to its Windows Mobile 6.5 operating

www.akbizmag.com • Alaska Business Monthly • December 2010

system. It also includes a 2.6 touch screen, Wi-Fi, Bluetooth, GPS and camera. Naturally, these premium features and functionality come at a higher price tag than most other smartphones. AT&T sells the device for $799. Cellular voice and smartphone data plans, along with satellite service fees, also apply.

BLACKBERRY TORCH 9800 AT&T also recently released the BlackBerry Torch 9800, which represents a new design for the market-leading brand. The Torch 9800 is a handset that combines a high-resolution touch screen, slide-out QWERTY keyboard and optical trackpad. It’s also the first smartphone to offer the BlackBerry 6 operating system, and it’s exclusive to AT&T, according to Fraser. The Torch 9800 offers a range of features – like enhanced Web browsing that allows users to switch between Web pages, multimedia functionality and social feeds – all designed to offer a more integrated and dynamic experience. “It caters not only to business customers, but to consumers as well,” Fraser says. “It’s been a popular device.” In the area of video communications, AT&T offers a Telepresence Solution for face-to-face business meetings. The high-definition video conferencing option enables meetings to take place virtually with the push of a button, yet it creates an engaging, in-person experience. “It helps businesses streamline their communications and become more efficient and productive in terms of handling meetings,” he says.

AT&T SYNAPTIC HOSTING SERVICE Businesses can also make their operations more efficient with AT&T Synaptic Hosting Service. Under this turnkey solution, AT&T supplies and manages the hosting infrastructure for the applications businesses run. The hosting service offers scalability based on storage demands, a reporting portal with storage usage information and up to 99.9 percent availability. Customers have flexibility to pay as they go and pay only for the capacity they use. They can also upload data from anywhere and from any device, as well as combine the service with

dedicated components to meet their individual needs. Fraser says, “You can create your own private store house connected over your own corporate network.” Synaptic Hosting Service is a nextgeneration utility computing platform that gives businesses their own secure, virtualized operating environment. It employs enterprise-grade security measures to safeguard customers’ information, including a firewall, intrusiondetection system, anti-virus software and various audits. As another more recent development, AT&T began allowing its new and existing virtual private network customers to add voice-over-IP to their service over its global network cloud. This enables them to consolidate their separate voice and data network and maintenance costs, Fraser says. AT&T business customers can choose between two solutions: AT&T’s IP Flexible Reach SIP trunking service – which allows businesses to leverage their existing IP-PBXs, while taking advantage of new IP-based services – or AT&T Voice DNA, which is a fully hosted networkbased service.

FINANCING FOR WIRELESS SOLUTIONS Several months ago, AT&T announced a financing initiative to help small businesses secure wireless solutions. Through its financing subsidiary, AT&T Capital Services, the company is providing loans to small businesses wanting to deploy new wireless solutions or upgrade existing ones. AT&T had previously focused on financing traditional wired communications, including office phone systems and equipment, high-speed Internet, maintenance and associated software, according to a Sept. 28 press release. The expanded financing option now covers AT&T wireless devices, wireless data plans and mobile applications. “With more than 25 years experience in communications financing, we know the challenges that small businesses face and understand that today, perhaps more than ever before, access to capital is critical to sustaining their operations,” said Cathy Martine, executive vice president-Small Business Solutions, AT&T Business Solutions.

GCI Products and Services GCI has made a number of recent enhancements to expand its products and presence throughout the state. Several months ago, the company began offering wireless data and Internet in rural Alaska. The Alaska-based integrated communications provider upgraded its wireless network in rural communities to allow current and new mobile subscribers access to its data services. Now GCI customers in many remote areas can access the Internet, download applications and check e-mail from their GSM data-enabled wireless devices. The new data services are designed to enhance the current voice coverage provided by GCI. GCI’s broadened coverage represents a major benefit for Alaska businesses – not just those based in isolated areas. Now businesses in larger cities like Anchorage and Fairbanks can take their smartphones throughout their entire market, said GCI Commercial Applications Consultant Greg Schlabaugh. He adds: “We have quite a large base of business customers who need to travel in Alaska. Now they can have their BlackBerry from Anchorage and Fairbanks and travel (with it) anywhere in Alaska and the Lower 48.”

SERVICES HELP ENHANCE COMPETITION Schlabaugh says GCI’s expanded wireless and data services can help companies become more competitive, and can also help shrink the rural-urban divide that’s existed throughout the state. “There’s been a huge disparity between services available in Anchorage and rural Alaska,” he says. “One of our goals is to diminish that rural divide. By the end of 2011, we’re hoping to have a hybrid fiber optic network to much of Southwest Alaska.” To accomplish this, GCI is extending terrestrial broadband service for the first time to Bristol Bay and the YukonKuskokwim Delta. The installation – being done by the company’s wholly owned subsidiary United Utilities Inc. (UUI) – will connect dozens of communities to the company’s existing

www.akbizmag.com • Alaska Business Monthly • December 2010

network in a project called TERRASouthwest. The $88 million project is jointly funded with $44 million coming from the USDA Rural Utilities Service and the American Recovery and Reinvestment Act and another $44 million in the form of a loan to UUI. When TERRA-Southwest is completed, it will be able to serve more than 9,000 households and 700 businesses in the 65 covered communities. It will also serve the needs of public/nonprofit entities such as regional health care providers, school districts, and regional and Alaska Native organizations. Schlabaugh says: “Southwest Alaska will have a vastly improved connection. It will allow those communities to be more competitive in a 21st century marketplace.”

VIDEO CONFERENCING TECHNOLOGY Video conferencing technology is one of the tools communities in the Southwest and elsewhere in Alaska can use to become more competitive. Video conferencing is a growing segment of GCI’s business, with an increasing number of smaller businesses adopting the technology, Schlabaugh says.

“In the past, it was limited to the executive board room,” he says. “Now as the technology has improved, it’s gone into mainstream use in business.” Part of the appeal of video conferencing is that it allows people to meet face-to-face without leaving their office. They can also easily share content like PowerPoint slides, documents and spreadsheets. “It allows you to have that true online collaboration,” Schlabaugh says. The most important benefit of video conferencing, perhaps, is its costeffectiveness. It’s becoming more and more expensive to travel, and businesses need to find ways to reduce their costs. An employee can typically get the same amount of work done in a videoconference without the expense of traveling to an in-person meeting. Schlabaugh says, “With high-definition video conferencing, it’s almost like they’re in the room with you.” Video conferencing can also be useful for telemedicine and educational purposes. For example, a clinic in rural Alaska could use video technology to consult with specialists in Anchorage or

Seattle. Video conferencing could enable the consulting physician to see and interact with patients to make a more accurate diagnosis of their condition. Students in remote villages of Alaska could use the technology to participate in interactive lectures or even take virtual fieldtrips. Schlabaugh says he’s starting to see more video conferencing services being adapted to mobile devices. That’s not surprising, given mobility is one of the key drivers behind communications. Mobility frees office workers from their desks, helping increase their productivity when they’re away from the workplace. That’s exactly what GCI’s MiFi does. Basically a pocket-sized router powered by GCI’s 3G wireless network, MiFi simultaneously connects up to five WiFi-enabled devices – such as laptops or smartphones – so users can work on the go. The mobile broadband solution can be used anywhere within the GCI’s Alaska and nationwide Code Division Multiple Access data footprint. Monthly prices for the service range from $19.99 for GCI cable modem ❑ customers to $49.99.

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www.akbizmag.com • Alaska Business Monthly • December 2010

TELECOMMUNICATIONS & TECHNOLOGY SPECIAL SECTION

Green IT Practices

Saving money and the environment BY TRACY BARBOUR

ising energy costs, heightened publicity regarding climate change, and increased legislation are causing more companies to enhance their “green” information technology initiatives, according to a study by independent research firm Forrester Research. IT organizations and departments are becoming more environmentally friendly by recycling equipment, purchasing more energy-efficient computers, and turning off office equipment to conserve energy, among other things. These practices translate into more “green” for businesses’ bottom line. Green IT refers to the environmentally conscious and cost-effective use of power and production in technology by centering around saving energy through hardware, software, services and even habits. Green IT strategies range from

the purchase of energy-efficient desktop PCs and smaller laptop computers to practices like hardware virtualization, recycling and energy management. In Alaska, Green Star Executive Director Kim Kovol is seeing more businesses carrying out green IT strategies to reduce overhead and do good things for the environment. “We’re seeing businesses that are a lot more savvy with their green purchases,” Kovol says. Green IT initiatives are designed to reduce the environmental impact of industrial processes and technology, but businesses engage in them for a variety of other reasons. According to a 2009 Forrester Research survey, the most important motivation for green IT activities are to cut spending on energy (69 percent), to lower IT costs (40 percent), legal compliance (15 percent), and to improve image. Cost considerations play an above-average role

in the United States, while image and legal compliance are more important in Europe. From Kovol’s perspective, organizations that are more environmentally responsible have a stronger bottom line. “I have yet to have one business tell me they did not save money,” she says. Green Star is an Anchorage-based nonprofit organization that encourages businesses to practice waste reduction, energy conservation and pollution prevention through education, technical assistance and a voluntary “green business” certification program. The Green Star program has about 250 participants, of which 148 are Green Star Award-certified.

POTENTIAL BENEFITS OF GOING GREENER Office equipment is the most rapidly growing type of energy user in commercial buildings, according to Green

www.akbizmag.com • Alaska Business Monthly • December 2010

Star. Energy-efficient machinery not only can help businesses reduce their energy use directly, but also can lower their utility bills by reducing air conditioning loads. Businesses can achieve significant savings by purchasing office equipment with the U.S. Environmental Protection Agency’s Energy Star rating. These machines have special powermanagement features that automatically place them in a lower-power sleep mode when not being used. For instance, an Energy Star-qualified computer in sleep mode consumes about 80 percent less electricity than it does in full-power mode, according to the EPA. Overall, Energy Star-qualified office products use about half as much electricity as standard equipment. A typical U.S. business with 100 employees, 100 computers, 10 laser printers, four copiers, four fax machines and two scanners can realize significant cost savings using energyefficient equipment. By purchasing Energy Star-qualified equipment, the business can trim its annual electricity costs by nearly $5,000, according to the EPA. Essentially, every computer and relevant peripheral device sitting in an office represents an opportunity to save energy and cut costs. The key is to choose energy-efficient equipment and to use that equipment in a conservative manner. Perhaps one of the best green IT strategies is to focus on “negawatts.” A negawatt is electricity not created due to energy that is not used. It’s the practical opposite of a megawatt, and it represents the amount of energy that’s removed from the power grid. Determining how much energy is not being used can be a bit elusive. However, Green Star awardees can check out a watt meter to see exactly how much their equipment consumes. “It’s a simple cord that you plug in, and it tells you how much energy the device is drawing down,” Kovol says. Many people are surprised to learn that if their office machine is plugged in, it’s drawing energy. That was the case with Joette Storm. Storm, the owner of WordWright LLC, was stunned at how much energy her small business was wasting. After using the watt meter, she was appalled to learn that a fax machine

might pull 20 watts while it’s not operating; an idle shredder might draw 23. Any piece of equipment with a clock or timer constantly uses energy. Storm has since started unplugging machines when not in use, consuming 200 fewer kilowatts of energy in August than the same period last year. “If I’m out of the office for a couple of hours, I turn off my computer and printers, and we always turn off everything at night,” Storm says. “We may use that equipment three or four hours a day, so why should it be drawing power 24 hours? You’re just throwing away electricity.” Wells Fargo and Co., with about 50 community banking stores and 1,200 team members in Alaska, is also taking a conservative approach to energy consumption. In 2009, Wells Fargo set a companywide goal to reduce the greenhouse gas emissions of its operations by 20 percent below 2008 levels by 2018. The financialservices company is powering down its equipment and running energyefficiency campaigns at its locations to encourage a culture of understanding about how its team members’ everyday actions can make a difference. When businesses implement green IT tactics, it benefits all stakeholders: society (the environment), the company, employees and customers. Green IT activities translate into lower carbon emissions for the environment, not to mention reduced resource consumption. Participating companies can reap reductions in energy costs, software/ hardware expenses and other operating costs. Employees who work for environmentally responsible businesses often experience a greater sense of satisfaction and loyalty, which enhances recruitment and employee retention. As consumers adopt more eco-friendly habits, they expect the businesses they patronize to do the same. “Customers are very particular about doing business with companies that are green savvy,” Kovol says.

THE APPEAL OF ENERGY EFFICIENCY When purchasing computers, energy efficiency is an important consideration for many Alaska businesses, according to Phillip Fontana, president of Lewis

and Lewis Computer Store. But, it’s not the biggest selling point – at least not initially. “But when you tell people about energy efficiency, they become very interested,” Fontana says. The company provides IT sales and services to government agencies and businesses of all sizes. Located off Fireweed Lane in Anchorage, it has several hundred regular clients. Many of them are choosing low-watt desktop PCs and notebook computers with a long battery life. Larger companies are more likely to be interested in virtualized servers that offer expanded capabilities. “Instead of having three physical servers doing one task, you can have one slightly larger server doing multiple tasks,” Fontana says. Buying a more efficient computer processor can result in significant energy savings through the life of the machine. The same processor that drew 150 watts of electricity a few years ago might now draw 90 watts. Considering that some processors run 24 hours a day multiple days a week, the difference in efficiency can be remarkable. Lewis and Lewis Computer Store is also taking steps to utilize more energyefficient equipment. Instead of having five servers drawing about 250 watts each, the store now has two servers using 200 watts each. The new servers cost a bit more up front, but Fontana expects to see a reduction in energy costs over the long-term. “We want ongoing savings,” he says. Fontana says companies in Alaska are also willing to recycle their old computers. “They know the circuit boards in there have highly toxic substances that don’t belong in the landfill,” he says. “It’s not free, but companies understand the community service that they’re providing. They’re being good corporate citizens.” Wells Fargo, for example, is dedicated to responsible recycling. As a company with more than 280,000 team members that use computers and other electronic devices, Wells Fargo has joined a group of companies and institutions, known as e-Stewards Enterprises, committed to using electronics recyclers that meet the world’s highest standards for responsible recycling.

www.akbizmag.com • Alaska Business Monthly • December 2010

At the heart of the certification program is the e-Stewards standard, which ensures recyclers will never export hazardous e-wastes to developing countries, dump them in municipal landfills or incinerators, or use captive prison populations as labor. It calls for the strict protection and destruction of customers’ private data and occupational health created by the Basel Action Network (BAN) with leading electronics recyclers, certification industry experts, and occupational, health, and safety specialists criteria to prevent workers in recycling plants from being exposed to toxic dusts and fumes. “The e-Stewards Enterprise program makes it easy for us to demonstrate that our electronic waste-management standards are responsible and align with best practices,” said Mary Wenzel, Wells Fargo director of Environmental Affairs, in an April 15 press release. “By using e-Stewards Recyclers, we know our old computers and other electronics aren’t going to be disposed of in a way that harms people or the environment and that, when possible, electronic components are recycled and reused.” In Anchorage, Total Reclaim is making it easier for companies to recycle a variety of used items. Total Reclaim provides recycling and management services for computers, electronics, appliances, refrigeration equipment and various hazardous materials. The company – a Green Star awardee – gathers electronic waste from businesses, individuals, community collection events and other sources. Some of the items are marketed for reuse with little to no repair. Others are refurbished and sold as used electronics. Kovol says selling reconditioned electronics benefits the community and environment. “We have some folks who can’t afford a brand new PC, but they can afford a refurbished one,” she says. “At least it’s not in a landfill or leaking out chemicals.” Businesses can also discard old computers and other unwanted items through Green Star’s Alaska Materials Exchange (AME). The interactive online solution allows users to list

everything from computers and chemicals to medical equipment and textiles. The items, which must be in working order, can be posted on the AME free of charge. “We want to provide a platform for folks to be able to safely exchange items they no longer use versus tossing them into the trash can or landfill,” Kovol says.

OTHER GREEN IT STRATEGIES Green IT encompasses more than p u r ch a s i n g ( a n d d i s p o s i n g o f ) energy-efficient computers. With the increasing convergence of IT and telecommunications, the green technology concept is expanding. Alaska companies are also leveraging video-conferencing technology to make their operations greener. “We are seeing more clients utilize high-definition video conferencing services for distance learning, internal and external client meetings, and diagnostic capability,” says Michael Wynschenk, Alaska Communications vice president, business sales and service. Video conferencing allows organizations to minimize the time and costs spent on business travel. It also improves the responsiveness and enhances their ability to deliver services. “In the case of health care clients, significantly improved health care is being provided, while education institutions are finding the ‘classroom without walls’ concept is improving the learning experience,” Wynschenk says. Green IT initiatives go far beyond installing more efficient computers or using eco-friendly video conferencing, entailing intelligent use of infrastructure, so organizations can change their day-to-day processes. For instance, printed letters at one time dominated business correspondence; now e-mailing and texting are the norm. Companies are also digitizing, archiving and distributing documents by e-mail or uploading them to a Website to make them instantly available to their employees, customers and the public. Electronic processes help to save not only energy, but also enhance efficiency and productivity. They also conserve paper, ink, toner and other printing resources. Kovol advises

Green Star members to liberally use scanners and jump drives to avoid printing out hardcopies. “We encourage our businesses to go as paperless as possible,” she says. “They’re little things, but while they seem commonplace, there are businesses that are not aware that they exist.” Another inventive solution Kovol recommends using is the ink-saving Ecofont. The free font – which can be downloaded to any computer – inserts tiny holes in the copy, yet doesn’t affect the integrity of the legibility or layout of the document. Users can print in familiar fonts, such as Arial or Verdana, or employ a variation of their own housestyle font. Kovol and other experts also suggest businesses use the following green IT tactics to save energy, costs and the environment: Use a watt meter to detect energy leaks because you can’t manage what you can’t measure. Or try Forrester’s Online Green IT Baseline Calculator for an annual estimate of your energy consumption, carbon dioxide emissions and financial cost of operating your IT within and outside of your data center. Avoid wasting paper by printing on the front and back side, reusing the blank side of paper, printing reduced-sized documents and reformatting documents (indents and margins) to reduce white space. Avoid using paper altogether by accessing an electronic version of documents and using a whiteboard for meetings instead of printing copies for everyone. Buy laptop computers, instead of desktop models whenever possible. Try to do computer-related tasks during several blocks of time, leaving the hardware off at other times. Use power-management features to turn off hard drives and displays after several minutes of inactivity. ❑

www.akbizmag.com • Alaska Business Monthly • December 2010

Telecommunications & Technology Directory INFORMATION TECHNOLOGY

laskans have used ingenuity to thrive in a diverse and often harsh environment for thousands of years, and that tradition continues today with technology. Alaska is a â&#x20AC;&#x153;wiredâ&#x20AC;? place with a relatively high level of Internet usage per capita, a strong Alaska-based telecommunications industry familiar with the challenges of a geographically dispersed population, and an increasingly tech-savvy population in both metropolitan and rural areas. The market is well-served by a mix of Alaskan telecommunication firms, global technology firms that have opened Alaska offices to serve the local market, and a diverse group of locally owned small businesses that specialize in specific products or services related to telecommunications and information technology. Often, these companies partner to bring new capabilities and products to our market with the help of local expertise. The Alaska market continues to grow as organizations continue to adopt technology and look for further opportunity to raise productivity and the bottom line. Source: Bryce Coryell, Account Executive, Network Business Systems, Anchorage, Alaska

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Estab.

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Top Executive

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Telecommunications & Technology Directory LONG DISTANCE CARRIERS (contâ&#x20AC;&#x2122;d.) COMPANY

Top Executive

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ December 2010

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Telecommunications & Technology Directory TELEPHONE EQUIPMENT REPAIR (contâ&#x20AC;&#x2122;d.) COMPANY

Top Executive

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101

SPECIAL SECTION

Telecommunications & Technology Directory WEBSITE DESIGN (contâ&#x20AC;&#x2122;d.) COMPANY

Top Executive

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WIRELESS PROVIDERS COMPANY

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102

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ December 2010

ALASKA TRENDS BY WILLIAM COX

Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development.

Alaska Employment by Region W

hile Alaska tends to fair better than much of the Lower 48, it is important to remember the state is still susceptible to the gyrations of the economy. The intensity of these economic changes is often curbed by the time they reach Alaska due to our geographic location. The effects of the economic downturn can be seen when looking at Alaska’s employment statistics during the past 24 months, due to the state’s dependence on resources and our government spending. Despite Alaska’s relative prosperity – demonstrated by its August 2010 unemployment rate, which measured 7.1 percent versus 9.5 percent for the United States – the past two years’ employment data show the state, as well as each of the regions tracked by Alaska Business Monthly (except the Anchorage and Mat-Su region) have each lost jobs (Fairbanks, Southeast and the Gulf Coast). The Anchorage and Mat-Su region, which had a slight increase of approximately 250 jobs since August 2008, was the only region to show any increase in employment, much less than the almost 2,900 jobs lost statewide during the same period. The graph expresses the cumulative employment (in

thousands), for each region by month, from August 2008 through August 2010. The separate blue line above the cumulative total denotes Alaska’s total employment. The blank area between the state total and cumulative regional total is due to employment in a region not specifically included in the ABM dataset, which includes the Interior (excluding Fairbanks) Northern, and Southwest regions. ❑

Source: Alaska Department of Labor & Workforce Development, Research and Analysis Section

ALASKA TRENDS HAS BEEN BROUGHT TO YOU THIS MONTH COURTESY OF PACIFIC PILE & MARINE

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103

ALASKA TRENDS Indicator

Units

GENERAL Personal Income – Alaska Personal Income – United States Consumer Prices – Anchorage Consumer Prices – United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectoral Distribution – Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Truck Transportation Information Telecommunications Financial Activities Professional & Business Svcs Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Svcs & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government1 Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast

104

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

US $ US $ 1982-1984 = 100 1982-1984 = 100

1st Q10 1st Q10 1st H10 1st H10

31,153 12,462,673 194.83 217.54

30,865 12,341,249 194.83 217.54

30,097 12,191,395 190.032 213.139

3.51% 2.23% 2.53% 2.06%

Number Filed Number Filed Number Filed

August August August

12 11 1

65 51 6

91 72 15

-86.81% -84.72% -93.33%

Thousands Thousands Thousands Thousands Thousands

August August August August August

342.17 182.81 43.31 41.11 38.63

348.18 184.82 44.42 41.46 39.27

340.50 178.98 44.09 41.75 39.21

0.49% 2.14% -1.76% -1.52% -1.46%

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August

340.4 56.2 284.2 14.7 14.4 12.0 19.4 22.1 16.5 66.0 6.5 36.9 6.7 10.1 22.6 5.6 3.2 6.4 4.2 15.0 26.5 40.5 29.2 36.5 10.3 21.0 11.7 81.6 18.4 24.7 5.9 38.5 19.5 3.8

350.8 63.2 287.6 17.8 17.4 12.0 20.0 25.4 19.3 68.1 6.9 38.4 7.0 10.5 22.8 5.7 3.2 6.4 4.3 14.1 26.0 40.6 28.9 40.1 11.6 22.8 10.9 81.4 19.0 24.7 5.7 37.7 18.0 4.1

342.6 55.6 287 15.4 15 12.7 19.8 20.4 16.4 68.0 6.6 37.3 6.6 10.1 24.1 6.4 3.3 6.6 4.3 15.3 27.4 39.4 28.5 37.8 10.9 21.2 11.7 80.8 17.8 24.9 5.9 38.1 18.8 3.9

-0.64% 1.08% -0.98% -4.55% -4.00% -5.51% -2.02% 8.33% 0.61% -2.94% -1.52% -1.07% 1.52% 0.00% -6.22% -12.50% -3.03% -3.03% -2.33% -1.96% -3.28% 2.79% 2.46% -3.44% -5.50% -0.94% 0.00% 0.99% 3.37% -0.80% 0.00% 1.05% 3.72% -2.56%

Thousands Thousands Thousands Thousands Thousands

August August August August August

368.34 196.19 46.24 43.75 41.73

373.49 197.69 47.25 44.02 42.28

366.83 192.42 47.09 44.41 42.39

0.41% 1.96% -1.79% -1.49% -1.55%

www.akbizmag.com • Alaska Business Monthly • December 2010